A-list Journal Publications
Ramesh Rao (OSU), Andrew Prevost (Ohio University) and Erik Devos (University of Texas-El Paso): “The Effects of Relative Changes in CEO Equity Incentives on the Cost of Corporate Debt,” published in the Journal of Business Finance and Accounting
We examine how effort and risk incentives embedded in CEO equity incentives are related to the cost of debt and the role credit worthinessplays in this relationship. Our empirical approach addresses a number of unanswered questions in the literature by examining the sources and effects of co-movements in CEO incentives, whether the proportionality of these movements is rationally priced, and whether the effects are concentrated among bonds with greater likelihood of default. Our findings confirm previous predictions that effort and risk incentives are rationally priced by bond market participants. We also show that significant cross-sectional effects are more pronounced for speculative bonds, implying that previously documented links between equity incentives and the cost of debt may not be generalizable to all debt issues.
Ali Nejadmalayeri and Ramesh Rao: “Sarbanes-Oxley Act and Corporate Credit Spreads,” published in the Journal of Banking and Finance
Stock market reaction suggests that despite improved disclosure and increased accountability, Sarbanes-Oxley Act (SOX) is too costly and not beneficial. Noting that bondholders are likely to reap the many potential benefits of SOX without bearing the brunt of costs, we examine how SOX affected corporate credit spreads to better assess its benefits. SOX has led to a significant structural decline in spreads of at least 27 basis points. Riskier firms (low rating, long maturity, high leverage, and small size) and firms closely related to SOX major provisions (earning variability, managerial trading, and corporate governance) experience greater declines in spreads.
Justin Webb: “Family Ties in Entrepreneurs’ Social Networks and New Venture Growth,” published in Entrepreneurship Theory and Practice
Family ties serve as an important conduit of resources for entrepreneurs’ new venture activities. However, research suggests that family ties can create both positive and negative entrepreneurial outcomes. Building upon a family embeddedness perspective, we develop hypotheses about curvilinear relationships between the degree of family embeddedness (defined as the percentage of family ties) in entrepreneurs’ networks and venture growth. We suggest that the effect of family ties depends on the type of an entrepreneur’s social network in which an entrepreneur’s family ties are involved. We differentiate three social networks types: business advice, emotional support, and business resources. We test these hypotheses on a sample of entrepreneurial ventures across four countries (China, France, Russia, and the United States). Our results confirm curvilinear effects specific to each network. The curvilinear relationship is an inverted U-shape for advice and emotional support networks but a U-shape for the business resource network. Hence, we measure what proportion of kin representation in entrepreneurial networks is valuable or conversely undermines new venture growth for each network type. Additionally, exploratory analyses on the role of the institutional context and of the venture’s age on these relationships show the stability of these effects (i.e., the business resources network) or, conversely, their contingency in a few cases (i.e., emotional support and business advice networks).
Bryan Edwards and Craig Wallace: “Change the Referent? A Meta-analytic Investigation of Direct and Referent-shift Consensus Models for Organizational Climate,” published in the Journal of Management
Companies often measure perceptions from members of work groups such as climate for safety, fairness, or high involvement. Climate surveys concerned with differences among departments, offices, locations, or supervisor work groups add a new element to measurement. Mainly, should the questions ask about members’ individual perceptions (e.g., I am concerned with safety compliance) or the groups’ perceptions (e.g., My work unit is concerned with safety compliance)?
In either case, climate is determined by averaging member responses but the questions differ in their primary referent (“I” vs. “My work unit”). Our meta-analysis showed that when predicting attitudes, the referent should be “I.” When predicting job group performance or customer service, the referent should be the group. Our study helps guide the development of company climate surveys to help get the most reliable and accurate employee responses.
