Fight or Flee? The Role of Firms' Connected Social Media Outlets
We examine how firms leverage social media outlets to counteract the impact of negative news coverage in traditional media. Using a sample of Chinese public firms with established connections to social media outlets, we find that these connected outlets actively promote favorable narratives about the firms immediately following unfavorable coverage in traditional media. This effect is particularly pronounced for firms with strong incentives to stabilize stock prices or where managers face significant career concerns. Moreover, while traditional media coverage tends to highlight firms’ short-term underperformance, connected social media outlets shift the focus toward their long-term development prospects. Our findings highlight the proactive role firms play in managing reputational capital through social media, demonstrating how these outlets can serve as a tool for mitigating adverse media sentiment.
Zhiqian Jiang, Baixiao Liu, Yuchen Xu, Bohui Zhang*
Working Paper | No. 20250503 |
Keywords: social media outlet, reputational capital management, media connection, stock price stabilization, managerial career concern
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Going Dark: Corporate Motivations for Covert Political Ties
Leveraging three unexpected leaks of donor lists from U.S. “dark money” organizations, we analyze firms whose anonymous political contributions were revealed, comparing them to similar firms without political contribution disclosures, to investigate the drivers of corporate involvement in covert political activities. On average, exposed firms saw a 3.7 percent rise in Tobin’s Q post-exposure. However, firms linked to donations that support attack advertisements (such as against then-President Barack Obama) suffered a 14.4 percent drop in Tobin’s Q. Our findings suggest that firms strategically use covert donations to avoid reputational damage, retaliation from political opponents, and misalignment with their publicly stated political stance. Consistent with these motivations, firms decrease (increase) their political disclosure practices following negative (positive) valuation responses to exposures.
Omrane Guedhami, April Knill, Baixiao Liu, Cayman Seagraves*
Working Paper | No. 20250502 |
Keywords: dark money groups, corporate political activity disclosure, corporate political connections, political contributions
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The Dynamics of Agricultural Productivity Gaps: An Open-Economy Perspective
This paper draws on cross-country census data to study how agricultural productivity gaps have evolved over the last four decades. We find little tendency for gaps to decline on average despite global decreases in agricultural employment shares. We analyze the dynamics of agricultural productivity gaps through the lens of an open-economy model of structural change. We calibrate the model using international trade data, which are measured independently from sectoral value added and employment data. Quantitatively, the model predicts that relatively faster physical productivity growth in the non-agricultural sector has, in many countries, offset the movement of labor out of agriculture, leading to persistently lower value added per worker in agriculture. Consistent with the model's predictions, previous exports by sector are strong predictors of agricultural productivity gaps in the current cross-section of countries.
Douglas Gollin, David Lagakos, Xiao Ma, Shraddha Mandi
Working Paper | No. 20250501 |
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Timely Negotiations
Deadlines often disrupt negotiations and lead to unwanted impasses, yet how to mitigate these effects is still an open question. We conduct a laboratory experiment to identify mechanisms that reduce bargaining impasses. Theoretical predictions suggest that uncertain deadlines—where the timing of the deadline is not fixed but follows a probabilistic process—should improve negotiation outcomes by limiting ...
Olivier Bochet, Manshu Khanna, Simon Siegenthaler
Working Paper | No. 20250303 |
Keywords: Bargaining, Negotiations, Deadlines, Anchoring, Brinkmanship, Range Offers.
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How do Workers Learn? Theory and Evidence on the Roots of Lifecycle Human Capital Accumulation
How do the sources of worker learning change over the lifecycle, and how do these changes impact human capital and wages? Using data from Germany and the US, we document that workers’ reliance on internal learning (learning from coworkers) decreases with experience, while external learning (on-the-job training) follows an inverted U-shape. Based on this evidence, we develop a search model featuring ...
Xiao Ma, Alejandro Nakab, Daniela Vidart
Working Paper | No. 20250302 |
Keywords: On-the-job learning; Human capital accumulation; Lifecycle wage growth
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Who Pays for Training? Theory and Evidence on Firm-Level Differences in Training Investments
We investigate how on-the-job training varies with firm characteristics and how this informs the distribution of training costs between firms and workers. Analyzing data from over 100 countries, we find that smaller firms consistently offer fewer training opportunities to their workers. Using administrative data from China and Mexico, we identify differences in labor share and productivity levels as ...
Xiao Ma, Alejandro Nakab, Daniela Vidart
Working Paper | No. 20250301 |
Keywords: On-the-job training; Human capital accumulation; Firm heterogeneity
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Let the Good Times Roll: Subjective Expectations and Asset Management
Using a unique regulation implemented in a developing financial market – the mandatory disclosure of macroeconomic and security-market outlooks required of all Chinese mutual funds – we construct direct measures of portfolio managers’ subjective expectations and their influence on asset allocation decisions. Despite their sophisticated skills, high-powered incentives, and access to extensive information,...
Francesco D
Working Paper | No. 20250104 |
Keywords: subjective expectations, belief formation, extrapolation, mutual funds, asset allocation
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Competition, Cannibalization, and New Product Introductions: Evidence from the Pharmaceutical Industry
When there is uncertainty about a new product’s net value, firms treat the timing of the product launch as a real option. When the potential cannibalization costs imposed on existing products are important, the timing decisions are sensitive to competitors’ actions, as they affect these costs. In the pharmaceutical industry, we show that firms often delay new launches until generic entry threats ...
Yuanfang Chu, Sudipto Dasgupta, Fangyuan Ma
Working Paper | No. 20250103 |
Keywords: innovation, product launch, competition, creative destruction, real option
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Fake Entry
We show the financial interests of a generic-drug manufacturer's largest shareholders in a branded competitor predict the generic's likelihood of being the first to challenge a drug patent. Conditional on a challenge, these common-ownership links predict settlements and delayed generic entry in exchange for payments to the generic. The stock price reactions are positive for the brand but negative for the generic, implying wealth transfers from one portfolio firm to another, with net benefits to investors. These facts suggest that in supracompetitive markets, corporate objectives depend on shareholder preferences.
Martin Schmalz, Jin Xie
Working Paper | No. 20250102 |
Keywords: ownership, corporate objective, corporate governance
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Nominal Rigidities, Earnings Manipulation, and Securities Regulation
How does output-price stickiness affect managers’ incentive to manipulate earnings and their firms' financing costs? We show firms with sticky-output prices experience more negative returns during tight windows around the Enron scandal and are more likely to misreport earnings when securities regulation is lenient, and their misreporting drops significantly after regulation becomes stringent. Sticky-price firms also face improved credit-market conditions following securities regulation. We build a model of earnings manipulation with endogenous manipulation costs to rationalize our empirical findings. The study suggests firms' stickiness in product pricing facilitates insiders' selfinterested behavior, imposing agency costs on firms.
Erica Xuenan Li, Pengfei Wang, Jin Xie, Ji Zhang
Working Paper | No. 20250101 |
Keywords: nominal rigidities, earnings manipulation, agency cost, Sarbanes-Oxley Act, credit market
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