Thomas Bourveau, François Brochet, F. Ferri, Chengzhu Sun
We examine whether mandatory adoption of say-on-pay increases executives’ incentives to engage in insider trading to offset the regulatory-induced increase in compensation risk. Our empirical design exploits the staggered adoption of say-on-pay laws across fourteen countries over the 2000-2015 period. We find that mandatory adoption of say-on-pay is associated with a material increase in insider trading profitability, especially in firms with excess pay and weaker governance. The increase in insider trading profits is mostly driven by more frequent and larger insider sales, consistent with executives’ desire to reduce their exposure to firm-specific risk and rebalance their portfolio. We also find some evidence that after the adoption of say-on-pay insider sales become more predictive of future returns and are more likely timed during information-sensitive windows. Overall, our results highlight the importance of considering potential effects on insider trading incentives when designing compensation reforms and when assessing their impact on executives’ incentives.
{"title":"Say on Pay Laws and Insider Trading","authors":"Thomas Bourveau, François Brochet, F. Ferri, Chengzhu Sun","doi":"10.2139/ssrn.3938891","DOIUrl":"https://doi.org/10.2139/ssrn.3938891","url":null,"abstract":"We examine whether mandatory adoption of say-on-pay increases executives’ incentives to engage in insider trading to offset the regulatory-induced increase in compensation risk. Our empirical design exploits the staggered adoption of say-on-pay laws across fourteen countries over the 2000-2015 period. We find that mandatory adoption of say-on-pay is associated with a material increase in insider trading profitability, especially in firms with excess pay and weaker governance. The increase in insider trading profits is mostly driven by more frequent and larger insider sales, consistent with executives’ desire to reduce their exposure to firm-specific risk and rebalance their portfolio. We also find some evidence that after the adoption of say-on-pay insider sales become more predictive of future returns and are more likely timed during information-sensitive windows. Overall, our results highlight the importance of considering potential effects on insider trading incentives when designing compensation reforms and when assessing their impact on executives’ incentives.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114651505","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine how prize announcements in economics influence the attention of insiders and outsiders to the field. Insiders pay greatest attention to consensus papers cited by the Nobel Prize Committee and written by past Clark Medal winners; outsiders focus more on consensus papers not written by Clark Medal awardees. In both cases, the entry of new citing authors accounts for most of the enhanced attention. We also consider the direct impact of the Clark Medal on citations and find effects comparable to those arising with the Nobel Prize. Our results imply that prizes enhance the leadership role of star scientists.
{"title":"Scientific Prizes And Post-Award Attention: Evidence From The Nobel Prize In Economics","authors":"M. McCabe, Z. Babutsidze","doi":"10.2139/ssrn.3534922","DOIUrl":"https://doi.org/10.2139/ssrn.3534922","url":null,"abstract":"We examine how prize announcements in economics influence the attention of insiders and outsiders to the field. Insiders pay greatest attention to consensus papers cited by the Nobel Prize Committee and written by past Clark Medal winners; outsiders focus more on consensus papers not written by Clark Medal awardees. In both cases, the entry of new citing authors accounts for most of the enhanced attention. We also consider the direct impact of the Clark Medal on citations and find effects comparable to those arising with the Nobel Prize. Our results imply that prizes enhance the leadership role of star scientists.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122048981","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Yuqian Xu, Baile Lu, A. Ghose, Hongyan Dai, Weihua Zhou
Crowd-sourced delivery represents a rapidly rising segment of the global workforce. Crowd-delivery workers enjoy flexibility in choosing when and where to work. However, such flexibility brings notorious challenges to online platforms in managing the crowd-sourced workforce. Thus, understanding the behavioral and incentive issues of crowd workers in this new business model is inherently important. In this paper, we investigate how a baseline incentive effect of piece-rate earning is moderated by two unique features of online crowd-sourcing platforms, namely, ratings and penalties. Utilizing data from one leading crowd-sourced grocery delivery platform with more than 50 million active users in China, we implement a two-stage Heckman model together with instrumental variables to tackle this research question. We first show the baseline effect whereby higher piece-rate earning increases the workers' work time. Going one step further, we find this positive effect of piece-rate earning decreases when the percentage of five-star ratings increases (negative moderating effect); moreover, this positive effect increases when the monetary penalty increases (positive moderating effect). Finally, we show the magnitude of the negative (positive) moderating effect decreases when the percentage of five-star ratings (monetary penalty) increases. The ultimate goal of this paper is to provide guidelines to online platforms on the design of better incentive mechanisms with the interplay of piece-rate earning, rating, and penalty.
