Stricter enforcement of post-employment restrictions that strengthens trade secrets protection also limits CEOs’ alternative employment opportunities. We find that such mobility restrictions, which heightened CEO career concerns can dampen their risk-taking incentives and distort corporate financing decisions, particularly in firms whose CEOs value outside employment opportunities relatively highly. Stock market reactions to acquisition announcements suggest that intensified CEO career concerns from mobility restrictions compromise the quality of investment decisions. More generally, managerial career concerns adversely affect shareholder value by exacerbating risk-related agency conflicts. Thus, our evidence suggests that shareholders can benefit from more unconstrained labor markets that promote managerial risk-taking.
{"title":"Mobility Restrictions and Risk-Related Agency Conflicts","authors":"Emdad Islam, Ronald W. Masulis, Lubna Rahman","doi":"10.2139/ssrn.3538945","DOIUrl":"https://doi.org/10.2139/ssrn.3538945","url":null,"abstract":"Stricter enforcement of post-employment restrictions that strengthens trade secrets protection also limits CEOs’ alternative employment opportunities. We find that such mobility restrictions, which heightened CEO career concerns can dampen their risk-taking incentives and distort corporate financing decisions, particularly in firms whose CEOs value outside employment opportunities relatively highly. Stock market reactions to acquisition announcements suggest that intensified CEO career concerns from mobility restrictions compromise the quality of investment decisions. More generally, managerial career concerns adversely affect shareholder value by exacerbating risk-related agency conflicts. Thus, our evidence suggests that shareholders can benefit from more unconstrained labor markets that promote managerial risk-taking.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"86 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116236526","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 document that recent quasi-experimental strategies for identifying advertising effects can be derived from a model in which ad decisions are made at a more aggregate level than conversion is measured. Next, we show that the identifying variation in one of these strategies, the Border Approach, is conceptually similar to what are commonly known as Waldfogel IVs. We compare these, as well as supply-side instruments and fixed effects, in a data set on advertising in US presidential elections. Both border approaches and IVs are known to sacrifice statistical power and they do, but not by enough to affect statistical significance, in this application. The Waldfogel IVs are much more powerful than the supply-side IVs and, when combined, the standard errors are substantially reduced. Each IV estimator has the potential to produce a local average treatment effect that weights aggregate markets differently. Estimates suggest differences may exist, but they are not significant. When both IVs are combined, the point estimate is identical to a fixed effect estimate that is likely to be unbiased. The Border Approach can produce local effects at the disaggregate level when border and non-border regions differ. We find evidence of a statistically signficant difference when analysis is restricted to those counties where identifying assumptions are more plausible. The point estimate drops to nearly zero and becomes insignificant despite a standard error that is as small as the lowest IV standard error. We suspect local estimate concerns are greater for the Border Approach because it identifies advertising effects that exclude the high population counties in all markets, whereas IVs may weight each market differently but include counties of all types within each market.
{"title":"Identification Using Border Approaches and IVs","authors":"Xing Li, Wesley R. Hartmann, Tomomichi Amano","doi":"10.2139/ssrn.3402187","DOIUrl":"https://doi.org/10.2139/ssrn.3402187","url":null,"abstract":"We document that recent quasi-experimental strategies for identifying advertising effects can be derived from a model in which ad decisions are made at a more aggregate level than conversion is measured. Next, we show that the identifying variation in one of these strategies, the Border Approach, is conceptually similar to what are commonly known as Waldfogel IVs. We compare these, as well as supply-side instruments and fixed effects, in a data set on advertising in US presidential elections. Both border approaches and IVs are known to sacrifice statistical power and they do, but not by enough to affect statistical significance, in this application. The Waldfogel IVs are much more powerful than the supply-side IVs and, when combined, the standard errors are substantially reduced. Each IV estimator has the potential to produce a local average treatment effect that weights aggregate markets differently. Estimates suggest differences may exist, but they are not significant. When both IVs are combined, the point estimate is identical to a fixed effect estimate that is likely to be unbiased. The Border Approach can produce local effects at the disaggregate level when border and non-border regions differ. We find evidence of a statistically signficant difference when analysis is restricted to those counties where identifying assumptions are more plausible. The point estimate drops to nearly zero and becomes insignificant despite a standard error that is as small as the lowest IV standard error. We suspect local estimate concerns are greater for the Border Approach because it identifies advertising effects that exclude the high population counties in all markets, whereas IVs may weight each market differently but include counties of all types within each market.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126868318","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}
Firms often use non-linear incentive systems to motivate workers to achieve specified goals, such as paying bonuses to reach targets in sales, production, or cost reduction. Using administrative data from a major Chinese insurance firm that raised its sales targets and rewards for insurance agents greatly in 2015, we find that increased incentives induced agents to increase sales of the increasingly incentivized life insurance products, bunched around the new targets, albeit in part with some low quality sales that led to canceled contracts, while reducing sales of products out-side the new incentive system. The greater non-linear incentives raised agent incomes and low-ered turnover and substantially increased firm revenues net of the increase in payments to agents. The stock market reacted to the new system with a jump in the firms’ share price relative to its main competitor by 15-20% in the days surrounding introduction of the new system.
