Q: Risk, rents, or growth?

We document that the increasing polarization in Tobin’s Q within industries is closely connected to the growing divergence in rents and the emergence of superstar firms over the past four decades, while discount rates and growth rates did not exhibit the same increasing dispersion. We explain these industry polarization trends in an estimated general equilibrium model where each industry consists of large superstar oligopolists and small monopolistically competitive firms with endogenous transitions between them. Small firms make investments in speculative innovation to increase their probability of becoming superstars. Our model estimation finds that rising entry barriers in both small and superstar firms contribute to rising polarization in markups, but the rising barriers to creating small firms and increasing tastes for goods produced by superstars account for most of the divergence in Q. Stunting the creation of small firms generates greater incentives for speculative innovation, magnifying the impact of market power dispersion on industry polarization in Q

State ownership and corporate leverage around the world

Does state ownership hinder or help firms access credit? We use data on almost 4 million firms in 89 countries to study the relationship between state ownership and corporate leverage. Controlling for country-sector-year fixed effects and conventional firm-level determinants of leverage, we show that state ownership is robustly and negatively related to corporate leverage. This relationship holds across most of the firm-size distribution – with the important exception of the largest companies – and is stronger in countries with weak political and legal institutions. A panel data analysis of privatized firms and a comparison of privatized with matched control firms yield similar qualitative and quantitative effects of state ownership on leverage

Motivating Support for Workplace Diversity Policies: A Mindsets Framework

Diversity policies designed to foster more equitable work environments are widespread, but not necessarily widely supported. In this review, we advance a fixed-growth mindsets approach to understand people’s support for, or resistance to, diversity policies in the workplace. We theorize that people’s mindsets, or their fundamental beliefs about the malleability of attributes, underlie their diversity support via multiple mechanisms: (1) effort, (2) bias, (3) attributions, and (4) worldview threat. We expand upon each theorized mechanism, draw on established evidence to substantiate our arguments, and offer exciting new questions to guide future research. Because mindsets are amenable to change, we argue that our motivational framework to understanding diversity support offers a novel path forward for both scholarship and organizations that want to generate a greater consensus of support for their diversity policies

Are CEOs Rewarded for Luck? Evidence from Corporate Tax Windfalls

Focusing on the one-off tax gains and losses (i.e., windfalls) associated with the 2017 Tax Cuts and Jobs Act, we reexamine whether CEOs are rewarded for luck. We find that weakly monitored CEOs are compensated for the windfall tax gains but not penalized for the corresponding tax losses. No such pattern is observed for CEOs facing greater pay scrutiny. The pay for windfalls cannot be explained as rewards for CEOs’ efforts, talents, political activities, or as firms sharing their tax gains with all executives. The results are more consistent with rent extraction by CEOs facing weak pay scrutiny

The Diffusion of New Technologies

We identify phrases associated with novel technologies using textual analysis of patents, job postings, and earnings calls, enabling us to identify four stylized facts on the diffusion of jobs relating to new technologies. First, the development of economically impactful new technologies is geographically highly concentrated, more so even than overall patenting: 56% of the most economically impactful technologies come from just two U.S. locations, Silicon Valley and the Northeast Corridor. Second, as the technologies mature and the number of related jobs grows, hiring spreads geographically. But this process is very slow, taking around 50 years to disperse fully. Third, while initial hiring in new technologies is highly skill biased, over time the mean skill level in new positions declines, drawing in an increasing number of lower-skilled workers. Finally, the geographic spread of hiring is slowest for higher-skilled positions, with the locations where new technologies were pioneered remaining the focus for the technology’s high-skill jobs for decades

Achieving Holism: Narrating Multiple Identities in the Moment and Over Time

People’s multiple identities often wax, wane, and are transformed over their lifetimes, both as sources of personal meaning and as realities communicated to others. Yet, despite a research turn toward studying identities as multiple and dynamic, largely still missing is a cohesive view of people’s efforts to narratively integrate the sum of their many evolving parts. In this paper, we take a narrative perspective on the notion of identity holism to theorize how people build a meaningful whole by making narrative claims involving “4Cs”—credibility, coherence, continuity, and causality. Cutting across these claims are more abstract themes, or leitmotifs, of identity coalescence and coevolution, which are internally experienced as static and dynamic holism, respectively. We discuss how holism, and particularly dynamic holism, fosters personal authenticity, wisdom, adaptiveness, and resilience; the broader contributions of our theorizing to the literatures on identity and narrative; and implications for management and future research

When Form Leads to Function: Network Closure & Social Identity Threat Among Women Entrepreneurs

We contend that the degree of closure in women entrepreneurs’ social networks affects how concerned they feel about being judged through the lens of negative gender stereotypes (i.e., their experience of social identity threat). Using data from a survey of entrepreneurs in Study 1, we observe that women (but not men) entrepreneurs who report more closure in their social networks experience less social identity threat. Study 2 shows that the trust that is inherent in closed social networks accounts for our effects. Using an experimental design, we find that a field sample of entrepreneurs who are assigned to develop a closed (versus open) network experience more trust, which is associated with reduced social identity threat for women (but not men). Our findings suggest that a closed social network may inoculate women against the risk of being derailed by negative stereotypes in the venture creation process. We conclude by discussing the theoretical and practical implications of our findings

Reaching for Yield: Evidence from Households

The literature has documented “reaching for yield”—the phenomenon of investing more in risky assets when interest rates drop—among institutional investors. We analyze detailed transaction data from a large brokerage firm to provide direct field evidence that individual investors also exhibit this behavior. Consistent with models of portfolio choice with labor income, reaching for yield is more pronounced among younger and less-wealthy individuals. Consistent with prospect theory, reaching for yield is more pronounced when investors are trading at a loss. Finally, we observe and discuss the phenomenon of “reverse reaching for yield.