Examining the Information Content of Residuals from Hedonic and Spatial Models Using Trees and Forests

The Journal of Real Estate Finance and Economics - Machine learning algorithms such as neural nets, support vector machines, and tree-based techniques (classification and regression trees) have...     

Exchange Rate Pass-Through to Consumer Prices: The Increasing Role of Energy Prices

Open Economies Review - A number of researchers have found that the rate of exchange rate pass-through (ERPT) to domestic prices has declined substantially over the last few decades. We revisit...     

Using paradata to collect better survey data: Evidence from a household survey in Tanzania

Data are a key component in the design, implementation, and evaluation of economic and social policies. Monitoring data quality is an essential part of any serious, large‐scale data collection process. The purpose of this article is to show how paradata should be used before, during, and after data collection to monitor and improve data quality. To do this we use timestamps, global positioning system (GPS) coordinates, and other paradata collected from an 800‐household survey conducted in Tanzania in 2016. We demonstrate how key paradata can be used during each phase of a research project to identify and prevent issues in the data and the methods used to collect it. Our results corroborate the importance of collecting and analyzing paradata to monitor fieldwork and ensuring data quality for micro data collection in developing countries. Based on these findings we also make recommendations as to how researchers can make better use of paradata in the future to manage and improve data quality. We argue for an expansion in the understanding and use of varied paradata among researchers, and a greater focus on its use for improving data quality.     

MORGAN STANLEY ROUNDTABLE ON Capital Structure and Payout Policy

A group of distinguished finance academics and practitioners discuss a number of topical issues in corporate financial management: Is there such a thing as an optimal, or value‐maximizing, capital structure for a given company? What proportion of a firm's current earnings should be distributed to the firm's shareholders? And under what circumstances should such distributions take the form of stock repurchases rather than dividends? The consensus that emerges is that a company's financing and payout policies should be designed to support its business strategy. For growth companies, the emphasis is on preserving financial flexibility to carry out the business plan, which means heavy reliance on equity financing and limited payouts. But for companies in mature industries with few major investment opportunities, more aggressive use of debt and higher payouts can add value both by reducing taxes and controlling the corporate free cash flow problem. In such cases, both leveraged financing and cash distributions through dividends and stock buybacks signal management's commitment to its shareholders that the firm's excess cash will not be wasted on projects that produce low‐return growth that comes at the expense of profitability. As for the choice between dividends and stock repurchases, dividends provide a stronger commitment to pay out excess cash than open market repurchase programs. Stock buybacks, at least of the open market variety, preserve more flexibility for companies that want to be able to capitalize on unpredictable investment opportunities. But, as with the debt‐equity decision, there is an optimal level of financial flexibility: too little can mean lost investment opportunities, but too much can lead to overinvestment.     

Corporate Multinationality and Acquirer Returns

This paper provides evidence on how corporate multinationality from the perspective of acquiring firms relates to M&A returns. Using multivariate regressions and a large dataset of over 6,000 M&As (both cross-border and domestic) by UK firms during 1987 to 2014, the paper finds multinationality to be associated with significantly higher short-run announcement returns and long-run operating performance. While the multinationality premium (higher M&A returns for multinationals) persists over time, it seems to be restricted to firms with superior resource/managerial capabilities and minimal agency problems. Finally, the multinationality premium appears to be driven by foreign acquisitions into advanced economies. The results are robust to correcting for sample selection bias and controlling for several firm and deal characteristics, as well as accounting for firm-, industry-, and year-fixed effects. Collectively, the findings imply that multinationality could be a source of value creation for acquiring firms, particularly in foreign acquisitions, which tend to be complex, and, thereby, require superior managerial capabilities to succeed.     