{"title":"Non-Linear Incentives, Worker Productivity, and Firm Profits: Evidence from a Quasi-Experiment","authors":"R. Freeman, Wei Huang, Teng Li","doi":"10.3386/W25507","DOIUrl":"https://doi.org/10.3386/W25507","url":null,"abstract":"Firms often use non-linear incentive systems to motivate workers to achieve specified goals, such as paying bonuses to reach targets in sales, production, or cost reduction. Using administrative data from a major Chinese insurance firm that raised its sales targets and rewards for insurance agents greatly in 2015, we find that increased incentives induced agents to increase sales of the increasingly incentivized life insurance products, bunched around the new targets, albeit in part with some low quality sales that led to canceled contracts, while reducing sales of products out-side the new incentive system. The greater non-linear incentives raised agent incomes and low-ered turnover and substantially increased firm revenues net of the increase in payments to agents. The stock market reacted to the new system with a jump in the firms’ share price relative to its main competitor by 15-20% in the days surrounding introduction of the new system.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116969678","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}
This paper proposes new estimators for the propensity score that aim to maximize the covariate distribution balance among different treatment groups. Heuristically, our proposed procedure attempts to estimate a propensity score model by making the underlying covariate distribution of different treatment groups as close to each other as possible. Our estimators are data-driven, do not rely on tuning parameters such as bandwidths, admit an asymptotic linear representation, and can be used to estimate different treatment effect parameters under different identifying assumptions, including unconfoundedness and local treatment effects. We derive the asymptotic properties of inverse probability weighted estimators for the average, distributional, and quantile treatment effects based on the proposed propensity score estimator and illustrate their finite sample performance via Monte Carlo simulations and two empirical applications.
{"title":"Covariate Distribution Balance via Propensity Scores","authors":"Pedro H. C. Sant’Anna, Xiaojun Song, Qi Xu","doi":"10.2139/ssrn.3258551","DOIUrl":"https://doi.org/10.2139/ssrn.3258551","url":null,"abstract":"This paper proposes new estimators for the propensity score that aim to maximize the covariate distribution balance among different treatment groups. Heuristically, our proposed procedure attempts to estimate a propensity score model by making the underlying covariate distribution of different treatment groups as close to each other as possible. Our estimators are data-driven, do not rely on tuning parameters such as bandwidths, admit an asymptotic linear representation, and can be used to estimate different treatment effect parameters under different identifying assumptions, including unconfoundedness and local treatment effects. We derive the asymptotic properties of inverse probability weighted estimators for the average, distributional, and quantile treatment effects based on the proposed propensity score estimator and illustrate their finite sample performance via Monte Carlo simulations and two empirical applications.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"83 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122896476","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}
Using a quasi-natural experiment setting of high-speed railway opening, we examine whether mutual fund holding horizon changes after the time distance between mutual funds and listed companies is shortened following the opening of high-speed railway. With the DID (difference-in-difference) method, we find that the holdings of mutual fund in remote listed companies increase following high-speed railway opening of remote cities in which these listed companies are located. We also find that this effect is mainly reflected in the high-speed railway transportation optimal interval (i.e. physical distance between 240 and 1800 kilometers), and this effect is stronger for companies with lower analyst coverage. We further find that the opening of high-speed railway facilitates the site visits of mutual funds to remote listed companies, which will eventually increase mutual fund holdings and extend mutual fund holding horizon.
