Strategy

The green transition comes with costs; but they are well worth it, and they pale in comparison to the costs of inaction. The ever-falling costs of renewables have not eliminated the politics of climate change. But they certainly have made our choices much easier.

This article describes randomized field experiments implemented on two online labor market platforms examining the effect of employer charitable giving on a source of human capital that is becoming increasingly important to firms: the gig worker. It provides support that a message about charitable giving increases gig workers' willingness to complete extra work, and that pro-socially oriented gig workers are most responsive.

We study the effects of evaluating asset managers against a benchmark on corporate decisions, e.g., investments, M&A, and IPOs. We introduce asset managers into an otherwise standard model and show that firms inside the benchmark are effectively subsidized by the asset managers. This “benchmark inclusion subsidy” arises because asset managers have incentives to hold some of the equity of firms in the benchmark regardless of their risk characteristics. Due to the benchmark inclusion subsidy, a firm inside the benchmark values an investment project more than the one outside.

In this paper, we examine a novel two-stage mechanism for selling government securities, wherein the dealers underwrite in the first stage the sale of securities, which are auctioned in stage 2 via either a discriminatory auction (DA) or a uniform price auction (UPA).

We construct a new measure of voluntary disclosure based on firms’ websites. Using the Wayback Machine, we create a standardized measure of disclosure capturing the quantity of information on firms’ websites. We validate our measure by documenting that it is positively associated with established measures of firms’ voluntary disclosure and liquidity. Importantly, we document that our measure, while correlated with established disclosure measures, is not subsumed by those measures. It complements existing measures in three important ways.

The use of order flow information by financial firms has come to the forefront of the regulatory debate. A central question is: Should a dealer who acquires information by taking client orders be allowed to use or share that information? We explore how information sharing affects dealers, clients and issuer revenues in U.S. Treasury auctions. Because one cannot observe alternative information regimes, we build a model, calibrate it to auction results data, and use it to quantify counter-factuals. The model's key force is that sharing information reduces uncertainty about future value.

Despite a recent surge in corporate activism, with firm leaders communicating about social-political issues unrelated to their core businesses, we know little about its strategic implications. This paper examines the effect of an employer communicating a stance about a social-political issue on employee motivation, using a two-phase, pre-registered field experiment in an online labor market platform. Results demonstrate an asymmetric treatment effect of taking a stance depending on whether the employee agrees or disagrees with that stance.

Using high-frequency transaction-level income, spending, balances, and credit limits data from an online financial service, we show that many consumers fail to stick to their self-set debt paydown plans and argue that this behavior is best explained by a model of present bias. Theoretically, we show that (i) a present-biased agent's sensitivity of consumption spending to paycheck receipt reflects his or her short-run impatience and that (ii) this sensitivity varies with available resources only for agents who are aware (sophisticated) rather than unaware (naive) of their future impatience.

We study how investors' preferences for robustness influence corporate investment, financing, and compensation decisions and valuation in a financial contracting model with agency. We characterize the robust contract and show that early liquidation can be optimal when investors are sufficiently ambiguity averse. We implement the robust contract by debt, equity, cash, and a financial derivative asset. The derivative is used to hedge against the investors' concern that the entrepreneur may be overly optimistic.