Learning from the crowd: Regression discontinuity estimates of the effects of an online review database
| Authors | Anderson, Magruder |
| Journal | Economic Journal |
| Year | 2012 |
| Type | Published Paper |
| Abstract | Internet review forums increasingly supplement expert opinion and social networks in informing consumers about product quality. However, limited empirical evidence links digital word-of-mouth to purchasing decisions. We implement a regression discontinuity design to estimate the effect of positive Yelp.com ratings on restaurant reservation availability. An extra half-star rating causes restaurants to sell out 19 percentage points (49%) more frequently, with larger impacts when alternate information is more scarce. These returns suggest that restaurateurs face incentives to leave fake reviews but a rich set of robustness checks confirm that restaurants do not manipulate ratings in a confounding, discontinuous manner. |
| Keywords | Sports events, media, Olympics, Olympic stocks, retail investors, valuation, fundamentals, comovement, categorization, investor sentiment, investor recognition, common factor, stay-at-home, meme |
| URL | https://doi.org/10.1111/j.1468-0297.2012.02512.x |
| Tags | Archival Empirical | Consumer Decisions | Manager / Firm Behavior | Media and Textual Analysis |
Friends with money
| Authors | Engelberg, Gao, Parsons |
| Journal | Journal of Financial Economics |
| Year | 2012 |
| Type | Published Paper |
| Abstract | When banks and firms are connected through interpersonal linkages - such as their respective management having attended college or previously worked together - interest rates are markedly reduced, comparable with single shifts in credit ratings. These rate concessions do not appear to reflect sweetheart deals. Subsequent firm performance, such as future credit ratings or stock returns, improves following a connected deal, suggesting that social networks lead to either better information flow or better monitoring. |
| Keywords | Asymmetric information, bank lending, cost of debt, social connections, lending outcomes |
| URL | https://doi.org/10.1016/j.jfineco.2011.08.003 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Investment Decisions (Institutional) | Manager / Firm Behavior | Social Network Structure |
Religious beliefs, gambling attitudes, and financial market outcomes
| Authors | Kumar, Page, Spalt |
| Journal | Journal of Financial Economics |
| Year | 2011 |
| Type | Published Paper |
| Abstract | This study investigates whether geographic variation in religion-induced gambling norms affects aggregate market outcomes. We conjecture that gambling propensity would be stronger in regions with higher concentrations of Catholics relative to Protestants. Consistent with our conjecture, we show that in regions with higher Catholic-Protestant ratios, investors exhibit a stronger propensity to hold lottery-type stocks, broad-based employee stock option plans are more popular, the initial day return following an initial public offering is higher, and the magnitude of the negative lottery-stock premium is larger. Collectively, these results indicate that religion-induced gambling attitudes impact investors' portfolio choices, corporate decisions, and stock returns. |
| Keywords | Gambling, religion, institutional investors, employee stock option plans, IPOs |
| URL | https://doi.org/10.1016/j.jfineco.2011.07.001 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Financing- and Investment Decisions (Individual) | Manager / Firm Behavior |
Workplace peers and entrepreneurship
| Authors | Nanda, Sorensen |
| Journal | Management Science |
| Year | 2010 |
| Type | Published Paper |
| Abstract | We examine whether the likelihood of entrepreneurial activity is related to the prior career experiences of an individual's coworkers, using a unique matched employer-employee panel data set. We argue that coworkers can increase the likelihood that an individual will perceive entrepreneurial opportunities as well as increase his or her motivation to pursue those opportunities. We find that an individual is more likely to become an entrepreneur if his or her coworkers have been entrepreneurs before. Peer influences also appear to be substitutes for other sources of entrepreneurial influence: we find that peer influences are strongest for those who have less exposure to entrepreneurship in other aspects |
| Keywords | Entrepreneurship, peers, organizational studies, personnel |
| URL | https://www.jstor.org/stable/40785246 |
| Tags | Archival Empirical | Manager / Firm Behavior |
Social connections and incentives in the workplace: Evidence from personnel data
| Authors | Bandeira, Barankay, Rasul |
| Journal | Econometrica |
| Year | 2009 |
| Type | Published Paper |
| Abstract | We present evidence on the effect of social connections between workers and managers on productivity in the workplace. To evaluate whether the existence of social connections is beneficial to the firm's overall performance, we explore how the effects of social connections vary with the strength of managerial incentives and worker's ability. To do so, we combine panel data on individual worker's productivity from personnel records with a natural field experiment in which we engineered an exogenous change in managerial incentives, from fixed wages to bonuses based on the average productivity of the workers managed. We find that when managers are paid fixed wages, they favor workers to whom they are socially connected irrespective of the worker's ability, but when they are paid performance bonuses, they target their effort toward high ability workers irrespective of whether they are socially connected to them or not. Although social connections increase the performance of connected workers, we find that favoring connected workers is detrimental for the firm's overall performance. |
