Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania最新文献
Ville A. Satopaa, Marat Salikhov, P. Tetlock, B. Mellers
A four-year series of subjective probability forecasting tournaments sponsored by the U.S. intelligence community revealed a host of replicable drivers of predictive accuracy, including experimental interventions such as training in probabilistic reasoning, anti‐groupthink teaming, and tracking of talent. Drawing on these data, we propose a Bayesian BIN model (Bias, Information, Noise) for disentangling the underlying processes that enable forecasters and forecasting methods to improve—either by tamping down bias and noise in judgment or by ramping up the efficient extraction of valid information from the environment. The BIN model reveals that noise reduction plays a surprisingly consistent role across all three methods of enhancing performance. We see the BIN method as useful in focusing managerial interventions on what works when and why in a wide range of domains. An R-package called BINtools implements our method and is available on the first author’s personal website. This paper was accepted by Manel Baucells, decision analysis.
{"title":"Bias, Information, Noise: The BIN Model of Forecasting","authors":"Ville A. Satopaa, Marat Salikhov, P. Tetlock, B. Mellers","doi":"10.2139/ssrn.3540864","DOIUrl":"https://doi.org/10.2139/ssrn.3540864","url":null,"abstract":"A four-year series of subjective probability forecasting tournaments sponsored by the U.S. intelligence community revealed a host of replicable drivers of predictive accuracy, including experimental interventions such as training in probabilistic reasoning, anti‐groupthink teaming, and tracking of talent. Drawing on these data, we propose a Bayesian BIN model (Bias, Information, Noise) for disentangling the underlying processes that enable forecasters and forecasting methods to improve—either by tamping down bias and noise in judgment or by ramping up the efficient extraction of valid information from the environment. The BIN model reveals that noise reduction plays a surprisingly consistent role across all three methods of enhancing performance. We see the BIN method as useful in focusing managerial interventions on what works when and why in a wide range of domains. An R-package called BINtools implements our method and is available on the first author’s personal website. This paper was accepted by Manel Baucells, decision analysis.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"21 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81398891","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}
Aymeric Bellon, J. Cookson, E. Gilje, Rawley Z. Heimer
We study the effect of personal wealth on entrepreneurial decisions using data on mineral payments from Texas shale drilling to individuals throughout the United States. Large cash windfalls increase business formation by 0.8 to 2.1 percentage points, but do not affect transitions to self-employment. By contrast, cash windfalls significantly extend self-employment spells, but do not affect the duration of business ownership. Our findings help reconcile contrasting findings in prior work: liquidity constraints have different effects on entrepreneurial activity that may depend on the entrepreneur’s motivations.
{"title":"Personal Wealth, Self-Employment, and Business Ownership","authors":"Aymeric Bellon, J. Cookson, E. Gilje, Rawley Z. Heimer","doi":"10.2139/ssrn.3551576","DOIUrl":"https://doi.org/10.2139/ssrn.3551576","url":null,"abstract":"\u0000 We study the effect of personal wealth on entrepreneurial decisions using data on mineral payments from Texas shale drilling to individuals throughout the United States. Large cash windfalls increase business formation by 0.8 to 2.1 percentage points, but do not affect transitions to self-employment. By contrast, cash windfalls significantly extend self-employment spells, but do not affect the duration of business ownership. Our findings help reconcile contrasting findings in prior work: liquidity constraints have different effects on entrepreneurial activity that may depend on the entrepreneur’s motivations.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"297 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-02-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76488422","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}
V. Choudhary, M. Shunko, Serguei Netessine, Seongjoon Koo
Driving is an integral component of many operational systems, and any small improvement in driving quality can have a significant effect on accidents, traffic, pollution, and the economy in general. However, making improvements is challenging given the complexity and multidimensionality of driving as a task. In this paper, we investigate the effectiveness of nudging to improve driving performance. In particular, we leverage a smartphone application launched by our industry partners to send three types of nudges through notifications to drivers, indicating how they performed on the current trip with respect to their personal best, personal average, and latest driving performance. We measure the resulting driving performance using telematics technology (i.e., real-time sensor data from an accelerometer, Global Positioning System (GPS), and gyroscope in a mobile device). Compared with the “no-nudge” control group, we find that personal best and personal average nudges improve driving performance by approximately 18% standard deviations of the performance scores calculated by the application. In addition, these nudges improve interaccident times (by nearly 1.8 years) and driving performance consistency, as measured by the standard deviation of the performance score. Noting that driving abilities and feedback seeking may vary across individuals, we adopt a generalized random forest approach, which shows that high-performing drivers who are not frequent feedback seekers benefit the most from personal best nudges, whereas low-performing drivers who are also frequent feedback seekers benefit the most from the personal average nudges. Finally, we investigate the potential mechanism behind the results by conducting an online experiment in a nondriving context. The experiment shows that the performance improvements are directly driven by the changes in participants’ effort in response to different nudges and that our key findings are robust in alternative (nondriving) settings. Our analysis further shows that nudges are effective when the variability in reference points is low, which explains why the personal best and personal average nudges are effective, whereas the last score nudge is not. This paper was accepted by Vishal Gaur, operations management.
