Research Bulletins

Highlights of research by faculty in the College of Business.

Not Throwing Away My Shot

A persistent trend to delay the MMR vaccination during 1998–2011 in the U.S. was driven by college-educated mothers, according to a study by Shin-Yi Chou, chair of the economics department, her colleague Associate Professor Ernest Lai, and former student Mengcen Qian, now associate professor at Fudan University. Influenced by the unfounded claim of a retracted study published in 1998, some mothers held biases against the vaccine. The more educated moms may have better access to information outside family doctors, exposing them to misinformation which leads them to seek out more to confirm their biases. Exposures to negative information about the vaccine strengthened their biases more than exposures to positive information attenuated them. Positive online information, however, had strong impacts on vaccination decisions. This suggests that online dissemination of vaccine-safety information may help tackle misinformation that is bound to accompany a COVID-19 shot.

Hedging Your Bets

You might think that if your hedge fund is affiliated with a larger financial services company, it will have a big advantage, given all of the extra resources available to it. Not so, says Sterling Yan, professor in the Perella department of finance. His research shows that affiliated hedge funds significantly underperform non-affiliated ones due to a conflict of interest. Affiliated hedge funds engage in asset gathering strategies and overweight their IPO/SEO client’s stocks at the expense of fund performance. Furthermore, affiliated funds are more likely to commit legal and regulatory violations. These results have significant implications for the newly enacted Volcker Rule, which prohibits banks from sponsoring hedge funds or private equity funds.

If You Could Read My Mind

What if an online advertiser could tell how ready you are to buy those new shoes? And you thought it couldn’t get creepier! Rebecca Wang, assistant professor of marketing, is working on a tool with her colleagues from Northwestern University Lab and Performics to do just that. According to Wang, consumers type words into search that can be clues to how ready you are to buy. It’s based on Construal Level Theory, which describes the relation between psychological distance and the extent to which people’s thinking is abstract or concrete. In the case of online shopping, the more concrete your thinking, the more ready you are to purchase. The team applies scores to 85,863 words based on construal level. If the words you are searching with have a low concreteness score, the advertiser knows to offer up something subtle like an ad about how to use the product. If your words have a high concreteness score, they know to move in for the sale. 

Is a College Education Enough?

Your college degree might not protect you from information technology taking your job. David Zhang, assistant professor in the Decision and Technology Analytics Department, and his coauthors examined just how far IT has come in U.S. industries. They found that, since the late 1990s, technology has not only put laborers with a high school degree or less out of work, but has also replaced workers with bachelor's or associate's degrees. You’re safe, for now, if you have a master’s degree or above.

Brain Teaser

Cognitive flexibility is the capacity to switch between different modes of thinking and find workable solutions to conflicting problems. Andreea Kiss, associate professor of management, couldn’t find any research that connected a CEO’s cognitive flexibility to firm strategic outcomes such as ambidexterity, so she conducted her own. Kiss’ study showed that a CEO’s cognitive flexibility determines where and how intensely and persistently the CEO searches for information. It further showed that the CEO with these skills is able to read signals in a fast-changing environment and simultaneously pursue different forms of innovation, leading to the overall ambidexterity of the organization. 

One Word: Derivatives

Little is known about the incentives and consequences for not complying with mandatory financial disclosure rules, according to Raluca Chiorean, assistant professor of accounting. She and her coauthors investigated this, using the provisions of mandatory derivatives disclosures required by the FASB. Fully complying with derivatives disclosure rules can expose firms to proprietary costs by providing competitors information regarding future sales or expected production. Further, ineffective hedging or speculation can damage the managers’ reputation or career prospects. However, inadequate disclosures make it difficult to assess the financial health of a company and can expose the firm to regulatory and public scrutiny. The authors found that only 49% of derivatives users fully comply with FASB’s disclosure requirements and that these disclosure deficiencies attract a regulatory response in terms of SEC comment letters. The results of the study suggest that when derivatives-related proprietary costs are high, benefits of non-compliance (safeguarding proprietary information) likely outweigh the costs (regulatory action).

Stories by Rob Gerth

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