Justin Webb: “Entrepreneurs’ Response to Semi-Formal Illegitimate Institutional Arrangements,” published in the Journal of Business Venturing
While prior research has discussed how entrepreneurs deal with formal institutional voids and informal institutional environments, little is known about how entrepreneurs respond to institutional arrangements involving illegitimate actors. We define such arrangements as semi-formal illegitimate institutions. Using an exploratory study, we examine one such arrangement in Guatemala City, where organized crime dominates the institutional landscape in which entrepreneurs operate. We examine the strategic responses of these entrepreneurs, and find that they vary in the extent to which they resist semi-formal illegitimate institutions; some entrepreneurs engage in defiance, others avoid the illegitimate pressures, while others simply acquiesce. Upon further investigation, we find that the differences in entrepreneurs’ network strength and network proximity, combined with their individual perception of threat and resource mobility, help to predict the different strategic responses.
Federico Aime (OSU), Stephen E. Humphrey (Penn State), D. Scott DeRue (Michigan), Jeffrey B. Paul (Tulsa): “The Riddle of Heterarchy: Power Transitions in Cross-Functional Team,” published in the Academy of Management Journal
People usually say that knowledge is power, but organizations have a hard time benefiting from it. In a new study published in the Academy of Management Journal (the top empirical journal in the field of management), Aime and his colleagues demonstrate that in a world that needs to integrate diverse knowledge, where impactful new products, services, and ideas are the result of bringing together people with very diverse skills, success emanates from allowing these people to take charge, exercise power, and own projects when their expertise is needed. This research shows that authority lines and work hierarchies are less and less valuable in our knowledge economy and that flexible power structures may be important for performance.
Alexis Smith: “Gendered Influence: A gender-role perspective on the use and effectiveness of influence tactics,” published in the Journal of Management
The current study meta-analytically examined the gendered nature of lateral and upward influence attempts. Drawing from gender role theory, we investigated the extent to which the gender of the influence actor affected the use and effectiveness of influence behaviors. The role of a gendered environmental context was also examined. The results provided limited support of gender role theory such that men were more likely to use agentic influence tactics and women were more likely to receive personal advancement outcomes when they used communal influence tactics. Overall, the current work suggests that influence tactics may be gendered in nature such that there may be gender differences in the frequency of use and subsequent outcomes thereof. Recommendations for future research on influence include increased attention to the potentially gendered nature of influence behaviors, as well as more explicit considerations of the impact of gender and gendered environment on influence effectiveness.
Laurie Lucas: “Say What You Mean: The FDCPA and Problems of Interpretation,” published in The Business Lawyer
Congress enacted the federal Fair Debt Collection (FDCPA) more than 35 years ago, but the U.S. Supreme Court has granted review of FDCPA decisions only three times. Despite the longevity of the FDCPA, the Court’s review of two of these cases only occurred since 2009. This marked increase in FDCPA decisions before the Court underscores the complexity of the FDCPA, reflects the current financial landscape in the U. S., and highlights the continuing problems for practitioners and the courts presented by judicial precedent that offers varied interpretations of the law’s provisions. This article analyzes the case currently before the Court, in addition to other recent federal cases that turn on the meaning of language generally, and the FDCPA’s statutory language specifically.
JinKyu Lee: “Sustaining Web 2.0 Services: A Survival Analysis of a Live Crowd-Casting Service,” published in Decision Support Systems
Securing continuous inflows of user-created content and promoting them to the potential consumers are basic yet critical tasks for many Internet businesses to succeed in Web 2.0 environments. Managers of Web 2.0 services need to quickly identify value-adding content and encourage the content contributors to keep supplying valuable content. This study surveys the previous literature to explain the lifespan of user created content and proposes a theoretical framework that considers three major stakeholders in the Web 2.0 business environments – content contributors, content consumers, and service platform providers. Based on the theoretical understanding, a model that explains the survivability of a user created content is developed and empirically tested using three months of log data collected by an Internet personal broadcasting service provider. The proposed theoretical framework provides researchers with insights into the interworking of the three major players in the novel business environments. The results of the empirical analysis suggest that content providers’ commitments and positive rewards to intrinsic motivations, content consumers’ acceptances and perceived popularity of available content, and the service platform provider’s support for social network capabilities and popularity signaling mechanisms are important factors that Web 2.0 service providers must carefully manage in order to improve the longevity of value-adding user created content.