Telling their own stories: Māori entrepreneurship in the mainstream screen industry

We examined how factors from Indigenous entrepreneurship research (social capital, cultural capital, self-efficacy) help explain the high level of Māori entrepreneurial performance in the mainstream screen industry. Results, based on ten case studies and a one-year series of structured interviews, extend prior research by showing that these Indigenous entrepreneurs benefit jointly from two forms of capital: cultural and social. We found high levels of both forms to increase the desire for emancipation of cultural and community identity – not just individual identity – through entrepreneurship. Self-efficacy and storytelling helped ameliorate discontinuities across Indigenous and mainstream contexts. Our research sheds new light on how Indigenous ventures can pursue mainstream entrepreneurship while maintaining cultural identity. It also makes several distinct contributions to the Indigenous entrepreneurship literature. First, it provides an integrative theoretic review. Second, it illustrates a culturally appropriate methodology for researching Māori entrepreneurs with implications for other Indigenous communities. Third, it proposes cultural capital and social capital as a two-part framework for explaining Indigenous entrepreneurial action. Fourth, it shows how entrepreneurship can be empowering for Indigenous communities. Finally, our paper demonstrates that entrepreneurship is a promising mechanism for preserving and promoting the cultures of Māori and other Indigenous peoples.     

How cultural branding,story-telling,and personification can save the iconic Australian koala

This article addresses the question as to why such a much loved and iconic Australian animal—the koala—has long been headed on a trajectory of extinction; primarily due to a lack of public concern and political will. Despite the affectionate regard in which they are held, koalas remain out of sight and out of mind for most Australians. However, the widely publicized catastrophic Australian bushfire season of 2019–2020 is a rare and illuminating case in which public support for koala welfare was stimulated by significant national and international media attention. The primary problem facing koala conservation was thrown into sharp relief—the need to proactively protect them from human activities destroying their habitat. This article explores how a marketer-lead intervention, employing cultural branding, story-telling, and personification, could potentially motivate the public to apply pressure at all levels of government to proactively protect the koala's habitat and grow their numbers. This solution is grounded in an awareness of several issues likely to impact its success, including: (1) the koala's biology and behavior, (2) uncertainty around koala population numbers, (3) the emergence of the koala as an (inter)national) icon, (4) the Australian 2019–2020 bushfire emergency, (5) postfire complacency, (6) Lewis and other koala stories, (7) acknowledging competing interests, and (8) taking learnings forward. Finally, the proposed campaign centers on forging emotional links between the koala and consumers, which are likely to positively impact consumers' attitudes, information processing and memory functions associated with messages highlighting the need to preserve the koala's habitat.     

Valuing the Redevelopment Option Component of Urban Land Values

This study draws from the redevelopment, real option, and urban spatial growth literatures to explore the spatial dynamics of the components of house prices. More specifically, the paper proposes that the capitalized value of the option to redevelop housing at the property level can be estimated by incorporating the likelihood of exercising the redevelopment option (the probability of redevelopment) into spatial and nonspatial hedonic house price models. Accordingly, option values are estimated for properties across the spectrum of the housing life cycle. Results from the study reveal a substantial level of spatial variation and clustering in the predicted option values, indicating that location is a major determinant of redevelopment and real option values. Furthermore, the results provide new evidence in support of the theoretical construct that properties purchased for immediate redevelopment are only valued for the underlying land.     

Entry and capital structure mimicking in concentrated markets: The role of incumbents’ financial disclosures

We examine whether the public availability of product market incumbents' financial disclosures leads to greater capital structure mimicking of incumbents by entrants. Exploiting a change in disclosure enforcement for German private firms in the mid-2000s, we find entrant-incumbent mimicking rises substantially in concentrated markets once incumbents' financial statements are publicly available. Additional tests exploring potential mechanisms are more consistent with interfirm learning underlying the effect than alternative channels. Our findings shed light on the effects of competitor financial statement disclosure on private firms’ initial financing decisions and highlight how capital structure dependencies among peer firms arise.     

Provider performance reports and consumer welfare

A provider's performance report consists of his service average outcome and volume. The two variables depend on the provider's private quality type and current demand, but he can raise his average outcome by dumping vulnerable consumers. Prospective consumers infer providers' qualities from their reports. Performance reporting drives some providers to dump consumers when competition is intense, but it may not reveal providers' qualities when their average quality is high. Statistical adjustment aiming at making reports independent of consumer characteristics can lead to more dumping, less informative reports, or both. There is more dumping when volume information is withheld and less dumping when ratings information is coarse.