{"title":"How Do Ratings and Penalties Moderate Earnings on Crowdsourced Delivery Platforms?","authors":"Yuqian Xu, Baile Lu, A. Ghose, Hongyan Dai, Weihua Zhou","doi":"10.2139/ssrn.3609132","DOIUrl":"https://doi.org/10.2139/ssrn.3609132","url":null,"abstract":"Crowd-sourced delivery represents a rapidly rising segment of the global workforce. Crowd-delivery workers enjoy flexibility in choosing when and where to work. However, such flexibility brings notorious challenges to online platforms in managing the crowd-sourced workforce. Thus, understanding the behavioral and incentive issues of crowd workers in this new business model is inherently important. In this paper, we investigate how a baseline incentive effect of piece-rate earning is moderated by two unique features of online crowd-sourcing platforms, namely, ratings and penalties. Utilizing data from one leading crowd-sourced grocery delivery platform with more than 50 million active users in China, we implement a two-stage Heckman model together with instrumental variables to tackle this research question. We first show the baseline effect whereby higher piece-rate earning increases the workers' work time. Going one step further, we find this positive effect of piece-rate earning decreases when the percentage of five-star ratings increases (negative moderating effect); moreover, this positive effect increases when the monetary penalty increases (positive moderating effect). Finally, we show the magnitude of the negative (positive) moderating effect decreases when the percentage of five-star ratings (monetary penalty) increases. The ultimate goal of this paper is to provide guidelines to online platforms on the design of better incentive mechanisms with the interplay of piece-rate earning, rating, and penalty.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125346301","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Digital matching marketplaces are characterized by user heterogeneity, limited capacity, and dynamic market clearing. These features create spillovers between users. For example, an Airbnb listing booked by one guest cannot be booked by another guest for the same night. Spillovers limit the applicability of many experimental and observational methods for evaluating the effects of marketplace policies. In this paper, I show how to use marketplace simulations as an input into the design of user acquisition strategies and ranking algorithms. I calibrate a marketplace simulation using data on searches and transactions from Airbnb and use it to address three topics: the returns to scale in matching, the heterogeneity in returns to user acquisition, and the size of bias in experimental designs. I find that returns to scale are initially increasing due to market thickness effects and then decreasing due to availability frictions in search. Furthermore, heterogeneity in the value of listings to the platform is large - the effect of acquiring 25% more listings on bookings varies between -4.1% and 5.4% depending on the quartile of listing quality. I then measure the extent of bias in experimental treatment effects due to spillovers. The treatment effect of a better ranking algorithm on conversion rates is overstated by 53% when a quarter of users are randomized into treatment.