{"title":"Nudging Drivers to Safety: Evidence from a Field Experiment","authors":"V. Choudhary, M. Shunko, Serguei Netessine, Seongjoon Koo","doi":"10.2139/ssrn.3491302","DOIUrl":"https://doi.org/10.2139/ssrn.3491302","url":null,"abstract":"Driving is an integral component of many operational systems, and any small improvement in driving quality can have a significant effect on accidents, traffic, pollution, and the economy in general. However, making improvements is challenging given the complexity and multidimensionality of driving as a task. In this paper, we investigate the effectiveness of nudging to improve driving performance. In particular, we leverage a smartphone application launched by our industry partners to send three types of nudges through notifications to drivers, indicating how they performed on the current trip with respect to their personal best, personal average, and latest driving performance. We measure the resulting driving performance using telematics technology (i.e., real-time sensor data from an accelerometer, Global Positioning System (GPS), and gyroscope in a mobile device). Compared with the “no-nudge” control group, we find that personal best and personal average nudges improve driving performance by approximately 18% standard deviations of the performance scores calculated by the application. In addition, these nudges improve interaccident times (by nearly 1.8 years) and driving performance consistency, as measured by the standard deviation of the performance score. Noting that driving abilities and feedback seeking may vary across individuals, we adopt a generalized random forest approach, which shows that high-performing drivers who are not frequent feedback seekers benefit the most from personal best nudges, whereas low-performing drivers who are also frequent feedback seekers benefit the most from the personal average nudges. Finally, we investigate the potential mechanism behind the results by conducting an online experiment in a nondriving context. The experiment shows that the performance improvements are directly driven by the changes in participants’ effort in response to different nudges and that our key findings are robust in alternative (nondriving) settings. Our analysis further shows that nudges are effective when the variability in reference points is low, which explains why the personal best and personal average nudges are effective, whereas the last score nudge is not. This paper was accepted by Vishal Gaur, operations management.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-11-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81659071","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}
Money-market issuers reward scale when they borrow from prime money funds. The scale they reward isn’t the scale of the transaction or of the fund, but rather the scale of the fund complex. For a one-month loan the magnitude is a basis point per fourfold increase in complex size. Larger complexes also enjoy an advantage when exiting holdings: they are both more likely to part with a holding and more likely to exchange it with the issuer for new paper with longer maturity. Our results demonstrate both economies of scale, which can concentrate the industry, and also the importance of relationships in money-market transactions.
