We develop a new measure of innovation using the text of analyst reports of S&P 500 firms. Our text-based measure gives a useful description of innovation by firms with and without patenting and R&D ...(research and development). For nonpatenting firms, the measure identifies innovative firms that adopt novel technologies and innovative business practices (e.g., Walmart’s cross-geography logistics). For patenting firms, the text-based measure strongly correlates with valuable patents, which likely capture true innovation. The text-based measure robustly forecasts greater firm performance and growth opportunities for up to four years, and these value implications hold just as strongly for innovative nonpatenting firms.
This paper was accepted by Gustavo Manso, finance.
We study sources of investor disagreement using sentiment of investors from a social media investing platform, combined with information on the users' investment approaches (e.g., technical, ...fundamental). We examine how much of overall disagreement is driven by different information sets versus differential interpretation of information by studying disagreement within and across investment approaches. Overall disagreement is evenly split between both sources of disagreement, but within-group disagreement is more tightly related to trading volume than cross-group disagreement. Although both sources of disagreement are important, our findings suggest that information differences are more important for trading than differences across market approaches.
Using new data on entry plans into the American casino industry, I find that incumbent firms invest in physical capacity when threatened with a nearby entry plan, and these strategic investments ...deter eventual entry. Consistent with an entry-deterrence motive, incumbents respond to the threat of entry when entry is uncertain, but not when entry is assured. The average capacity expansion of 2,300 square feet is associated with a 6.8-percentage-point greater likelihood that the entry plan fails. These findings show that investments in deterrence are viable, especially when new entrants face other significant barriers to entry.
Data and the online appendix are available at
https://doi.org/10.1287/mnsc.2017.2730
.
This paper was accepted by Bruno Cassiman, business strategy.
When saving is gambling Cookson, J. Anthony
Journal of financial economics,
07/2018, Letnik:
129, Številka:
1
Journal Article
Recenzirano
Prize-linked savings (PLS) accounts, which allocate interest using lottery payments rather than fixed interest, encourage savings by appealing to households’ gambling preferences. I introduce new ...data on casino cash withdrawals to measure gambling, and examine how individual gambling expenditures respond to the introduction of PLS in Nebraska using a difference-in-differences design. After PLS is introduced, individuals who live in counties that offer PLS reduce gambling by at least 3% more than unaffected individuals. The substitution effect is stronger in low-frills gambling environments, which most resemble PLS, indicating that these accounts fulfill the desire to gamble.
This paper empirically investigates the effect of leverage on strategic preemption. Using new data on entry plans and incumbent investments from the American casino industry, I find that high ...leverage prevents incumbents from responding to entry threats. Facing the same set of entry plans, low-leverage incumbents expand physical capacity (by 30%), whereas high-leverage incumbents do not. This difference in investment matters because capacity installations preempt eventual entry. Stock market reactions to withdrawn plans imply that effective preemption increases incumbent firm value by 5%. My findings suggest that leverage matters for industry composition, not just firm-level investment.
Growing up without finance Brown, James R.; Cookson, J. Anthony; Heimer, Rawley Z.
Journal of financial economics,
12/2019, Letnik:
134, Številka:
3
Journal Article
Recenzirano
Odprti dostop
Early life exposure to local financial institutions increases household financial inclusion and leads to long-term improvements in consumer credit outcomes. We identify the effect of local financial ...markets using Congressional legislation that led to unintended differences in financial market development across Native American reservations. Individuals from financially underdeveloped reservations enter consumer credit markets later, and upon reaching adulthood, have ten point lower credit scores and four percentage point more delinquent accounts. These effects are long-lived and depreciate slowly after individuals move to more developed areas. Formative exposures to local banking improve consumer credit behavior by increasing financial literacy and financial trust.
Echo Chambers Cookson, J Anthony; Engelberg, Joseph E; Mullins, William
The Review of financial studies,
02/2023, Letnik:
36, Številka:
2
Journal Article
Recenzirano
Abstract
We find evidence of selective exposure to confirmatory information among 400,000 users on the investor social network StockTwits. Self-described bulls are five times more likely to follow a ...user with a bullish view of the same stock than are self-described bears. Consequently, bulls see 62 more bullish messages and 24 fewer bearish messages than bears do over the same 50-day period. These “echo chambers” exist even among professional investors and are strongest for investors who trade on their beliefs. Finally, beliefs formed in echo chambers are associated with lower ex post returns, more siloing of information, and more trading volume.
We provide new estimates of merger value creation by exploiting revealed preferences of merging banks within a matching market framework. We find that merger value arises from cost efficiencies in ...overlapping markets, relaxing of regulation, and network effects exhibited by the acquirer-target matching. Beyond our findings, the revealed preference method has notable advantages that warrant its application beyond the bank merger market. Notably, we show that the method outperforms reduced form alternatives out of sample, enables sensible counterfactual experiments, and can be used to evaluate private-to-private mergers, which have been understudied because of lack of stock market data.
Data, as supplemental material, are available at
http://dx.doi.org/10.1287/mnsc.2015.2245
.
This paper was accepted by Amit Seru, finance
.
Abstract This articles serves as a guide to using cost-effectiveness analysis (CEA) to address health equity concerns. We first introduce the "equity impact plane," a tool for considering trade-offs ...between improving total health—the objective underpinning conventional CEA—and equity objectives, such as reducing social inequality in health or prioritizing the severely ill. Improving total health may clash with reducing social inequality in health, for example, when effective delivery of services to disadvantaged communities requires additional costs. Who gains and who loses from a cost-increasing health program depends on differences among people in terms of health risks, uptake, quality, adherence, capacity to benefit, and—crucially—who bears the opportunity costs of diverting scarce resources from other uses. We describe two main ways of using CEA to address health equity concerns: 1) equity impact analysis, which quantifies the distribution of costs and effects by equity-relevant variables, such as socioeconomic status, location, ethnicity, sex, and severity of illness; and 2) equity trade-off analysis, which quantifies trade-offs between improving total health and other equity objectives. One way to analyze equity trade-offs is to count the cost of fairer but less cost-effective options in terms of health forgone. Another method is to explore how much concern for equity is required to choose fairer but less cost-effective options using equity weights or parameters. We hope this article will help the health technology assessment community navigate the practical options now available for conducting equity-informative CEA that gives policymakers a better understanding of equity impacts and trade-offs.
Using a tractable structural model of the matching equilibrium between underwriters and equity-issuing firms, we study the determinants of value in underwriter–firm relationships. Our estimates imply ...that high underwriter prestige is associated with 5.3%–14.1% greater equilibrium surplus. According to the structural model, high prestige exhibits a significant certification effect throughout the sample (1985–2010), but there is also a countervailing effect of underwriter prestige that reflects subscriber preferences for more underpricing. Consistent with trading off profits from issuers and subscribers, high-prestige underwriters underprice more in hot markets when rents to catering to subscribers are greatest.
This paper was accepted by Gustavo Manso, finance.
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