{"title":"A Simulation Approach to Designing Digital Matching Platforms","authors":"Andrey Fradkin","doi":"10.2139/ssrn.3320080","DOIUrl":"https://doi.org/10.2139/ssrn.3320080","url":null,"abstract":"Digital matching marketplaces are characterized by user heterogeneity, limited capacity, and dynamic market clearing. These features create spillovers between users. For example, an Airbnb listing booked by one guest cannot be booked by another guest for the same night. Spillovers limit the applicability of many experimental and observational methods for evaluating the effects of marketplace policies. In this paper, I show how to use marketplace simulations as an input into the design of user acquisition strategies and ranking algorithms. I calibrate a marketplace simulation using data on searches and transactions from Airbnb and use it to address three topics: the returns to scale in matching, the heterogeneity in returns to user acquisition, and the size of bias in experimental designs. I find that returns to scale are initially increasing due to market thickness effects and then decreasing due to availability frictions in search. Furthermore, heterogeneity in the value of listings to the platform is large - the effect of acquiring 25% more listings on bookings varies between -4.1% and 5.4% depending on the quartile of listing quality. I then measure the extent of bias in experimental treatment effects due to spillovers. The treatment effect of a better ranking algorithm on conversion rates is overstated by 53% when a quarter of users are randomized into treatment.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121906942","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Do extrinsic rewards able to encourage employee commitment especially those in the professional industry and in high position? The purpose of this research is to critically examine the link between rewards and organisational commitment underpinned by motivation theory; Self-Determination Theory and Regulatory Focus Theory among Independent Financial Advisers (IFAs) in Malaysia. This research used a scaling questionnaire covering 2 categories on a 6-point Likert scale. The survey involved 260 IFAs registered with Securities Commission Malaysia using the SurveyMonkey web tools consisting of 18-item scale for measuring a three-component model of organisation commitment (Affective Commitment, Normative Commitment and Continuance Commitment) and a 14-item scale for measuring a five-component model of rewards (Extrinsic Rewards: Pay Satisfaction, Promotion and Team Support; Intrinsic Rewards: Autonomy and Participation in Decision Making). This research used a measurement model via Structure Modelling Equation (SEM) to find the factor analysis for each latent variable. The hypotheses tested clearly show that rewards have a positive and significant effect on organisational commitment. This research has been able to identify the most practical and effective rewards for IFAs. For extrinsic rewards, prospects of promotion have the most positive effect on employee commitment which can be translated into employee performance. Besides that, autonomy and participation in decision making able can foster intrinsic motivation among IFAs. Overall, employee commitment is one of the antecedent determinants of employee performance.
{"title":"Correlation Between Rewards and Commitment: An Empirical Investigation of Independent Financial Adviser in Malaysia","authors":"M. Jantan","doi":"10.2139/ssrn.3560753","DOIUrl":"https://doi.org/10.2139/ssrn.3560753","url":null,"abstract":"Do extrinsic rewards able to encourage employee commitment especially those in the professional industry and in high position? The purpose of this research is to critically examine the link between rewards and organisational commitment underpinned by motivation theory; Self-Determination Theory and Regulatory Focus Theory among Independent Financial Advisers (IFAs) in Malaysia. This research used a scaling questionnaire covering 2 categories on a 6-point Likert scale. The survey involved 260 IFAs registered with Securities Commission Malaysia using the SurveyMonkey web tools consisting of 18-item scale for measuring a three-component model of organisation commitment (Affective Commitment, Normative Commitment and Continuance Commitment) and a 14-item scale for measuring a five-component model of rewards (Extrinsic Rewards: Pay Satisfaction, Promotion and Team Support; Intrinsic Rewards: Autonomy and Participation in Decision Making). This research used a measurement model via Structure Modelling Equation (SEM) to find the factor analysis for each latent variable. The hypotheses tested clearly show that rewards have a positive and significant effect on organisational commitment. This research has been able to identify the most practical and effective rewards for IFAs. For extrinsic rewards, prospects of promotion have the most positive effect on employee commitment which can be translated into employee performance. Besides that, autonomy and participation in decision making able can foster intrinsic motivation among IFAs. Overall, employee commitment is one of the antecedent determinants of employee performance.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"94 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-07-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121966465","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate how counterparty credit risk influences the prices of over-the-counter CDS contracts using confidential transaction level data for practically all Dutch trades. We confirm our prior of a significant negative relationship between the credit worthiness of the CDS seller and the price of the CDS contract. We find that an increase of 100 basis points in the credit spread of the seller, decreases the price of the CDS contract by 7.2 basis points. Also, the larger the size of the CDS contract the lower the price of the CDS contract. Finally, we find that regulatory exemptions have a statistically significant but economically negligible impact on CDS pricing: Transactions exempted from banking capital requirements for Credit Valuation Adjustment risk - mostly banks transacting with non-financial institutions, sovereigns and pension funds - trade 0.14 basis points lower, all else equal.