Scott Johnson: “Model Theoretic Knowledge Accumulation: The Case of Agency Theory and Incentive Alignment,” published in the Academy of Management Review
What does all of the research done in business schools add up to? Some would say that this research tests theories about how businesses work but this is a puzzling answer since scholars have not reached a consensus about the truth of very many theories. Drawing from the philosophy of science, we offer a different answer based on examples of how other disciplines accumulate knowledge. Instead of testing theory we argue that scholars work to represent the world in more accurate ways. Without necessarily verifying or falsifying theoretical axioms, research builds understanding of the world through the grafting, contextualizing, and repurposing of representational models. We explain this different way of understanding research by analyzing studies of incentive alignment and we discuss how this perspective contributes to an ongoing discussion about improving theoretical precision in management research.
Ramesh Sharda, Ashish Gupta, Yue Dong, Brian Pickering: “Improving Rounding in Critical Care Environments through Management of Interruptions,” published in Decision Support Systems
Efficient and effective functioning of Intensive care units (ICU) has a significant impact on the safety of patients who are critically sick, performance of care providers, utilization of clinical resources, and is essential for improving the overall healthcare delivery. This study focuses on developing a better understanding of ICU rounding process, which is a team-based activity and is routinely conducted with the objective of providing an error-free and customized treatment plan for each patient admitted to an ICU. However, rounding process is complex, ill-understood and marred by numerous inefficiencies. In this study, we develop process framework for ICU care delivery that integrates various pathophysiologic, care delivery and intervention processes. We do this by examining the rounding workflow of two major teaching hospitals in the US. One major issue for rounding process is interruptions. We suggest and test strategies for improving ICU rounding workflow by managing interruptions. This is accomplished through the development of simulation models to compare the relative merits of controlling interruptions in ICU with respect to overall rounding completion time. We found that as much as 39 percent time savings can be realized with alternate interruption control methods.
Our research uses equilibrium arguments to derive closed-form solutions for the price of European call and put options written on an individual stock when shareholders might lose all their claims on the firm. The stock price accounts for both a stochastic probability of bankruptcy and a stochastic probability of going concern. With a random probability of bankruptcy shareholders lose all their claims in the firm. With a random probability of going concern the stock price is lognormal as in the Black-Scholes model. The bankruptcy probability is correlated with aggregated wealth if the bankruptcy risk is systematic. The model is consistent with a bankruptcy probability negatively correlated with the firm’s stock price. If the bankruptcy probability of a giving firm increases then its stock price decreases which leads to the value of the call options written on that stock to decrease. This result is not obtainable under the Merton’s (1976) ruin model where the stock price and the bankruptcy probability are independent.
Ramesh Sharda and Ashish Gupta: “Improving the Science of Healthcare Delivery and Informatics Using Modeling Approaches,” published in Decision Support Systems
The science of health care delivery and informatics are to be viewed as mutually connected disciplines and, therefore, the problems in both streams often occur concomitantly. For example, inefficiencies or ineffectiveness of Healthcare Information Technologies (HIT) quickly translates into poor healthcare delivery or vice versa. Research focusing on various decision making or decision support aspects of HIT and healthcare delivery is still sparse. We identify six key thematic areas that require significant attention from various researchers and stakeholder communities and emphasize on ways research in this space could further developed. We provide examples from the articles appearing in the special issue on healthcare modeling.
Robert Baron: “I Care About Nature, but …: Disengaging Values in Assessing Opportunities that Cause Harm,” published in Academy of Management Journal
This research is focused on the question of how entrepreneurs who state that they hold strong pro-environmental values sometimes decide to pursue opportunities that will harm the natural environment, and as such, pursue actions that are inconsistent with their own personal values. We found evidence for the view that they do this through “moral disengagement,” cognitive processes that allow them to “turn off” (deactivate) the self-regulatory processes that normally prevent individuals from acting in ways inconsistent with their own beliefs/values. This has important implications for understanding how entrepreneurs (and others) evaluate business opportunities, and for sustainable development/entrepreneurship.