{"title":"Time Distance and Mutual Fund Holding Horizon: Evidence from a Quasi-Natural Experiment Setting of High-Speed Railway Opening","authors":"Qiliang Liu, Li Tian, Junbo Wang","doi":"10.2139/ssrn.3490445","DOIUrl":"https://doi.org/10.2139/ssrn.3490445","url":null,"abstract":"Using a quasi-natural experiment setting of high-speed railway opening, we examine whether mutual fund holding horizon changes after the time distance between mutual funds and listed companies is shortened following the opening of high-speed railway. With the DID (difference-in-difference) method, we find that the holdings of mutual fund in remote listed companies increase following high-speed railway opening of remote cities in which these listed companies are located. We also find that this effect is mainly reflected in the high-speed railway transportation optimal interval (i.e. physical distance between 240 and 1800 kilometers), and this effect is stronger for companies with lower analyst coverage. We further find that the opening of high-speed railway facilitates the site visits of mutual funds to remote listed companies, which will eventually increase mutual fund holdings and extend mutual fund holding horizon.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"92 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126208364","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 the aftermath of the bursting of Japan’s “Bubble” economy and the subsequent banking crisis of 1997, we find it is possible to have “too few lawyers”. The decline of extra-legal resolution of financial distress via banks’ suspension of banking transactions leads to an increase in yakuza numbers as “dark side” private ordering increases and there is an increase in loss-making “zombie” firms. Japanese legal reforms in 2002 lead to a significant increase in lawyer numbers. These new lawyers play an economically significant role in reducing the number of “zombie” firms in Japan and the yakuza’s involvement in civil disputes. Using a panel of 47 prefectures we find new lawyers lead to a rise in the dissolution and liquidation of firms and a reduction in the number of loss-making “zombie” firms, as well as a reduction in crimes associated with yakuza involvement in civil dispute resolution.
{"title":"Lawyers, Yakuza and Zombie Firms: A Quasi-Natural Experiment","authors":"Paolo Campana, Kentaro Okamura","doi":"10.2139/ssrn.2860676","DOIUrl":"https://doi.org/10.2139/ssrn.2860676","url":null,"abstract":"In the aftermath of the bursting of Japan’s “Bubble” economy and the subsequent banking crisis of 1997, we find it is possible to have “too few lawyers”. The decline of extra-legal resolution of financial distress via banks’ suspension of banking transactions leads to an increase in yakuza numbers as “dark side” private ordering increases and there is an increase in loss-making “zombie” firms. Japanese legal reforms in 2002 lead to a significant increase in lawyer numbers. These new lawyers play an economically significant role in reducing the number of “zombie” firms in Japan and the yakuza’s involvement in civil disputes. Using a panel of 47 prefectures we find new lawyers lead to a rise in the dissolution and liquidation of firms and a reduction in the number of loss-making “zombie” firms, as well as a reduction in crimes associated with yakuza involvement in civil dispute resolution.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115922594","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}
Although social capital has been considered of the utmost importance for development it remains a complex and elusive concept. Different dimensions of social capital form part of the puzzle: cooperation is an individual other-regarding preference; social norms stem from beliefs about others' behavior; and the formation of such beliefs is mediated by attributes of the social network. To disentangle social capital we conduct an artefactual field experiment with 714 households at the inset of a Conditional Cash Transfer program in an urban context. To our knowledge this is the first paper that disentangles cooperation from coordination by conducting a minimum effort coordination game with Pareto ranked equilibria. Willingness to cooperate is teased out using a public goods game. By controlling for the density of network information we capture the role of connections, which is the third element of the mixture. We also look at the relation between our experimental data and traditional survey measures of social capital. Our identification strategy allows us to assess whether exposure to the program could be helping individuals overcome strategic uncertainty and select the most efficient equilibrium in the coordination game. The regressions suggest that the program helps overcome the coordination failure through different channels. In particular, the evidence suggests there is a spillover effect of the monetary incentive as it facilitates a social norm, which itself allows individuals to overcome the coordination failure. We rule out confounding factors such as individual socio-economic characteristics, social capital accumulation, willingness to cooperate and connectivity.