{"title":"Counterparty Credit Risk and the Effectiveness of Banking Regulation","authors":"Sînziana Kroon, I. van Lelyveld","doi":"10.2139/ssrn.3278728","DOIUrl":"https://doi.org/10.2139/ssrn.3278728","url":null,"abstract":"We investigate how counterparty credit risk influences the prices of over-the-counter CDS contracts using confidential transaction level data for practically all Dutch trades. We confirm our prior of a significant negative relationship between the credit worthiness of the CDS seller and the price of the CDS contract. We find that an increase of 100 basis points in the credit spread of the seller, decreases the price of the CDS contract by 7.2 basis points. Also, the larger the size of the CDS contract the lower the price of the CDS contract. Finally, we find that regulatory exemptions have a statistically significant but economically negligible impact on CDS pricing: Transactions exempted from banking capital requirements for Credit Valuation Adjustment risk - mostly banks transacting with non-financial institutions, sovereigns and pension funds - trade 0.14 basis points lower, all else equal.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"126 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-06-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133464004","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A study on marketing mix and decisional factors on airline carrier among Thai freight forwarder aims to investigate the general behavior of the airline carrier selective decision for the freight forwarder in Thailand. It focuses on the use of international outbound freight services in Bangkok metropolitan region. In addition, the marketing mix factors affecting airline service providers in Thailand are investigated. Consequently, the new strategies to meet the customer requirements and the guidelines for improving and developing services are proposed. The samples for this study are 400 freight forwarder customers during May 2016 and March 2017. A random sampling is conducted using the convenience sampling method with the questionnaire as a research tool. The data analysis statistics is performed with the frequency distribution, average percentage, and standard deviation. The results of the research are as follow: 1) The customers are mainly sales executive of a large freight company, working in sales department. The majority of goods are transported to Europe over 16 times per month. A popular type of transported products is a general merchandise valued over 1,000,000 Baht,shipping a paper box container; 2) The decision to use the airline is decided by the freight forwarder. The popular commercial conditions for the freight forwarder are DDP terms, over 1,000,000 Baht for each transportation cost, optimal service of 14 trips per week, 1 working day for transit, 75-100% punctual delivery rate, 2 delays delivery per week, damaged goods by cargo compression, and limited number of shipping by the airlines. Therefore, most carriers resolved the problem by switching to another airline; 3) The 7 marketing mix factors affecting the airline service selection are in the following order Process, Product, Price, People, Place, Promotion, and Physical Evidence; 4) The guidelines for improving the airline business consist of introducing a technology to improve products and services, price and quality optimization, improving the efficiency and distribute channels, developing a good staff attitude toward service and the airline standard to meet international standards.
