Research Paper Series


Departments: Tax & Law, GREGHEC (CNRS)

This paper advocates for the adoption of freedom of panorama in the European Union. The term “freedom of panorama” (FoP) refers to an unconditional copyright exception vis-à-vis works of architecture and sculpture placed permanently in public places. The current lack of uniformity with respect to copyright exceptions at the EU level has proven problematic to end-users, service providers and other intermediaries. It has also frustrated the ultimate goal of promoting a single internal market throughout Europe, and safeguarding freedom of expression and free movement of services throughout the EU.The current system does not harmonize copyright exceptions throughout the EU. Rather, each Member State is free to adopt copyright exceptions as it sees fit. The result is a heavily fragmented system that leaves businesses and users with the necessity to individually deal with each Member State and rights holder concerned. A mandatory exception for FoP would play a key role in guaranteeing freedom of expression, access to education and the free movement of digital services in the internal single market.FoP is critical for ensuring freedom of expression and access to education. Additionally, the growth of net companies that rely on user generated conduct (UGC), such as through YouTube, Wikipedia and blogs, has led to the constant fear among most EU citizens of violating copyright law. This reiterates the need for a FoP exception that covers both commercial and non-commercial uses. Furthermore, many new cross-border educational initiatives in Europe do not fall within the “non-commercial educational and scientific research purposes” exempted under the current InfoSoc Directive. Some national systems that broadly extend the education exception to uses that fall outside the “non-commercial” definition do not extend the exception to online uses.The EU Copyright Directive should be re-written to include a mandatory FoP provision, as is already the case in the national law of EU Member States such as the United Kingdom and Germany, as well as third countries like Brazil. This solution would also comply with copyright-protective countries’ call – among them Italy, Spain and France – for such an exhaustive list. This solution would provide clear direction to Member States without becoming an overly lengthy and unwieldy document.Several problems remain with this approach. First, there has been reticence on the part of the European Court of Human Rights to protect FoP from a freedom of expression standpoint when the images’ use was commercial. Second, there is the possibility for Member States to use trademark law, cultural heritage law, or other national laws to get around a mandatory FoP exception. The uses of trademark and cultural heritage law do not pose a significant barrier to a mandatory FoP exception at present. However, the reforms ultimately decided upon must take into account the possibility of the use of this law to frustrate the Directive’s objectives.The HEC-NYU EU Public Interest Clinic (the “Clinic”) presents its justifications for a mandatory FoP exception below. We also include an annex and model legislation that addresses many of the deficiencies of current EU law

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Departments: Tax & Law, GREGHEC (CNRS)

The EU’s political system has never caught up with the impact European integration has had on citizens’ daily lives. EU citizens still vote in the European Parliament elections on different dates, according to different electoral laws, and in support of candidates selected by national parties and on the basis of domestic agendas. Yet this is set to change. With less than a year to go before the European Parliament elections, the EU political landscape is about to undergo a deep and historical shake-up. While populists are poised to disrupt the Parliament, a new wave of little-noticed transnational parties is emerging from the bottom-up. They both threaten established, mainstream political parties that have historically hold a monopoly of the European ‘project’. This paper traces their genesis, evolution and raison d'être before identifying their major features and political prospect.

Keywords: Elections, Parties, Europe, trasnational parties, European Parliament, Spitzenkandidated, Trasnational list


Departments: Finance, GREGHEC (CNRS)

We propose a new model of interdealer trading. Dealers trade together to reduce their inventory holding costs. Core dealers share these costs efficiently and provide liquidity to peripheral dealers, who have heterogeneous access to core dealers. We derive predictions about the effects of peripheral dealers’ connectedness to core dealers and the allocation of aggregate inventories between core and peripheral dealers on the distribution of interdealer prices, the efficiency of interdealer trades, and trading costs for the dealers’ clients. For instance, the dispersion of interdealer prices is higher when fewer peripheral dealers are connected to core dealers or when their aggregate inventory is higher.

Keywords: OTC markets, Interdealer trading, Inventory management.