{"title":"Scale Economies in the Money Market","authors":"Su Li, David K. Musto","doi":"10.2139/ssrn.3489470","DOIUrl":"https://doi.org/10.2139/ssrn.3489470","url":null,"abstract":"Money-market issuers reward scale when they borrow from prime money funds. The scale they reward isn’t the scale of the transaction or of the fund, but rather the scale of the fund complex. For a one-month loan the magnitude is a basis point per fourfold increase in complex size. Larger complexes also enjoy an advantage when exiting holdings: they are both more likely to part with a holding and more likely to exchange it with the issuer for new paper with longer maturity. Our results demonstrate both economies of scale, which can concentrate the industry, and also the importance of relationships in money-market transactions.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"22 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-11-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87237959","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 show that Initial Coin Offerings (ICOs) can limit rent-seeking activities of large firms with market power while preserving efficiency gains due to network effects. We model ICOs of utility tokens, which can be used to finance development of online platforms where buyers and sellers can meet to exchange services or goods. Utility tokens serve as the sole medium of exchange on a platform and can be traded in a secondary market. We show that such a financing mechanism allows an entrepreneur to give up monopolistic rents associated with the control of the platform and make a credible commitment to long-run competitive prices. The entrepreneur optimally chooses to have an ICO, rather than operate as a monopolist, only if future consumers of the platform participate in financing. ICOs, therefore, endogenously require crowd-funding to be viable.
{"title":"Initial Coin Offerings As a Commitment to Competition","authors":"Itay Goldstein, Deeksha Gupta, R. Sverchkov","doi":"10.2139/ssrn.3484627","DOIUrl":"https://doi.org/10.2139/ssrn.3484627","url":null,"abstract":"We show that Initial Coin Offerings (ICOs) can limit rent-seeking activities of large firms with market power while preserving efficiency gains due to network effects. We model ICOs of utility tokens, which can be used to finance development of online platforms where buyers and sellers can meet to exchange services or goods. Utility tokens serve as the sole medium of exchange on a platform and can be traded in a secondary market. We show that such a financing mechanism allows an entrepreneur to give up monopolistic rents associated with the control of the platform and make a credible commitment to long-run competitive prices. The entrepreneur optimally chooses to have an ICO, rather than operate as a monopolist, only if future consumers of the platform participate in financing. ICOs, therefore, endogenously require crowd-funding to be viable.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74404423","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 study exploits a complex information setting of a network of customer-supplier relationships to test whether short sellers pay attention to corporate news to act upon this news across the supply chain. We measure revealed short seller attention by using the link between a customer's news announcement return and the abnormal short selling of its supplier's stock. Results suggest that short sellers are attentive to news of customers to short their suppliers' stocks and that this short selling behavior strengthens with the intensity of SEC Edgar filing searches for both the customer and the supplier. Short sales of suppliers' stocks upon customer news announcements predict the suppliers' negative future stock returns, suggesting that short sellers' attention in a complicated information setting of customer-supplier links allows exploiting profitable trading opportunities.
{"title":"Short Seller Attention","authors":"Rui Dai, Lilian Ng, N. Zaiats","doi":"10.2139/ssrn.2944477","DOIUrl":"https://doi.org/10.2139/ssrn.2944477","url":null,"abstract":"This study exploits a complex information setting of a network of customer-supplier relationships to test whether short sellers pay attention to corporate news to act upon this news across the supply chain. We measure revealed short seller attention by using the link between a customer's news announcement return and the abnormal short selling of its supplier's stock. Results suggest that short sellers are attentive to news of customers to short their suppliers' stocks and that this short selling behavior strengthens with the intensity of SEC Edgar filing searches for both the customer and the supplier. Short sales of suppliers' stocks upon customer news announcements predict the suppliers' negative future stock returns, suggesting that short sellers' attention in a complicated information setting of customer-supplier links allows exploiting profitable trading opportunities.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"73 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81796075","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}
Oregon recently launched an automatic-enrollment retirement savings program for private sector workers who lack access to other workplace retirement plans. We analyze participation choices, account balances, and inflow/outflow data using administrative records between August 2018 and April 2020. Within the small to mid-sized firms served by OregonSaves, estimated average after-tax earnings are low ($2,365 per month) and turnover rates are high (38.2% per year). We find that younger employees and employees in larger firms are less likely to opt out, but that participation rates fall over time. The most common reason given for opting out is “I can’t afford to save at this time,” but the second most common is “I have my own retirement plan.” At the end of April 2020, 67,731 accounts had positive account balances, holding $51.1 million in total assets. The average balance is $754, but there is considerable dispersion, with younger workers accumulating the fewest assets due to higher rates of job turnover. Overall, we conclude that OregonSaves has meaningfully increased employee savings by reducing search costs. The 34.3% of workers with positive account balances in April 2020 is comparable to the marginal increase in participation at larger firms in the private sector. Nevertheless, there are significant constraints to the savings that auto-enrollment savings plans can achieve when provided to workers in industries and firms with low wages, volatile wages, and high turnover. Our evidence suggests that employees who are opting out of OregonSaves are often doing so for rational reasons.
