Research Seminars

TBD

Accounting & Management Control

Speaker: Paul Pronobis
ESCP Europe Business School

19 October 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


TBD

Accounting & Management Control

Speaker: Kalle Kraus
Stockholm School of Economics

14 September 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


Disclosure and Financing Choice: PIPEs vs. SEOs

Accounting & Management Control

Speaker: Shiva Sivaramakrishnan
Rice University

15 June 2018 - HEC Paris - Room X120 - From 2:00 pm to 4:00 pm


Firms in competitive industries have natural incentives to avoid wide dissemination of proprietary information. We test this proprietary cost hypothesis (PCH) by examining the impact of corporate disclosure policy on a firm’s equity financing choice between Private Investments in Public Equity (PIPEs) and Seasoned Equity Offerings (SEOs). PIPEs offer firms a way to share proprietary information privately with a small group of investors. We employ several concentration and competition constructs to proxy for proprietary costs, but fail to find support to this hypothesis. Consistent with the literature, our results indicate that an “urgent need for cash” explains firms’ choice of PIPEs over SEOs. We also find that firms that choose SEOs over PIPEs are characterized by higher holdings by dedicated institutions, transient institutions and quasi-indexers. However, the PCH does not receive support even after controlling for these other determinants of the financing choice. Finally, we estimate a two-stage endogenous treatment-effect model to explain discounts associated with PIPEs and SEOs. Preliminary results indicate that discounts are lower when unobservables (e.g., private information) seem to influence the choice of PIPE over SEO.

Operating Leverage, Risk Taking and Coordination Failures

Finance

Speaker: Matthieu Bouvard
Desautels Faculty of Management

14 June 2018 - S125 - From 2:00 pm to 3:15 pm

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We study an economy with demand spillovers where firms' decisions to produce are strategic complements. Firms have access to an increasing returns to scale technology and choose their operating leverage trading off higher fixed costs for lower variable costs. Operating leverage raises the sensitivity of firms' profits to an aggregate labor productivity shock, thereby magnifying systematic risk. We show that firms take excessive risk as they do not internalize that higher operating leverage increases the likelihood of a coordination failure where output is infficiently depressed across the economy. More generally, our analysis suggests that individual risk-taking decisions aggregate into excessive output volatility in the presence of strategic complementarities among agents.

Make-and-Ally and Performance: Evidence from the Korean TV Drama Industry

Strategy & Business Policy

Speaker: Evan Rawley
Associate Professor of Strategic Management & Entrepreneurship , Carlson School of Business- University of Minnesota

14 June 2018 - Room #S218 - From 2:00 pm to 3:30 pm


Make-and-ally governance, where integrated firms develop new products internally while simultaneously collaborating on new product development with suppliers, is becoming increasingly common in knowledge-based industries. Yet, there is little theory or evidence to explain the prevalence of this governance mode. In this paper, we propose that, when downstream commercialization is concentrated relative to upstream product development, make-and-ally governance improves market performance of knowledge-based products and facilitates value capture for the integrated firm. Using data from the Korean TV drama industry, we find qualitative and quantitative evidence that collaborative development between network companies and independent production companies improves viewership ratings of TV dramas. The results suggest that make-and-ally governance is driven partly by efficiency and partly by market power considerations.

Parent−Subsidiary Common Managers and Corporate Tax Planning

Accounting & Management Control

Speaker: Xin Wang
Hong Kong University

8 June 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


As an interesting but neglected governance mechanism of a firm’s subsidiaries, corporate headquarters managers often take a position in significant subsidiaries (“parent-subsidiary common manager” hereafter), either as the board member or the operations manager. These parent-subsidiary common managers have direct access to divisional information and, therefore, possess greater knowledge useful for them to identify tax opportunities and coordinate tax-motivated activities across business units. Using senior executives’ subsidiary positions disclosed in Chinese listed firms’ annual reports, we examine the impact of parent-subsidiary common managers on corporate tax planning and find a lower effective income tax rate for firms appointing common managers. Additional analyses show that the tax-avoiding effect of common managers is more pronounced for firms with more intangible assets, more related-party transactions involving subsidiaries, and more diversified business. Moreover, we find stronger effects for those common managers who take a position in economically significant subsidiaries or subsidiaries entitled to preferential tax treatments. The effect is also stronger when common managers work as operations managers of the subsidiaries. Collectively, our study is the first to analyze the appointment of parent-subsidiary common managers and to show the impact of such an appointment on corporate decisions.