{"title":"A Survey of Marketing Mix and Decisional Factors on Airline Carrier among Incentive Freight Forwarder in Thailand","authors":"Prerada Praditpong, Areerat Sensod, Sakworawich Arnond","doi":"10.2139/ssrn.2994882","DOIUrl":"https://doi.org/10.2139/ssrn.2994882","url":null,"abstract":"A study on marketing mix and decisional factors on airline carrier among Thai freight forwarder aims to investigate the general behavior of the airline carrier selective decision for the freight forwarder in Thailand. It focuses on the use of international outbound freight services in Bangkok metropolitan region. In addition, the marketing mix factors affecting airline service providers in Thailand are investigated. Consequently, the new strategies to meet the customer requirements and the guidelines for improving and developing services are proposed. The samples for this study are 400 freight forwarder customers during May 2016 and March 2017. A random sampling is conducted using the convenience sampling method with the questionnaire as a research tool. The data analysis statistics is performed with the frequency distribution, average percentage, and standard deviation. \u0000 \u0000The results of the research are as follow: 1) The customers are mainly sales executive of a large freight company, working in sales department. The majority of goods are transported to Europe over 16 times per month. A popular type of transported products is a general merchandise valued over 1,000,000 Baht,shipping a paper box container; 2) The decision to use the airline is decided by the freight forwarder. The popular commercial conditions for the freight forwarder are DDP terms, over 1,000,000 Baht for each transportation cost, optimal service of 14 trips per week, 1 working day for transit, 75-100% punctual delivery rate, 2 delays delivery per week, damaged goods by cargo compression, and limited number of shipping by the airlines. Therefore, most carriers resolved the problem by switching to another airline; 3) The 7 marketing mix factors affecting the airline service selection are in the following order Process, Product, Price, People, Place, Promotion, and Physical Evidence; 4) The guidelines for improving the airline business consist of introducing a technology to improve products and services, price and quality optimization, improving the efficiency and distribute channels, developing a good staff attitude toward service and the airline standard to meet international standards.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129101626","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Seth G. Benzell, Guillermo Lagarda, Marshall W. Van Alstyne
Using proprietary information from a significant percentage of the API-tool provision and API-management industry, we explore the impact of API adoption on firm performance. We use a difference in difference approach centered on the date of first use to show that API adoption leads to increased profitability in the short and long run. APIs vary in their business function, and we find that B2B, B2C, and Internal API calls are heterogeneous in their association with outcomes. For a firm of 13,500 employees, our preferred specification implies API adoption increases yearly net income by more that $250,000. We also find evidence that having an open developer portal further enhances the gains from API adoption.
{"title":"The Impact of APIs in Firm Performance","authors":"Seth G. Benzell, Guillermo Lagarda, Marshall W. Van Alstyne","doi":"10.2139/ssrn.2843326","DOIUrl":"https://doi.org/10.2139/ssrn.2843326","url":null,"abstract":"Using proprietary information from a significant percentage of the API-tool provision and API-management industry, we explore the impact of API adoption on firm performance. We use a difference in difference approach centered on the date of first use to show that API adoption leads to increased profitability in the short and long run. APIs vary in their business function, and we find that B2B, B2C, and Internal API calls are heterogeneous in their association with outcomes. For a firm of 13,500 employees, our preferred specification implies API adoption increases yearly net income by more that $250,000. We also find evidence that having an open developer portal further enhances the gains from API adoption.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122834095","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As a term, “innovation” is used inconsistently, often resembling ‘cheap talk.’ In telecom. and media policy debates like network neutrality, both those supporting and against proposed regulation will claim their position improves innovation, while their opponents’ position will harm innovation. However, “innovation” becomes a valuable legal term of art when used in mergers and acquisitions (“M&A”) decisions, particularly when the Federal Communications Commission (“FCC”) evaluates “Major Transactions.” The primary aims of this work are to clarify the meaning of innovation as it pertains to competition regulation and M&A strategy and offer insights into how innovation should influence future regulation and strategy formation. After the Telecommunications Act of 1996 enabled telecommunications and media companies to compete in once-restricted lines of business, there was a flurry of M&A activity that has continued to this day. Simultaneously, innovations related to digital convergence have placed these once disparate lines of business in increasingly direct competition with one another. This research reviews the 82 FCC “Major Transaction” orders between the passage of the Act and 2015, using a textual coding method related to the various economic and legal definitions of innovation to analyze all 509 instances of the grammatical variations of the term's use. Four primary conceptual definitions of innovation are identified and explored through legal analysis, with the term’s usage patterns analyzed in connection to bundling, business mavericks, business innovation, innovation markets, technological innovation, and the concept’s integration into the competition regulation framework. Each of 82 orders is also categorized by the general markets involved and the type of transaction under review, and explored through a combination of the results of this coded data and legal research, which clarifies and reframes innovation discussions surrounding the precedents contained within the FCC’s major mergers, acquisitions, joint ventures, and licensing transactions. Policy and business strategy conclusions are considered, with insights about how technological innovation challenges antitrust law’s discrete market definitions and why open access factors across a broader range of indirect competitors may be more important.