{"title":"Auto-Enrollment Retirement Plans for the People: Choices and Outcomes in OregonSaves","authors":"J. Chalmers, O. Mitchell, J. Reuter, Mingli Zhong","doi":"10.2139/ssrn.3659731","DOIUrl":"https://doi.org/10.2139/ssrn.3659731","url":null,"abstract":"Oregon recently launched an automatic-enrollment retirement savings program for private sector workers who lack access to other workplace retirement plans. We analyze participation choices, account balances, and inflow/outflow data using administrative records between August 2018 and April 2020. Within the small to mid-sized firms served by OregonSaves, estimated average after-tax earnings are low ($2,365 per month) and turnover rates are high (38.2% per year). We find that younger employees and employees in larger firms are less likely to opt out, but that participation rates fall over time. The most common reason given for opting out is “I can’t afford to save at this time,” but the second most common is “I have my own retirement plan.” At the end of April 2020, 67,731 accounts had positive account balances, holding $51.1 million in total assets. The average balance is $754, but there is considerable dispersion, with younger workers accumulating the fewest assets due to higher rates of job turnover. Overall, we conclude that OregonSaves has meaningfully increased employee savings by reducing search costs. The 34.3% of workers with positive account balances in April 2020 is comparable to the marginal increase in participation at larger firms in the private sector. Nevertheless, there are significant constraints to the savings that auto-enrollment savings plans can achieve when provided to workers in industries and firms with low wages, volatile wages, and high turnover. Our evidence suggests that employees who are opting out of OregonSaves are often doing so for rational reasons.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"53 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88750675","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}
Jacquelyn R. Gillette, Delphine Samuels, Frank S. Zhou
This paper examines how credit rating levels affect municipal debt issuers’ disclosure decisions. Using exogenous upgrades in credit rating levels caused by the recalibration of Moody's municipal ratings scale in 2010, we find that upgraded municipalities significantly reduce their disclosure of required continuing financial information, relative to unaffected municipalities. Consistent with a reduction in debtholders’ demand for information driving these results, the reduction in disclosure is greater when municipal bonds are held by investors who relied more on disclosure ex ante. However, we also find that the reduction in disclosure does not manifest when issuers are monitored by underwriters with greater issuer‐specific expertise and when issuers are subject to direct regulatory enforcement through the receipt of federal funding. Overall, our results suggest that higher credit rating levels lower investor demand for disclosure in the municipal market, and highlight the role of underwriters and direct regulatory enforcement in maintaining disclosure levels when investor demand is low.
{"title":"The Effect of Credit Ratings on Disclosure: Evidence from the Recalibration of Moody’s Municipal Ratings","authors":"Jacquelyn R. Gillette, Delphine Samuels, Frank S. Zhou","doi":"10.2139/ssrn.3153143","DOIUrl":"https://doi.org/10.2139/ssrn.3153143","url":null,"abstract":"This paper examines how credit rating levels affect municipal debt issuers’ disclosure decisions. Using exogenous upgrades in credit rating levels caused by the recalibration of Moody's municipal ratings scale in 2010, we find that upgraded municipalities significantly reduce their disclosure of required continuing financial information, relative to unaffected municipalities. Consistent with a reduction in debtholders’ demand for information driving these results, the reduction in disclosure is greater when municipal bonds are held by investors who relied more on disclosure ex ante. However, we also find that the reduction in disclosure does not manifest when issuers are monitored by underwriters with greater issuer‐specific expertise and when issuers are subject to direct regulatory enforcement through the receipt of federal funding. Overall, our results suggest that higher credit rating levels lower investor demand for disclosure in the municipal market, and highlight the role of underwriters and direct regulatory enforcement in maintaining disclosure levels when investor demand is low.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"6 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90486851","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}
Financial covenants influence firm behavior by state-contingently allocating decision rights. I develop a quantitative model with long-term debt where shareholders cannot commit to not dilute existing lenders with new debt issuances. Lenders intervene on covenant violations but cannot commit either to any debt restructuring plan ex ante. Counterfactual experiments suggest that financial covenants significantly reduce default probability and increase firm value. However, the value creation is limited by lenders’ limited commitment. A hump-shaped relation between covenant tightness and firm value emerges, reflecting a balance between limited commitment on two sides. This paper was accepted by Gustavo Manso, finance. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2022.4667 .
