An Empirical Investigation of the Growth Cycle Theory of Small Firm Financing

This paper empirically tests the financial growth cycle model for small and medium-sized enterprises (SMEs), which postulates that as firms become larger, older, and more informationally transparent, their financing options become more attractive. We add to the literature by providing one of the first empirical tests of the model using a large, cross-sectional data set. Our results partially support the financial growth cycle model. Specifically, our results show larger firms, as measured by total number of employees, are more likely to use public equity funding or long-term debt as opposed to insider funding.     

Exploring the need for (extreme) speed: motivations for and outcomes of discontinuous NPD acceleration

ABSTRACT

New product development (NPD) speed is an important concern for firms in today’s fast-paced economy. While existing literature has focused on continuous NPD speed improvements, this paper explores discontinuous NPD acceleration, or dramatic reductions in development time relative to firms’ normal NPD cycles. Across two studies, the authors interview managers to develop a typology of strategic motivations for discontinuous NPD acceleration, followed by a survey of 218 NPD managers to validate the typology and identify important differences across firm types, including those in new product performance, innovation levels, and configurations of organisational characteristics. The results suggest that discontinuous NPD acceleration is most profitable when firms are proactive and have specific configurations of culture, capabilities, and structure. The authors also discuss implications for theory, practice, and future research.     

I used to work at Goldman Sachs! How firms benefit from organizational status in the market for human capital

How does employer status benefit firms in the market for general human capital? On the one hand, high status employers are better able to attract workers, who value the signal of ability that employment at those firms provides. On the other hand, that same signal can help workers bid up wages and capture the value of employers' status. Exploring this tension, we argue that high status firms are able to hire higher ability workers than other firms, and do not need to pay them the full value of their ability early in the career, but must raise wages more rapidly than other firms as those workers accrue experience. We test our arguments using unique survey data on careers in investment banking. Copyright © 2014 John Wiley & Sons, Ltd.     

The Sources of Risk Spillovers among U.S. REITs: Financial Characteristics and Regional Proximity

In this article, we estimate the risk spillovers among 74 U.S. Real Estate Investment Trusts (REITs) using the state‐dependent sensitivity value‐at‐risk approach. This methodology allows for the quantification of the spillover size as a function of a company's financial condition. We show that the size of risk spillovers is more than twice as large when REITs are in financial distress and find evidence for the impact of geographical proximity. Our results provide new insights concerning the relevance of geographical diversification for REITs and have important implications for the investment and risk management decisions of real estate investors, mortgage lenders, home suppliers and policy makers.     

Consumer learning, switching costs, and heterogeneity: A structural examination

This paper develops and estimates a model of forward-looking consumer learning with switching costs using household level scanner data from a frequently purchased product category. This is novel because current models of consumer purchase behavior assume that only one of these types of dynamics is present, not both at the same time. My model estimates support the presence of both learning and switching costs in this product category. The estimates show that before consuming new products, consumers are unsure of their tastes for them, and subsequently learn their tastes by purchase and consumption of new products. Switching costs are large, comprising roughly 30 percent of the cost of a medium sized package of the product. Additionally, the model incorporates very rich individual level unobserved heterogeneity in price sensitivities, tastes, and switching costs, and the amount by which consumers learn. To show that my model produces different implications than a model with learning or switching costs only, I estimate two more specifications, one without each type of dynamics, and simulate counterfactuals that are of interest to managers and policymakers. I find that intertemporal elasticities are underestimated when either type of dynamics is left out, by as much as 90%. Informative advertising is also affected by the presence of switching costs, although the direction of the bias is not signed. Leaving out dynamics also has a large impact on long-term elasticities, which are used by antitrust policymakers to evaluate the impact of mergers. When learning is ignored, cross elasticities are underestimated by as much as 45%. When switching costs are ignored, both own and cross elasticities are underestimated.     

Degraded Work,Declining Community,Rising Inequality,and the Transformation of the Protestant Ethic in America: 1870–1930

The Protestant ethic has been depicted as declining in America between 1870 and 1930, due to new consumer durables and less rewarding work. This study finds that the Protestant ethic did not so much decline as become transformed. The work ethic remained in force, while frugality weakened. This transformation is traced to three dynamic social forces: degradation in the quality of work due to industrialization, the decline of community with urbanization, and a dramatic increase in inequality. Consequently, social respect and social standing came increasingly to be sought through consumption, which became a proxy for hard work, entailing a weakening of asceticism.     

An Anglo‐Japanese study of young people and some domestic tasks related to food

Housework, in particular related to food preparation, has received little attention. Tasks are performed in line with gender stereotypes which are culturally specific and change with time. A comparison has been made between the domestic tasks and behaviours and attitudes related to food in young people in Japan and England. Gender stereotyping was apparent in both countries to a remarkable and fairly similar degree (very few children thought that men should have responsibility for tasks related to food) although many aspects were different; English children were more involved in preparing food and fewer Japanese children claimed to like cooking. Fewer Japanese boys (almost half) than English boys (14%) helped to clear up after meals. Almost all Japanese children ate sitting at a table compared with about 75% of English children for whom it was more common to have to be careful to keep their mouths closed when eating. Japanese culture however, does seem to be becoming more Westernized. Even ‘liberated women’ and ‘new age men’ may acquiesce to a degree of stereotyping in order to ensure that their children are ‘normal’. Curiously, the high media attention given to food and food preparation does not seem to be resulting in increased involvement in cooking by young people. This lack of involvement by young people in food preparation may have consequences for nutritional skills and so compromise health in later life.     

Publication bias in entrepreneurship research: An examination of dominant relations to performance

Publication bias (PB) exists when the published literature is not representative of the population of studies. PB has largely been ignored or dismissed in entrepreneurship research as there is a general belief that only fields entrenched in dominant theoretical paradigms are capable of suffering from PB. We tested this presumption by re-analyzing the results of 15 systematic reviews (i.e., meta-analyses) of entrepreneurial antecedents and firm performance. Using three different tests, we found some degree of PB in all but three of these analyses. Our results belie the contention that entrepreneurship is immune to PB.     

Tooke's approach to explaining prices

This paper examines the method of analysis and theoretical approach Thomas Tooke (1774–1858) employed in his empirical study of English prices. It is shown that Tooke adopted the “long period method” formulated by Adam Smith to analyse a capitalist society. It is shown that like most nineteenth-century classical economists, Tooke adopted a modified version of Adam Smith's “adding-up” approach to normal prices and distribution which incoporated Ricardo's theory of rent. The paper shows that based on this approach, Tooke explained short-run fluctuations in prices be reference to factors that disrupted the adjustment of supply to the “effectual” demand for commodities.