Dursun Delen: “A Comparative Analysis of Machine Learning Systems for Measuring the Impact of Knowledge Management Practices,” published in Decision Support Systems
Knowledge management (KM) has recently emerged as a discrete area in the study of organizations and frequently cited as an antecedent of organizational performance. This study aims at investigating the impact of KM practices on organizational performance of small and medium-sized enterprises (SME) in service industry. Four popular machine learning techniques (i.e., neural networks, support vector machines, decision trees and logistic regression) are used to developed predictive and explanatory models. The data for this study is obtained from 277 SMEs operating in the service industry within the greater metropolitan area of Istanbul, Turkey. Empirical analysis indicated that there is a strong and positive relationship between the implementation level of KM practices and organizational performance related to KM. The paper summarizes the finding of the study and provides managerial implications to improve the organizational performance of SMEs through effective implementation of KM practices.
JinKyu Lee, Jessica P. Li, Rui Chen and H. Raghav Rao: “A Case Study of Private-Public Collaboration for Humanitarian Free and Open Source Disaster Management Software Deployment,” published in Decision Support Systems
Free and open source software (FOSS) has been increasingly adopted for humanitarian purpose worldwide, yet the factors for successful deployment of humanitarian FOSS in a disaster situation remain largely unexplored. Drawing upon the Technology-Organization-Environment (TOE) framework, this study identifies the key issues in collaborative deployment of FOSS for humanitarian relief operations. The research further elaborates the key research issues by adopting a case study approach in which qualitative data were gathered from key informants from both private and public sectors. The results suggest that task-technology fit, expertise management, and inter-organizational relationship management play critical roles in humanitarian FOSS deployment.
Ali Nejadmalayeri: “Product Market Advertising and Corporate Bonds,” published in the Journal of Corporate Finance
Research shows that by enhancing visibility, advertising improves stock liquidity and returns. Unlike stock holders, bond holders may view advertising skeptically. Without proven effectiveness in improving revenues, large pre-interest advertising expenditures can be seen as eroding a firm’s ability to meet its debt service obligations. We find that although greater advertising by a firm improves liquidity of its bonds in the market, it does not lower the firm’s cost of debt. However, firms with ineffective advertising experience reduced bond market liquidity and a higher cost of debt. Without a real positive economic impact, advertising has little or no value for bond investors.
Scott Johnson and Aaron Hill: “Board Composition Beyond Independence: Social Capital, Human Capital and Demographics,” published in the Journal of Management
There is little consensus as to what a board of directors should look like or even what kind of people make the best board members. Research has focused on board independence – the proportion of directors that are not employed by or have other business relationships with the company. The idea is that these independent directors are better at monitoring the CEO and other top managers and representing the interests of shareholders but this research has not been able to show
evidence board independence has a positive effect on firm performance. Our paper summarizes research that investigates other attributes of board members that are more consistently associated with firm performance such as social status, ties to other companies, prior experience and educational background. We summarize this growing literature and suggest that future research focus on clarifying how these attributes of directors affect firm performance.
Justin Webb, Garry D. Burton, Laszlo Tihanyi, R. Duane Ireland: “Research on Entrepreneurship in the Informal Economy: Framing a Research Agenda,” published in the Journal of Business Venturing
The informal economy consists of economic activities that occur outside of formal institutional boundaries but which remain within informal institutional boundaries for large segments of society. We draw from diverse disciplines to frame research concerning entrepreneurship in the informal economy around three separate theories: institutional theory, motivation-related theories from a sociological perspective, and resource allocation theory. Each of these theories provides a complementary lens through which to examine the incentives, constraints, motivations, strategies, and abilities of entrepreneurs to operate and grow their ventures in the informal economy. Employing these theoretical perspectives facilitates efforts to highlight the breadth of informal economy research in different domains and lays foundations for future entrepreneurship research.