Departments: Finance, GREGHEC (CNRS)

We show that banker bonuses cannot be understood exclusively as incentive contracts, but also incorporate a significant risk sharing dimension between bank shareholders and bank employees. This contrasts with the conventional view whereby diversified shareholders fully insure risk averse employees. However, financial frictions imply that shareholder value is concave in a bank's cash reserves---making shareholders effectively risk averse. The optimal contract between shareholders and employees then involves some degree of risk sharing. Using extensive payroll data on 1.26 million bank employee years in the Austrian, German, and Swiss banking sectors, we show that the structure of bonus pay within and across banks is compatible with an economically significant risk sharing motive, but difficult to rationalize based on incentive theories of bonus pay only.

Keywords: Bank compensation, risk sharing, bank risk, operating leverage


Departments: Marketing, GREGHEC (CNRS)

An important challenge for many firms is to identify the life transitions of its customers, such as job searching, being pregnant, or purchasing a home. Inferring such transitions, which are generally unobserved to the firm, can offer the firm opportunities to be more relevant to its customers. In this paper, we demonstrate how a social network platform can leverage its longitudinal user data to identify which of its users are likely job seekers. Identifying job seekers is at the heart of the business model of professional social network platforms. Our proposed approach builds on the hidden Markov model (HMM) framework to recover the latent state of job search from noisy signals obtained from social network activity data. Specifically, our modeling approach combines cross-sectional survey responses to a job seeking status question with longitudinal user activity data. Thus, in some time periods, and for some users, we observe the “true” job seeking status. We fuse the observed state information into the HMM likelihood, resulting in a partially HMM. We demonstrate that the proposed model can not only predict which users are likely to be job seeking at any point in time, but also what activities on the platform are associated with job search, and how long the users have been job seeking. Furthermore, we find that targeting job seekers based on our proposed approach can lead to a 42% increase in profits of a targeting campaign relative to the approach that was used at the time of the data collection.

Keywords: Hidden Markov Models, Data Fusion, Targeting, Customer Analytics


Departments: Strategy & Business Policy, GREGHEC (CNRS)

To investigate time compression dis-economies (TCD), this study estimated time-cost elasticities using 459 oil and gas global investment projects (1997-2010). Results show that the average cost of accelerating investments is negative: a firm could cut $6.3 million in costs of a single project by accumulating asset stocks one month faster. About 88 percent of the projects exhibit negative time-cost elasticities with over 39 percent of unrealized economies of time compression. Only 12 percent of the projects are subject to TCD. These time inefficiencies or frictions do not negate the existence of TCD, but suggest they are less prevalent than assumed in the literature. Management experience, R&D investment, firm size, economic development and political stability are shown to be associated with greater time compression efficiency.

Keywords: Sustainable Competitive Advantage, Temporal Frictions, Time Compression Diseconomies, Time Inefficiencies, Time-Cost Tradeoff


Departments: Strategy & Business Policy, GREGHEC (CNRS)

We consider the formation of alliances that potentially create complementarities, that is, when the value function is super-modular in firm resources. We show that, in a frictionless world where information is perfect and managers optimize, firm alliances disproportionately increase the value of high-resource-level firms, resulting in higher variance and higher skewness of the distribution of firm value; moreover, higher-value alliances are subject to regression to the mean at a faster rate. These effects are magnified if the degree of complementarities is endogenously determined by each firm’s investment. We also consider alliances where matching and/or information about firm resources are imperfect, and show that complementarities are a necessary but not sufficient condition for alliances to cause an increase in firm value; and that complementarities are neither a necessary nor a sufficient condition for alliances to be correlated with higher firm value.

Keywords: Firm Alliances, Matching, Competitive Advantage


Departments: Tax & Law, GREGHEC (CNRS)

This article examines the concept of “significant imbalance” (SI) under French law and its impact on international business transactions. “Significant imbalance” is a legal standard meant to assess whether a contractual clause is unfair (abusive). Although initially restricted to consumer law, it has been extended to general contract law with the implementation of a reform entered into force on 1st October 2016. Previously, the Commercial Court of Paris in the ruling Ministry of Economy et al. v. Expedia, Inc. et al. (2015) had qualified SI as an “overriding mandatory provision” (loi de police) under EU Regulation No. 593/2008 on the applicable law to contractual obligations (Rome I). As a consequence, SI became operative in respect of international contracts despite an express choice of a foreign governing law made by the parties to the transaction. This article argues that, as a result of Expedia and the 2016 reform, French courts can interfere with international business transactions by striking down contractual terms that they deem unfair according to the SI standard. The analysis focuses on two key issues. On the one hand, notwithstanding recent judicial precedents, SI still fails to provide a reliable test for predicting which clauses or contracts are at risk of being deemed unfair. On the other hand, the legal arsenal supporting French legislator’s disapproval of SI allocates great power to French courts and the French government to pursue tort lawsuits against foreign companies allegedly oppressing their commercial partners with SI clauses. Empirical evidence shows that these actions are highly successful compared to those commenced by private actors. The article concludes that all these aspects, together with SI’s turbulent case-law throughout the years, will sprout uncertainty in international business transactions and may eventually disparage France in the global competition in such a field.