The Origins and Real Effects of the Gender Gap: Evidence from CEOs’ Formative Years∗

Finance

Speaker: Mikhail Simutin
Rotman School of Management

7 June 2018 - T004 - From 10:00 am to 12:30 pm

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CEOs allocate more investment capital to male than female division managers. Using data from individual Census records, we find that this gender gap is driven by CEOs who grew up in male-dominated families—those where the father was the only income earner and had more education than the mother. The gender gap also increases for CEOs who attended all-male high schools and grew up in neighborhoods with greater gender inequality. The effect of gender on capital budgeting introduces frictions and erodes investment efficiency. Overall, the gender gap originates in CEO preferences developed during formative years and produces significant real effects.

Disclosure, Competition, and Learning from Asset Prices

Finance

Speaker: Liyan Yang
Rotman School of Management

31 May 2018 - T027 - From 2:00 pm to 3:15 pm

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This paper studies the classic information-sharing problem in a duopoly setting in which firms learn information from a financial market. By disclosing information, a firm incurs a proprietary cost of losing competitive advantage to its rival firm but benefits from learning from a more informative asset market. Firms' disclosure decisions can exhibit strategic complementarity, which is strong enough to support both a disclosure equilibrium and a nondisclosure equilibrium. Allowing minimal learning from asset prices dramatically changes firms' disclosure behaviors: without learning from prices, firms do not disclose at all; but with minimal learning from prices, firms can almost fully disclose their information. Learning from asset prices benefits firms, consumers, and liquidity traders, but harms financial speculators.

Rationalizing Outcomes: Mental-Model-Guided Learning in Competitive Markets

Strategy & Business Policy

Speaker: Anoop Menon
Assistant Professor of Management , The Wharton School, University of Pennsylvania

31 May 2018 - Room #T105 - From 1:30 pm to 3:00 pm


This paper explores how competitive market interactions between agents with different mental models can lead to dysfunctional learning which can, in turn, have significant implications for an agent’s performance. We build a simulation model where two agents with different mental models about their demand environment compete over many periods, with the decisions of one period leading to market outcomes that are then used to recalibrate the mental models which, in turn, are used to make the decisions in the following period. Three model variants, exploring different mental models about the demand structure, the cost structure, and the market are studied. Dysfunctional learning occurs through dynamic mechanisms involving rationalization of observations within flexible mental models and misinterpretation of observations because of poor understanding of rival mental models. These mechanisms sometimes lead to distortion of an agent’s own initially correct mental model of the demand environment and to superior relative performance by the agent with an incorrect model of that environment. The insights from the models are used to interpret the ascension of GM over Ford in the late 1920’s, the slow adoption of radial tires in the U.S., and the rise of Nirma over incumbent Hindustan Lever in the Indian detergent market.


Accounting for tacit coordination

Accounting & Management Control

Speaker: Hendrik Vollmer
University of Leicester

25 May 2018 - HEC Paris - Room T020 - From 2:00 pm to 4:00 pm


Tacit coordination is a pervasive aspect of accounting practice. This paper teases out insights on tacit coordination from existing scholarship, starting with studies of everyday life accounting, then turning to professional practice. It develops an understanding that, in the application of rules and accounting standards, in producing, framing, auditing and using statements, records, apologies or excuses, accounting practitioners tacitly coordinate towards the passing of accounts. This passing can be articulated in terms of structures, agencies and processes of tacit coordination involved in making accounting happen. The implications of this understanding of accounting practice and the importance of the wider domain of enquiry it is indicating are discussed with respect to the stewardship position of accounting professionals and to the further development of accounting theory. The paper identifies a need for broad-based forms of accounting theory to support accounting practitioners in the stewardship of silence and provide an antidote against the idea that any account, any slice of information, or any amount of ‘big data’, could speak for itself – or that it should.

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