Justin Webb: “Institutional Polycentrism, Entrepreneurs’ Social Networks, and New Venture Growth,” published in the Academy of Management Journal
What is the interrelationship among formal institutions, social networks, and new venture growth? Drawing on the theory of institutional polycentrism and social network theory, we examine this question using data on 637 entrepreneurs from four different countries. We find the confluence of weak and inefficient formal institutions to be associated with a larger number of structural holes in the entrepreneurial social networks. While the effect of this institutional order on the revenue growth of new ventures is negative, a network’s structural holes have a positive effect on the revenue growth. Furthermore, the positive effect of structural holes on the revenue growth is stronger in an environment with a more adverse institutional order (i.e., weaker and more inefficient institutions). The contributions and implications of these findings are discussed.
Chad Stefaniak: “Audit Partner Perceptions of Post-Audit Review Mechanisms: An Examination of Internal Quality Review and PCAOB Inspections,” published in Accounting Horizons
This study reports the results of a survey of 107 audit partners from large public accounting firms that investigates and compares partner perceptions of Public Company Accounting Oversight Board [PCAOB] inspections’ and Internal Quality Reviews’ [IQRs]: (1) predictability, (2) conduct, (3) reviewer qualifications and behavior, and (4) effects (i.e., on audits, partners, and firms).
A majority of partners can or try to predict the year of both reviews and perceive that, relative to PCAOB inspections, IQR reviewers have a better understanding of firms’ audit methodologies, IQRs focus more on whether firms follows their methodology, and IQRs examine more audit areas. In addition, partners believe that PCAOB inspectors are more focused on finding deficiencies than are IQR reviewers, and that IQR feedback is more timely and helpful for improving audit quality. Both reviews are perceived to impact professional reputation; however, partners perceive that PCAOB inspections increase their firms’ litigation risk more so than do IQRs.
Finally, less experienced partners perceive reviews as more invasive and as posing more consequences than do more experienced partners. We provide credible, informed perceptions of partners directly involved in both PCAOB inspections and IQRs (which heretofore have not been examined directly by practitioner or academic research), which should be beneficial to accounting researchers, practicing auditors, and regulatory bodies interested in understanding the perceived effects and effectiveness of PCAOB inspections and IQRs.
John Abernathy and Eric Rapley: “Schedule UTP: Stock Price Reaction and Economic Consequences,” published in The Journal of the American Taxation Association
In 2010, the Internal Revenue Service (IRS) announced the requirement to disclose uncertain tax positions (UTP) on a new schedule (Schedule UTP) to be filed with federal corporate income tax returns. Schedule UTP could increase a firm’s tax burden by providing a roadmap for the IRS to identify firms’ tax planning strategies. We find that stock returns around the development of Schedule UTP are negative; consistent with investors’ concern that Schedule UTP would impose costs on firms.
Ramesh Sharda and Jongsawas Chongwatpol: “Achieving Lean Objectives Through RFID: A Simulation Based Assessment,” published in Decision Sciences
Lean concepts in manufacturing have focused on elimination of wastes within the business processes. This study investigates whether addition of radio frequency identification (RFID) technologies in the manufacturing process can complement Lean manufacturing. Specifically, will more accurate information from RFID-based solutions help in achieving the goals of Lean initiatives in manufacturing plant performance, and if yes, in what specific ways?
Dursun Delen: “Optimal Pricing Strategies for Capacity Leasing Based on Time and Volume Usage in Telecommunication Networks,” published in Decision Sciences Journal
In this study, we examined optimal pricing strategies for “pay-per-time,” “pay-per-volume” and “pay-per both time and volume” based leasing of data networks in a monopoly environment. Conventionally, network capacity distribution includes short/long term bandwidth and/or usage time leasing. When customers choose connection-time based pricing, their rational behavior is to fully utilize the bandwidth capacity within a fixed time period, which may cause network to burst (or overload).
Debra Nelson: “More than Happy to Help? Customer-focused Emotion Management Strategies,” published in Personnel Psychology
In maintaining and improving customer satisfaction, businesses should pay attention to the interactions in their call centers. Although customer service representatives regularly deal with negative customers and are told by their organizations to satisfy these customers, they are less frequently provided guidance on how to do so beyond simply acting positive. Providing training to customer service representatives to focus on problem-focused strategies which address the customer’s problem or the customer’s perception of the problem is likely to pay off and reduce the customer service representative’s reliance on less effective emotion-focused strategies that try to placate the customer’s anger or distract them from the problem.