{"title":"Analysis of Innovation in FCC M&A Transactions from 1997 to 2015","authors":"Ryland Sherman","doi":"10.2139/ssrn.2757451","DOIUrl":"https://doi.org/10.2139/ssrn.2757451","url":null,"abstract":"As a term, “innovation” is used inconsistently, often resembling ‘cheap talk.’ In telecom. and media policy debates like network neutrality, both those supporting and against proposed regulation will claim their position improves innovation, while their opponents’ position will harm innovation. However, “innovation” becomes a valuable legal term of art when used in mergers and acquisitions (“M&A”) decisions, particularly when the Federal Communications Commission (“FCC”) evaluates “Major Transactions.” The primary aims of this work are to clarify the meaning of innovation as it pertains to competition regulation and M&A strategy and offer insights into how innovation should influence future regulation and strategy formation. \u0000After the Telecommunications Act of 1996 enabled telecommunications and media companies to compete in once-restricted lines of business, there was a flurry of M&A activity that has continued to this day. Simultaneously, innovations related to digital convergence have placed these once disparate lines of business in increasingly direct competition with one another. This research reviews the 82 FCC “Major Transaction” orders between the passage of the Act and 2015, using a textual coding method related to the various economic and legal definitions of innovation to analyze all 509 instances of the grammatical variations of the term's use. Four primary conceptual definitions of innovation are identified and explored through legal analysis, with the term’s usage patterns analyzed in connection to bundling, business mavericks, business innovation, innovation markets, technological innovation, and the concept’s integration into the competition regulation framework. Each of 82 orders is also categorized by the general markets involved and the type of transaction under review, and explored through a combination of the results of this coded data and legal research, which clarifies and reframes innovation discussions surrounding the precedents contained within the FCC’s major mergers, acquisitions, joint ventures, and licensing transactions. Policy and business strategy conclusions are considered, with insights about how technological innovation challenges antitrust law’s discrete market definitions and why open access factors across a broader range of indirect competitors may be more important.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"49 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132303585","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In our model multiple innovators compete against each other by submitting investment proposals to an investor. The investor chooses the least expensive proposal and when to invest in it. Innovators have to provide costly effort and they learn privately the cost of investing. Multiple efforts have to be compensated for, but competition helps to erode innovators' informational rents, since innovators are more likely to lose the competition if they inflate investment costs. Consequently, competition leads to faster innovation, because the investor has less of a need to delay expensive investments. The investor's payoff sensitivity also increases with competition, thus enabling the investor to capture more of the upside of innovative activity.
{"title":"Innovation, Competition, and Investment Timing","authors":"Y. Koskinen, J. Maeland","doi":"10.2139/ssrn.2153713","DOIUrl":"https://doi.org/10.2139/ssrn.2153713","url":null,"abstract":"In our model multiple innovators compete against each other by submitting investment proposals to an investor. The investor chooses the least expensive proposal and when to invest in it. Innovators have to provide costly effort and they learn privately the cost of investing. Multiple efforts have to be compensated for, but competition helps to erode innovators' informational rents, since innovators are more likely to lose the competition if they inflate investment costs. Consequently, competition leads to faster innovation, because the investor has less of a need to delay expensive investments. The investor's payoff sensitivity also increases with competition, thus enabling the investor to capture more of the upside of innovative activity.","PeriodicalId":180189,"journal":{"name":"Boston University Questrom School of Business Research Paper Series","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-11-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123066908","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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