Geographic Lead-Lag Effects Parsons, Christopher A.; Sabbatucci, Riccardo; Titman, Sheridan
The Review of financial studies,
10/2020, Volume:
33, Issue:
10
Journal Article
Peer reviewed
We document lead-lag effects on returns between coheadquartered firms in different sectors. Geographic lead-lags yield risk-adjusted returns of 5 %–6 % annually, half that observed for industry ...lead-lag effects. Whereas industry lead-lag effects are strongest among small, thinly traded stocks with low analyst coverage, geographic lead-lags are unrelated to these proxies for investor scrutiny. We propose an explanation linked to the structure of the investment analyst business, which is organized by sector, not by geographic region. Our findings suggest that in lead-lag relationships, analysts common to both leading and lagging firms are important, regardless of the number of analysts covering each individually.
The contemporary "risk society" is associated with the emergence of a wide range of risks characterized by uncertainty and unfamiliarity. These "novel" risks pose a major challenge for organizations: ...their negative effects may be significant, but prevailing risk-assessment techniques are limited in their ability to identify these effects. Building on our prior work on the chemical bisphenol A (BPA), this study examines how organizations deal with novel risks. It finds that organizations engage in "risk translation" by translating equivocality associated with the novel risk into more familiar risks, providing them with a clearer basis and guide for action. As multiple organizations take actions to manage these translated risks, the interactive effects result in an "ecology of risks" that evolves over time, allowing for the construction of a novel risk. The study contributes to research on organizing and risk by theorizing how organizations respond to novel risks, as well as by highlighting the role of translated organizational risks in constructing novel risks and shaping societal responses to grand challenges.
ABSTRACT
This article provides a comprehensive, interdisciplinary review of the extant literature regarding the gay and lesbian consumer market. Through the critical review of 38 scholarly, ...peer‐reviewed articles, four primary streams of research are identified, and the significant findings and avenues for future academic inquiry are highlighted. Additionally, this review identifies the research trends in terms of publications, theoretical approaches, research design, and methodology spanning from the earliest publication in 1993 to 2013. This study provides important theoretical and managerial implications to inform business practice, public policy, and future scholarly research.
Between 1993 and 2013 the number and power of CTOs increased; as indicated in the percentage of firms with CTOs, their increasing presence on boards, their compensation relative to their CEOs, and ...compensation relative to other highly compensated executives. Firms which pursue an aggressive technology strategy (powerful CTO, high R&D spending) in industries in which technology is a critical contingency have well above normal market adjusted returns while those which pursue that strategy in industries in which technology is not critical have well below normal returns. These results empirically confirm longstanding, untested assumptions in the field of technology management. Moreover, the effect of R&D expenditures on firm performance is contingent on the degree to which technology is a critical contingency in the industry and on the power of the firm's CTO. These findings may explain the mixed results of past studies of the effects of R&D expenditure on firm performance. A model which integrates its own insights with those of earlier work on CTOs, R&D expenditures, firm strategy, and firm power dynamics is presented and supported.
Abstract
What drives investment in automation technologies? This paper documents a positive relationship between labor-friendly institutions and investment in industrial robots in a sample of ...advanced and developing economies. Institutions explain a substantial share of cross-country variation in automation. The relationship between institutions and robots is stronger in sunk cost-intensive industries, where producers are vulnerable to holdup. The result suggests that one reason for producers to invest in automation is to thwart rent appropriation by labor.
Rising between-firm pay dispersion accounts for the majority of the dramatic increase in earnings inequality in the United States in the last several decades. This paper shows that a distinct ...cross-cohort pattern drives this rise: newer cohorts of firms enter more dispersed and stay more dispersed throughout their lives. These cohort patterns suggest a link between changes in firm entry associated with the decline in business dynamism and the rise in earnings inequality. Cohort effects also imply a slow diffusion of inequality: inequality rises as younger and more unequal cohorts of firms replace older and more equal cohorts.
Does competition increase or decrease price dispersion? Our study addresses this long‐standing debate by presenting an intriguing empirical puzzle. Specifically, leveraging an extended panel from the ...U.S. airline industry between 1993 and 2013, we find that competition intensity and price dispersion are positively correlated for one‐way tickets but negatively correlated for round‐trip products. We posit that the recent growth in one‐way ticket sales may have led airlines to adjust their pricing strategies to allow for more effective market segmentation. Our study contributes to the empirical literature on price dispersion across multiple goods and helps inform antitrust policy on product bundling.
This paper estimates the consumer welfare impact of the new generation of trade agreements implemented by the European Union between 1993 and 2013. We decompose the overall effect into contributions ...of changes in prices, quality and variety. Estimating trade elasticities for narrow product categories of EU imports, we infer quality from data on imported values and volumes. For the EU as a whole, we find that trade agreements increased quality by 7% on average but did not affect prices or variety. This translates into a cumulative reduction in the consumer price index of 0.24% over our sample period. We also find a high degree of impact heterogeneity across EU countries, trading partners, and the type of trade agreement, with high-income EU countries seeing much stronger quality increases and larger overall consumer benefits.
Crime rates in the United States have declined to historical lows since the early 1990s. Prison and jail incarceration rates as well as community correctional populations have increased greatly since ...the mid-1970s. Both of these developments have disproportionately impacted poor and minority communities. In this paper, we document these trends. We then assess whether the crime declines can be attributed to the massive expansion of the US criminal justice system. We argue that the crime rate is certainly lower as a result of this expansion and in the early 1990s was likely a third lower than what it would have been absent changes in sentencing practices in the 1980s. However, there is little evidence that further stiffening of sentences during the 1990s—a period when prison and other correctional populations expanded rapidly—have had an impact. Hence, the growth in criminal justice populations since 1990s has exacerbated socioeconomic inequality in the United States without generating much benefit in terms of lower crime rates.
Despite public interest in keeping guns out of schools, little is known about the effects of gun control on youths’ gun carrying or school violence. Using data from the Youth Risk Behavior Survey ...(YRBS) for 1993–2013, we examine the relationship between child-access-prevention (CAP) laws and gun carrying among high-school students. Our results suggest that CAP laws lead to an 18.5 percent decrease in the rate of gun carrying and a 19 percent decrease in the rate at which students report being threatened or injured with a weapon on school property. These results are concentrated among minors, for whom CAP laws are most likely to bind. To supplement our YRBS analysis, we assemble a data set on school-shooting deaths for 1991–2013. We find little evidence that CAP laws deter school-associated shooting deaths, but these estimates are insufficiently precise to reach a policy conclusion.