Tony Kang and Michael Wolfe: “The Impact of Eliminating the 20‐F Reconciliation Requirement for IFRS Filers on Earnings Persistence and Information Uncertainty,” published in Accounting Horizons
On November 15, 2007, the U.S. Securities and Exchange Commission (SEC) eliminated the requirement that foreign private issuers reporting under International Financial Reporting Standards (IFRS) include a reconciliation to U.S. GAAP in their 20-F filing. To the extent that the reconciliations had information content, it is possible that the information environment of IFRS filers deteriorated in the post-reconciliation period, unless they voluntarily improved disclosure quality.
Ramesh Sharda and Paras M. Agrawal: “Quantum Mechanics and Human Decision Making,” published in Operations Research
In physics, at the beginning of the 20th century it was recognized that some experiments could not be explained by the conventional classical mechanics but the same could be explained by the newly discovered quantum theory. It resulted in a new mechanics called quantum mechanics that revolutionized the scientific and technological developments. Again at the beginning of the 21st century, it is being recognized that some experiments related with the human decision making processes could not be explained by the conventional classical decision theory but the same could be explained by the models based on quantum mechanics.
Angela Spencer: “An Examination of the Cost of Capital Implications of FIN 46,” published in The Accounting Review
This study examines whether adoption in 2003 of FASB Interpretation No. 46/R (FIN 46), Consolidation of Variable Interest Entities–an Interpretation of ARB No. 51, changes the cost of equity capital for affected firms. Using comparative analysis on a broad sample of 11,719 firm-quarter observations for 1,389 firms during the period 1998 through 2005, we find evidence FIN 46 significantly increased the cost of capital for firms with affected variable interest entities (VIEs), an increase of approximately 50 basis points relative to firms reporting no material effect from the standard. Further, firms consolidating these formerly off-balance sheet structures experienced the largest increase. Taken together, these results suggest that FIN 46 reduced the opportunity for firms to use off-balance sheet structures to reduce their cost of capital, a matter of regulatory concern.
Dursun Delen: “Leveraging the Capabilities of Service-Oriented Decision Support Systems,” published in Decision Support Systems
In today’s very complex business world, organizations must find innovative ways to differentiate themselves by becoming more accurate, timely, collaborative, virtual, adaptive and agile. They need to be able to rapidly respond to market needs and changes. Many organizations noticed that the data they own and how they use it can greatly enhance their business practices. As data and information are becoming key assets for many organizations, they strive to leverage their capabilities to collect and process as much data as possible. Therefore having efficient and effective decision making processes continuously fed with the right data, which is transformed to meaningful information with data-driven discoveries (e.g., analytics) are becoming mainstream processes for companies to run smarter, more agile and efficient businesses.
Robert Baron: “Entrepreneurship in Innovation Ecosystems: Entrepreneur’s Self-Regulatory Processes and Their Implications for New Venture Success,” published in Entrepreneurship Theory and Practice
Innovation ecosystems – which involve loosely interconnected networks of companies working together to develop capabilities, new products, and new services, relating to a shared set of technologies – have emerged in recent years as an important context for entrepreneurship. Examples of such networks include Apple’s iPhone ecosystem, Google’s Android ecosystem, and Boeing’s Dreamliner innovation network. Although such ecosystems offer important advantages to entrepreneurs (e.g., working with a large, well-established company), they also pose a unique set of challenges associated with the need for such entrepreneurs to balance the goals and priorities set by the ecosystem leader (e.g., Apple, Google) with the goals and priorities of their own new ventures. We suggest that in this complex business context, ecosystem entrepreneurs’ self-regulatory processes (e.g., their capacity to exert self-control, remain focused on key goals, and to “know what they know and don’t know”), play a key role, helping the entrepreneurs’ to successfully balance these two distinct, and sometimes incompatible, sets of goals.