Keywords: Contract, International Business Transactions, French Law, Conflict of Laws


Departments: Tax & Law, GREGHEC (CNRS)

It is almost a truism to argue that data holds a great promise of transformative resources for social good, by helping to address a complex range of societal issues, ranging from saving lives in the aftermath of a natural disaster to predicting teen suicides. Yet it is not public authorities who hold this real-time data, but private entities, such as mobile network operators and business card companies, and - with even greater detail - tech firms such as Google through its globally-dominant search engine, and, in particular, social media platforms, such as Facebook and Twitter. Besides a few isolated and self-proclaimed ‘data philanthropy’ initiatives and other corporate data-sharing collaborations, data-rich companies have historically shown resistance to not only share this data for the public good, but also to identify its inherent social, non-commercial benefit. How to explain to citizens across the world that their own data – which has been aggressively harvested over time – can’t be used, and not even in emergency situations? Responding to this unsettling question entails a fascinating research journey for anyone interested in how the promises of big data could deliver for society as a whole. In the absence of a plausible solution, the number of societal problems that won’t be solved unless firms like Facebook, Google and Apple start coughing up more data-based evidence will increase exponentially, as well as societal rejection of their underlying business models.This article identifies the major challenges of unlocking private-held data to the benefit of society and sketches a research agenda for scholars interested in collaborative and regulatory solutions aimed at unlocking privately-held data for good.

Keywords: Big data, data, data governance, data sharing, data risk, data invisible, risk governance, philanthropy


Departments: Information Systems and Operations Management, GREGHEC (CNRS)

We examine empirically how different information types and information channels affect both the intention and the decision to adopt photovoltaic (PV) technology as affected by adoption stage. Analyzing data on a large European utility’s current and potential clients reveals how the effects of various drivers of adoption can change across phases of the adoption process. Our results challenge the common wisdom that information necessarily and homogeneously supports innovation adoption; instead, they strongly support the hypothesis that information types and channels have distinct effects on adoption rates. These results also highlight that, throughout the adoption process, the value of information changes. In addition, we clarify the effects of economic incentives on both the intention to adopt PV technology and actual adoption behavior. Our findings have critical implications for policy makers and for any technology manufacturing company that must optimize its marketing strategy and distribution channels to promote renewable energy systems.

Keywords: innovation adoption; renewable energy; information characteristics; empirical studies


Departments: Accounting & Management Control, GREGHEC (CNRS)

Evidence suggests society still does not view whistleblowers as wholly legitimate – despite legal protections now offered in some jurisdictions, such as the United States. Drawing on a discourse analysis, (i.e., an examination of statements), we investigate the well-publicized stories of seven whistleblowers from 69 sources, including books, first- and second-hand interviews, websites and videos. Our focus is to examine how whistleblower discourses can build legitimacy by more tightly defining the whistleblower role and demonstrating its alignment with social norms. Using whistleblower self-narratives, we identify four narrative patterns: (1) Trigger(s): the event(s) leading to whistleblowing; (2) Personality traits: whistleblower’s morality, resourcefulness, and determination; (3) Constraints: barriers requiring regulatory and organizational change; and (4) Consequences: the longer-term positive impact of the whistleblowing act. These patterns rely on symbolic, analogical, and metaphorical framing to allow others to better understand the role of whistleblowers and enlist their support. Exploring a data-set of 1,621 press articles, we find indications that these narrative patterns resonate in the media – which provide a form of support and may be instrumental in legitimizing the whistleblower role. Grounded on these results, we develop a legitimacy construction model of the whistleblower role, i.e., a representation of how role legitimacy is produced and sustained. From this model, we identify a number of important areas for future research.

Keywords: Whistleblowing, Fraud Detection, Role Definition, Discourse Analysis, Legitimacy, Securities and Exchange Commission (SEC), Sarbanes-Oxley Act (SOX)


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