Columbia Business School Research

This paper investigates the interaction between synergies and internal agency conflicts that emerges endogenously in multi-division firms. A divisional manager's entrenchment choice depends directly on the specificity of her division's assets, because the specificity governs whether entrenchment activities reduce the likelihood of her division being divested. The presence of synergies, by modifying the difference between the value of assets in their current use and in alternative uses, may alter the divisional manager's entrenchment incentive.

The provision of choice in terms of how people use goods and services has been proposed as a vehicle of improvement of social welfare. This article highlights some of the costs and benefits of creating choice, and it discusses how much choice policy makers and other agents (e.g., employers, retailers) should ideally grant and in what form they should grant it.

Narcissism has received increased attention in the past few decades as a sub-clinical individual difference with important everyday consequences, such as self-enhancement in perceptions of one's own behavior and attributes. The most widespread measure used by non-clinical researchers, the 40-item Narcissistic Personality Inventory or NPI-40, captures a range of different facets of the construct but its length may prohibit its use in settings where time pressure and respondent fatigue are major concerns.

The accruals anomaly—the negative relationship between accounting accruals and subsequent stock returns—has been well documented in the academic and practitioner literatures for almost a decade. To the extent that this anomaly represents market inefficiency, one would expect sophisticated investors to learn about it and arbitrage the anomaly away. Yet, we show that the accruals anomaly still persists and its magnitude has not declined over time.

The better able you are to "get inside the head" of your opponent, the better your negotiated outcomes are likely to be. But very few of us are born with the ability to take on the perspective of others effectively. Fortunately, this skill can be learned. The authors of this article show you how to use perspective taking — the active consideration and appreciation of another person's viewpoint, role, and underlying motivations — to understand your counterpart better and improve the quality of your deals.

Objectives: Significant variation in emergency department (ED) patient arrival rates necessitates the adjustment of staffing patterns to optimize the timely care of patients. This study evaluated the effectiveness of a queueing model in identifying provider staffing patterns to reduce the fraction of patients who leave without being seen.

A lot, including a few things you may not expect. Previous studies find that the term spread forecasts GDP but these regressions are unconstrained and do not model regressor endogeneity. We build a dynamic model for GDP growth and yields that completely characterizes expectations of GDP. The model does not permit arbitrage. Contrary to previous findings, we predict that the short rate has more predictive power than any term spread. We confirm this finding by forecasting GDP out-of-sample. The model also recommends the use of lagged GDP and the longest maturity yield to measure slope.

Time preference is a key determinant of occupational choice and investments in human capital. Since careers are characterized by different wage growth prospects, individual discount rates play an important role in the relative valuation of jobs or occupations. We predict that individuals with lower discount rates are more likely to select into jobs or occupations with steeper wage profiles. To test this hypothesis we use smoking as an instrument for time preference.

We show that the accrual anomaly documented by Sloan (1996) [Do stock prices fully reflect information in accruals and cash flows about future earnings? The Accounting Review 71: 289–315] is concentrated in firms with high idiosyncratic stock return volatility making it risky for risk-averse arbitrageurs to take positions in stocks with extreme accruals. Moreover, the accrual anomaly is found in low-price and low-volume stocks, suggesting that transaction costs impose further barriers to exploiting accrual mispricing.

We study how multi-product queueing systems should be controlled so that sojourn times (or end-to-end delays) do not exceed specified leadtimes. The network dynamically decides when to admit new arrivals and how to sequence the jobs in the system. To analyze this difficult problem, we propose an approach based on fluid-model analysis that translates the leadtime specifications into deterministic constraints on the queue length vector.

Membership in certain intergovernmental organizations (IGOs), such as the World Trade Organization, has long been argued to stimulate trade. Yet, evidence linking IGOs to trade is mixed. We argue that identifying the influence of IGOs requires attention not only to the institutions IGOs enact, but to the network through which they enact them. We incorporate the full set of IGOs by using shared-IGO membership to create a network of connectivity between countries.

This research examines the dynamic process of inference updating. The authors present a framework that delineates two mechanisms that guide the updating of personality trait inferences about brands. The results of three experiments show that chronics (those for whom the trait is accessible) update their initial inferences on the basis of the trait implications of new information. Notably, nonchronics (those for whom the trait is not accessible) also update their initial inferences, but they do so on the basis of the evaluative implications of new information.

This paper develops a theory of control as a signal of congruence of objectives, and applies it to financial contracting between an investor and a privately informed entrepreneur. We show that formal investor control is (i) increasing in the information asymmetries ex ante, (ii) increasing in the uncertainty surrounding the venture ex post, (iii) decreasing in the entrepreneur's resources, and (iv) increasing in the entrepreneur's incentive conflict. In contrast, real investor control—that is, actual investor interference—is decreasing in information asymmetries.

A quarter-century ago, Miles and Ezzell (1980) solved the valuation problem of a firm that follows a constant leverage ratio L = D/S. However, to this day, the proper discounting of free cash flows and the computation of WACC are often misunderstood by scholars and practitioners alike. For example, it is common for textbooks and fairness opinions to discount free cash flows at WACC with beta input Beta(S) = [1 + (1 - Tax Rate)L]Beta(U), although the latter is not consistent with the assumption of constant leverage.

Under what conditions do intricate pre-planned arguments enable negotiators to dominate the conversation and ultimately the outcome? We proposed the advantage occurs when the communication media involves the expectation of rapid turn-taking, because counterparts cannot generate rebuttals in time and end up making concessions. In an experiment with a negotiation task, sellers were provided with either intricate or simple arguments to support a competitive tactic and negotiated via either a quick-tempo (Instant Messaging) or slow-tempo (E-mail) medium.

Prof. Donald E. Sexton, in an exclusive write-up for OER, focuses on how a country brand affects behaviour through perceived value and what factors influence the branding investment process.

The authors demonstrate that in dyadic negotiations, negotiators with a promotion regulatory focus achieve superior outcomes than negotiators with prevention regulatory focus in two ways. First, a promotion focus leads negotiators to claim more resources at the bargaining table. In the first two studies, promotion-focused negotiators paid more attention to their target prices (i.e., their ideal outcomes) and achieved more advantageous distributive outcomes than did prevention-focused negotiators.

I analyze corporate social responsibility (CSR) from economic and financial perspectives, and suggest how it is reflected in financial markets. CSR is defined as a programme of actions to reduce externalized costs or to avoid distributional conflicts. It has evolved in response to market failures, a Coasian solution to problems associated with social costs. The analysis suggests that there is a resource-allocation role for CSR programmes in cases of market failure through private-social cost differentials, and also where distributional disagreements are strong.

We show that equity market liberalizations, on average, lead to a one percent increase in annual real economic growth over a five-year period. The effect is robust to alternative definitions of liberalization and does not reflect variation in the world business cycle. The effect also remains intact when liberalization is instrumented with quality of institutions-variables that explain liberalization but not growth and when a growth opportunity measure is included in the regression. Capital account liberalization has a less robust effect on growth than equity market liberalization has.