{"title":"Disentangling Social Capital: Lab-in-The-Field Evidence on Coordination, Networks and Cooperation","authors":"Sandra Polanía-Reyes","doi":"10.2139/ssrn.2638456","DOIUrl":"https://doi.org/10.2139/ssrn.2638456","url":null,"abstract":"Although social capital has been considered of the utmost importance for development it remains a complex and elusive concept. Different dimensions of social capital form part of the puzzle: cooperation is an individual other-regarding preference; social norms stem from beliefs about others' behavior; and the formation of such beliefs is mediated by attributes of the social network. To disentangle social capital we conduct an artefactual field experiment with 714 households at the inset of a Conditional Cash Transfer program in an urban context. To our knowledge this is the first paper that disentangles cooperation from coordination by conducting a minimum effort coordination game with Pareto ranked equilibria. Willingness to cooperate is teased out using a public goods game. By controlling for the density of network information we capture the role of connections, which is the third element of the mixture. We also look at the relation between our experimental data and traditional survey measures of social capital. Our identification strategy allows us to assess whether exposure to the program could be helping individuals overcome strategic uncertainty and select the most efficient equilibrium in the coordination game. The regressions suggest that the program helps overcome the coordination failure through different channels. In particular, the evidence suggests there is a spillover effect of the monetary incentive as it facilitates a social norm, which itself allows individuals to overcome the coordination failure. We rule out confounding factors such as individual socio-economic characteristics, social capital accumulation, willingness to cooperate and connectivity.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"99 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-06-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122009874","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}
When deciding to cast a split ticket ballot, voters in established democracies can rely on their experience with democracy and long term party attachments to guide their voting behavior. However, voters in new democracies do not have these individual level sources of information and motivation, and may instead rely on information from their social networks. Using the 1990 Cross-National Election Project German Unification election study, I examine the information sources West and East Germans use when splitting their ballot. I find that political disagreement within a social network is much more influential in decisions to cast a split ticket ballot for East German voters, while individual-level traits, particularly party attachment, play a greater role for West German voters. These findings indicate that, in absence of competition between individual-level information sources, network characteristics may have a profound impact on political decision-making.
{"title":"Split Ticket Voting and Social Networks in New and Established Democracies: A Quasi-Experiment in the 1990 German Unification Elections","authors":"D. Leiter","doi":"10.2139/ssrn.2619406","DOIUrl":"https://doi.org/10.2139/ssrn.2619406","url":null,"abstract":"When deciding to cast a split ticket ballot, voters in established democracies can rely on their experience with democracy and long term party attachments to guide their voting behavior. However, voters in new democracies do not have these individual level sources of information and motivation, and may instead rely on information from their social networks. Using the 1990 Cross-National Election Project German Unification election study, I examine the information sources West and East Germans use when splitting their ballot. I find that political disagreement within a social network is much more influential in decisions to cast a split ticket ballot for East German voters, while individual-level traits, particularly party attachment, play a greater role for West German voters. These findings indicate that, in absence of competition between individual-level information sources, network characteristics may have a profound impact on political decision-making.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122345521","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}
Increasingly, work on the validity of experimental treatments has explored whether treatments are measuring what they intend to measure. This study compares a treatment of hypothetical hurricanes with actual hurricane effects, and finds that hypothetical hurricanes induce much stronger reactions than those observed in the natural world. Findings suggest that treatments, at least regarding disasters, stimulate behavior much more dramatic than, and in some cases contradictory to, that which is to be expected in regular behavior, and underline the importance of continuing to rely on observational studies.
{"title":"The Reality of Treatment Effects","authors":"G. Reinhardt","doi":"10.2139/ssrn.2309599","DOIUrl":"https://doi.org/10.2139/ssrn.2309599","url":null,"abstract":"Increasingly, work on the validity of experimental treatments has explored whether treatments are measuring what they intend to measure. This study compares a treatment of hypothetical hurricanes with actual hurricane effects, and finds that hypothetical hurricanes induce much stronger reactions than those observed in the natural world. Findings suggest that treatments, at least regarding disasters, stimulate behavior much more dramatic than, and in some cases contradictory to, that which is to be expected in regular behavior, and underline the importance of continuing to rely on observational studies.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"95 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124423814","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 the fall of 2002, over 1,000 members of the American Political Science Association—including 28 former Association Presidents and seven former APSR editors—signed a petition to launch a new APSA Organized Section for Qualitative Methods. The proposed section would sponsor training and research focused on the several branches of methodology associated with the qualitative tradition. The goal will be to promote an integrated understanding of these methods and their relationship to other branches of methodology, including the quantitative tradition. The new section would complement the activities of the existing Political Methodology Section, seeking to develop productive avenues of cooperation.
{"title":"A New Qualitative Methods Section","authors":"Colin Elman, D. Collier, Henry E. Brady","doi":"10.2139/SSRN.2905408","DOIUrl":"https://doi.org/10.2139/SSRN.2905408","url":null,"abstract":"In the fall of 2002, over 1,000 members of the American Political Science Association—including 28 former Association Presidents and seven former APSR editors—signed a petition to launch a new APSA Organized Section for Qualitative Methods. The proposed section would sponsor training and research focused on the several branches of methodology associated with the qualitative tradition. The goal will be to promote an integrated understanding of these methods and their relationship to other branches of methodology, including the quantitative tradition. The new section would complement the activities of the existing Political Methodology Section, seeking to develop productive avenues of cooperation.","PeriodicalId":275625,"journal":{"name":"PSN: Quasi-Experiment (Topic)","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123636920","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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