| URL | https://doi.org/10.3982/ECTA6496 |
| Tags | Archival Empirical | Manager / Firm Behavior | Productivity Spillovers |
Social interactions and entrepreneurial activity
| Authors | Giannetti, Simonov |
| Journal | Journal of Economics and Management Strategy |
| Year | 2009 |
| Type | Published Paper |
| Abstract | We show that individuals residing in highly entrepreneurial neighborhoods are more likely to become entrepreneurs and invest more into their own businesses, even though their entrepreneurial profits are lower and their alternative job opportunities more attractive. Our results suggest that peer effects create nonpecuniary benefits from entrepreneurial activity and play an important role in the decision to become an entrepreneur. Alternative explanations, such as entry costs, social learning, and informal credit markets, are not supported by the data. |
| URL | https://doi.org/10.1111/j.1530-9134.2009.00226.x |
| Tags | Archival Empirical | Manager / Firm Behavior |
Clean evidence on peer effects
| Authors | Falk, Ichino |
| Journal | Journal of Labor Economics |
| Year | 2006 |
| Type | Published Paper |
| Abstract | We study subjects who were asked to fill letters into envelopes with a remuneration independent of output. In the "pair" treatment, two subjects worked at the same time in the same room, and peer effects were possible. In the "single" treatment, subjects worked alone, and peer effects were ruled out. We find evidence of peer effects in the pair treatment because the standard deviations of output are smaller within pairs than between pairs. Moreover, average output is higher in the pair treatment: thus, peer effects raise productivity. Finally, low-productivity workers are the most sensitive to the behavior of peers. |
| URL | https://doi.org/10.1086/497818 |
| Tags | Archival Empirical | Manager / Firm Behavior | Productivity Spillovers |
Thy neighbor's portfolio: Word-of-mouth effects in the holdings and trades of money managers
| Authors | Hong, Kubik, Stein |
| Journal | Journal of Finance |
| Year | 2005 |
| Type | Published Paper |
| Abstract | A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city are buying (or selling) that same stock. This pattern shows up even when the fund manager and the stock in question are located far apart, so it is distinct from anything having to do with local preference. The evidence can be interpreted in terms of an epidemic model in which investors spread information about stocks to one another by word of mouth. |
| Keywords | Word-of-mouth effects, fund managers, trading behaviors |
| URL | https://doi.org/10.1111/j.1540-6261.2005.00817.x |
| Tags | Archival Empirical | Investment Decisions (Institutional) | Manager / Firm Behavior |
Thy neighbor's portfolio: word-of-mouth effects in the holdings and trades of money managers
| Authors | Hong, Kubik, Stein |
| Journal | Journal of Finance |
| Year | 2005 |
| Type | Published Paper |
| Abstract | A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city are buying (or selling) that same stock. This pattern shows up even when the fund manager and the stock in question are located far apart, so it is distinct from anything having to do with local preference. The evidence can be interpreted in terms of an epidemic model in which investors spread information about stocks to one another by word of mouth. |
| Keywords | Word-of-mouth effects, Fund managers, Trading behaviors |
| URL | https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2005.00817.x |
| Tags | Archival Empirical | Investment Decisions (Institutional) | Manager / Firm Behavior |
The effect of socially activist investment policies on the financial markets: Evidence from the South African boycott
| Authors | Teoh, Welch, Wazzan |
| Journal | Journal of Business |
| Year | 1999 |
| Type | Published Paper |
| Abstract | We study the most important legislative and shareholder boycott to date, the boycott of South Africa's apartheid regime, and find that corporate involvement with South Africa was so small that the announcement of legislative/shareholder pressure or voluntary corporate divestment from South Africa had little discernible effect either on the valuation of banks and corporations with South African operations or on the South African financial markets. There is weak evidence that institutional shareholdings increased when corporations divested. In sum, despite the publicity of the boycott and the multitude of divesting companies, political pressure had little visible effect on the financial markets. |
| Keywords | Boycott, shareholder pressure, corporate divestment, firm valuation |
| URL | https://doi.org/10.1086/209602 |
| Tags | Archival Empirical | Asset Pricing, Trading Volume and Market Efficiency | Investment Decisions (Institutional) | Manager / Firm Behavior |