{"title":"Time Inconsistency and Financial Covenants","authors":"Haotian Xiang","doi":"10.2139/ssrn.3274047","DOIUrl":"https://doi.org/10.2139/ssrn.3274047","url":null,"abstract":"Financial covenants influence firm behavior by state-contingently allocating decision rights. I develop a quantitative model with long-term debt where shareholders cannot commit to not dilute existing lenders with new debt issuances. Lenders intervene on covenant violations but cannot commit either to any debt restructuring plan ex ante. Counterfactual experiments suggest that financial covenants significantly reduce default probability and increase firm value. However, the value creation is limited by lenders’ limited commitment. A hump-shaped relation between covenant tightness and firm value emerges, reflecting a balance between limited commitment on two sides. This paper was accepted by Gustavo Manso, finance. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2022.4667 .","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79786570","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}
J. Chod, Nikolaos Trichakis, Gerry Tsoukalas, Henry Aspegren, M. Weber
We develop a theory that shows signaling a firm’s fundamental quality (e.g., its operational capabilities) to lenders through inventory transactions to be more efficient—it leads to less costly operational distortions—than signaling through loan requests, and we characterize how the efficiency gains depend on firm operational characteristics, such as operating costs, market size, and inventory salvage value. Signaling through inventory being only tenable when inventory transactions are verifiable at low enough cost, we then turn our attention to how this verifiability can be achieved in practice and argue that blockchain technology could enable it more efficiently than traditional monitoring mechanisms. To demonstrate, we develop b_verify, an open-source blockchain protocol that leverages Bitcoin to provide supply chain transparency at scale and in a cost-effective way. The paper identifies an important benefit of blockchain adoption—by opening a window of transparency into a firm’s supply chain, blockchain technology furnishes the ability to secure favorable financing terms at lower signaling costs. Furthermore, the analysis of the preferred signaling mode sheds light on what types of firms or supply chains would stand to benefit the most from this use of blockchain technology. This paper was accepted by Victor Martínez-de-Albéniz, operations management.
{"title":"On the Financing Benefits of Supply Chain Transparency and Blockchain Adoption","authors":"J. Chod, Nikolaos Trichakis, Gerry Tsoukalas, Henry Aspegren, M. Weber","doi":"10.2139/ssrn.3078945","DOIUrl":"https://doi.org/10.2139/ssrn.3078945","url":null,"abstract":"We develop a theory that shows signaling a firm’s fundamental quality (e.g., its operational capabilities) to lenders through inventory transactions to be more efficient—it leads to less costly operational distortions—than signaling through loan requests, and we characterize how the efficiency gains depend on firm operational characteristics, such as operating costs, market size, and inventory salvage value. Signaling through inventory being only tenable when inventory transactions are verifiable at low enough cost, we then turn our attention to how this verifiability can be achieved in practice and argue that blockchain technology could enable it more efficiently than traditional monitoring mechanisms. To demonstrate, we develop b_verify, an open-source blockchain protocol that leverages Bitcoin to provide supply chain transparency at scale and in a cost-effective way. The paper identifies an important benefit of blockchain adoption—by opening a window of transparency into a firm’s supply chain, blockchain technology furnishes the ability to secure favorable financing terms at lower signaling costs. Furthermore, the analysis of the preferred signaling mode sheds light on what types of firms or supply chains would stand to benefit the most from this use of blockchain technology. This paper was accepted by Victor Martínez-de-Albéniz, operations management.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88790746","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}
Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania
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