An examination of the long-term business value of investments in information technology

In this paper, we examine the effects of investments in Information Technology (IT) on the long term business values of organizations. The regression discontinuity design is used in this research to examine eight hundred and ten IT investment announcements collected from the period 1982–2007. Our results found that press releases can affect the market value of a firm by possibly providing investors with a better idea of a firm’s current and future operations and strategy. On the other hand, these press releases also appear to attract more transient investors. The attraction of transient investors likely suggests the market believes the IT investing firm is serious about its potential for growth and expansion

Corporate Structure and Performance Feedback: Aspirations and Adaptation in M-Form Firms

In this study, we examine how business units of multidivisional (M-form) firms adapt their activities in response to poor performance at the corporate and business unit levels. By linking performance feedback theory with theories of attention and M-form organizations, we show that corporate structure influences the relationship between performance below aspirations and business unit adaptation. Because corporate structure vertically differentiates performance goals and problemistic search, solutions to performance problems vary across corporate and business unit levels, with divergent implications for business unit adaptation. We examine business unit adaptation empirically through new product introductions in the global mobile device industry, finding that poor performance at the business unit level leads to greater new product introductions. In contrast, corporate-level responses to performance problems have a negative cross-level effect on new product introductions. We also find that these negative effects are attenuated for strategically significant business units, which have more input into corporate responses. By linking structural and behavioral drivers of action, this paper contributes to the knowledge and understanding of adaptive behavior in multidivisional firms

The Effects of MiFID II on Sell-Side Analysts, Buy-Side Analysts, and Firms

This paper provides early but broad empirical evidence on a major new investor protection regulation in Europe, MiFID II, which requires investment firms to unbundle investment research from other costs they charge to clients. We predict that the price separation resulting from unbundling and a hard-dollar system leads to a shrinking of the market for sell-side investment research, manifested in lower quantity of sell-side coverage that is of higher quality than before the regulation. We test our predictions in difference-in-differences matched-sample research designs with firm fixed effects. We find a decrease in the number of sell-side analysts covering European firms after MiFID II implementation, particularly for firms that are less important to the sell-side. However, research quality improves; specifically, individual analyst forecasts are more accurate and stock recommendations garner greater market reactions. In addition, sell-side analysts seem to cater more to the buy-side after MiFID II by providing industry recommendations along with stock recommendations. Importantly, we predict and find evidence that buy-side investment firms turn to more in-house research after MiFID II implementation. Equally interesting, buy-side analysts increase their participation and engagement in earnings conference calls compared to the control group. Finally, we find some evidence that stock-market liquidity decreases post-MiFID II. Our findings have implications beyond Europe, as investors are currently pressuring the U.S. Securities and Exchange Commission to adopt a similar regulation

The separate and joint effects of the market for corporate control and board effectiveness on R&D valuation

This study finds that stronger market control (measured as fewer anti-takeover provisions) and more effective boards (measured as boards that are more independent and for which independent directors have more outside directorships) are both associated with higher R&D valuation. Furthermore, stronger market control (more effective board governance) is associated with higher R&D valuation only in the presence of weaker board governance (market control). Taken together, the results are consistent with the interpretation that both the market for corporate control and effective boards mitigate agency conflicts arising from R&D investments and improve the market valuation of R&D. Furthermore, the two mechanisms act as substitutes in doing so