How do successful scholars get their best research ideas? An exploration

We interview 24 marketing professors to ask how they got the ideas for 64 of their papers. More than three-quarters of the papers were inspired by holes in the literature, by a “stylized fact” that the current literature cannot explain, or by an interaction with a manager. The rest fall into several smaller categories that to a large extent can be seen as special cases of the three big ones. We describe how papers from each of the three big categories help move the literature forward. We also illustrate the range of situations contained in each category by way of several examples. Among the authors we interview, most do not use a single source. As these authors become more senior, managerial contacts play an increasing role, while the balance between literature and stylized facts appears to be unchanged.

     

Conservatism correction for the market-to-book ratio and Tobin’s q

We decompose the market-to-book ratio into two additive components: a conservatism correction factor and a future-to-book ratio. The conservatism correction factor exceeds the benchmark value of one whenever the accounting for past transactions has been subject to an (unconditional) conservatism bias. The observed history of a firm’s past investments allows us to calculate the magnitude of its conservatism correction factor, resulting in an average value that is about two-thirds of the overall market-to-book ratio. We demonstrate that our measure of Tobin’s q, obtained as the market-to-book ratio divided by the conservatism correction factor, has greater explanatory power in predicting future investments than the market-to-book ratio by itself. Our model analysis derives a number of structural properties of the conservatism correction factor, including its sensitivity to growth in past investments, the percentage of investments in intangibles, and the firm’s cost of capital. We provide empirical support for these hypothesized structural properties.     

Identifying Control Motives in Managerial Ownership: Evidence from Antitakeover Legislation

This study uses the introduction of second-generation antitakeoverlegislation as a natural experimental setting to infer the valuethat managers place on the control rights conferred by stockownership. We conjecture that managers will reduce their stockholdingsin the post-legislation period because they can ensure theirprior level of control while holding fewer risky shares. Usinga variety of specifications, we find robust evidence consistentwith this "revealed preference" hypothesis. Further demonstratingthe key role played by control considerations in managers' stockholdingdecisions, the reductions in ownership are concentrated in managementteams with higher levels of initial ownership and in firms withoutpoison pills.     

Conservatism, growth, and return on investment

Return on Investment (ROI) is widely regarded as a key measure of firm profitability. The accounting literature has long recognized that ROI will generally not reflect economic profitability, as determined by the internal rate of return (IRR) of a firm’s investment projects. In particular, it has been noted that accounting conservatism may result in an upward bias of ROI, relative to the underlying IRR. We examine both theoretically and empirically the behavior of ROI as a function of two variables: past growth in new investments and accounting conservatism. Higher growth is shown to result in lower levels of ROI provided the accounting is conservative, while the opposite is generally true for liberal accounting policies. Conversely, more conservative accounting will increase ROI provided growth in new investments has been “moderate” over the relevant horizon, while the opposite is true if new investments grew at sufficiently high rates. Taken together, we find that conservatism and growth are “substitutes” in their joint impact on ROI.     

Discussion of “Performance Evaluation and Corporate Income Taxes in a Sequential Delegation Setting”

Baldenius and Ziv (2003), emphasize the role played by corporate taxes in the context of a multi-period setting that features project selection and incentive issues. In this discussion, I employ a parametric example to illustrate the intuition behind their findings, as well as to delineate their incremental contribution and to speculate on the robustness of the results. I also highlight the differences between the residual income framework employed in their paper and traditional models of agency.     

A Comparative Analysis of Ethical Perceptions in Marketing Research: U.S.A. vs. Canada

The study compares Canadian and U.S. marketing researchers' attitudes, perceptions and intentions related to several areas of ethical concern. A particular focus involves salience of norms common to marketing research codes of ethics (COEs) and familiarity of such codes to marketing research professionals. Researchers' attitudes towards today's ethical climate are identified and compared between the two countries. Relationships are examined between familiarity, ethical intention and salience. Results indicate that U.S. and Canadian marketing researchers have similar perceptions of the relative importance of specific ethical norms, but worldwide COEs do not reflect these perceptions. Canadian marketing researchers report having a greater familiarity with their firms' adopted COEs, but this finding is moderated by the type of researcher. Among other findings, results indicate that familiarity influences ethical intention only for highly salient issues.     

An information-based model for the differential treatment of gains and losses

This study defines reporting conservatism as a higher verification standard for probable gains compared to losses and builds a model that endogenously generates optimal behavior resembling an asymmetric preference for gains versus losses. Our model considers the setting where one party produces a resource and another tries to expropriate it. The key factor determining the extent of the gain-loss asymmetry is the level of information asymmetry or trust between the two parties. The information asymmetry-based results of our model provide a simpler explanation for the vast empirical literature on conservatism, where the bulk of the economic relationships among the parties appear to be information-based with little direct relation to explicit debt contracts, a factor that has been the focus of theoretical arguments. We also suggest new empirical analyzes.     

The Role of Information and Opportunism in the Choice of Buyer-Supplier Relationships

An important characteristic of any buyer-supplier relationship is the amount and type of information that is exchanged between the contracting parties. Buyer-supplier networks are characterized by greater information exchange than arm's-length transactions. This enhanced information exchange allows for greater production efficiency but increases the potential for information misappropriation. In this paper we characterize the set of innovations for which each of these forms of exchange relationships is efficient. We then explore the effect of an initial information linkage between the buyer and supplier. Such linkages increase the set of innovations for which networks are efficient. However, such linkages have a negative effect on the buyer's incentive to innovate and an ambiguous effect on the supplier's incentive to invest in flexible production techniques. Finally, we identify settings in which the buyer-supplier surplus is greater with such linkages.