Getting By With The Advice Of Their Friends: Ceos' Advice Networks And Firms' Strategic Responses To Poor Performance

This paper theorizes that relatively poor firm performance can prompt chief executive officers (CEOs) to seek more advice from executives of other firms who are their friends or similar to them and less advice from acquaintances or dissimilar others and suggests how and why this pattern of advice seeking could reduce firms' propensity to change corporate strategy in response to poor performance. We test our hypotheses with large-sample survey data on the identities of CEOs' advice contacts and archival data on firm performance and corporate strategy. The results confirm our hypotheses and show that executives' social network ties can influence firms' responses to economic adversity, in particular by inhibiting strategic change in response to relatively poor firm performance. Additional findings indicate that CEOs' advice seeking in response to low performance may ultimately have negative consequences for subsequent performance, suggesting how CEOs' social network ties could play an indirect role in organizational decline and downward spirals in firm performance.Business Administratio

Orbifold Reduction Of The Quark-Lepton Symmetric Model

We investigate the quark-lepton symmetric gauge group in five dimensions, with the gauge symmetry broken by a combination of orbifold compactification of the extra dimension and the Higgs mechanism. The gauge sector of the model is investigated and contrasted with the four dimensional case. We obtain lower bounds on the mass of the exotic gauge bosons, the inverse compactification scale and the exotic leptons. Light neutrinos are obtained without requiring any scale larger than a TeV. However an ultra-violet cut-off of order $10^{11}$ GeV is required to suppress proton decay inducing non-renormalizable operators.Comment: References added to match PRD versio

A primer on the mortgage market and mortgage finance

This article is a primer on mortgage finance. It discusses the basics of the mortgage market and mortgage finance. In so doing, it provides useful information that can aid individuals in making better mortgage finance decisions. The discussion and the tools are presented within the context of mortgage finance; however, these same principles and tools can be applied to a wide range of financial decisions.Mortgages

How Big is the Tax Advantage to Debt?

This paper uses an option valuation model of the firm to answer the question, "What magnitude tax advantage to debt is consistent with the range of observed corporate debt ratios?" We incorporate into the model differential personal tax rates on capital gains and ordinary income. We conclude that variations in the magnitude of bankruptcy costs across firms can not by itself account for the simultaneous existence of levered and unlevered firms. When it is possible for the value of the underlying assets to junip discretely to zero, differences across firms in the probability of this jump can account for the simultaneous existence of levered and unlevered firms. Moreover, if the tax advantage to debt is small, the annual rate of return advantage offered by optimal leverage may be so small as to make the firm indifferent about debt policy over a wide range of debt-to-firm value ratios.

Debt Policy and the Rate of Return Premium to Leverage

Equilibrium in the market for real assets requires that the price of those assets be bid up to reflect the tax shields they can offer to levered firms.Thus there must be an equality between the market values of real assets and the values of optimally levered firms. The standard measure of the advantage to leverage compares the values of levered and unlevered assets, and can be misleading and difficult to interpret. We show that a meaningful measure of the advantage to debt is the extra rate of return, net of a market premium for bankruptcy risk, earned by a levered firm relative to an otherwise-identical unlevered firm. We construct an option valuation model to calculate such a measure and present extensive simulation results. We use this model to compute optimal debt maturities, show how this approach can be used for capital budgeting, and discuss its implications for the comparison of bankruptcy costs versus tax shields.

Gravity on a Little Warped Space

We investigate the consistent inclusion of 4D Einstein gravity on a truncated slice of AdS_5 whose bulk-gravity and UV scales are much less than the 4D Planck scale, M_* << M_{Pl}. Such "Little Warped Spaces" have found phenomenological utility and can be motivated by string realizations of the Randall-Sundrum framework. Using the interval approach to brane-world gravity, we show that the inclusion of a large UV-localized Einstein-Hilbert term allows one to consistently incorporate 4D Einstein gravity into the low-energy theory. We detail the spectrum of Kaluza-Klein metric fluctuations and, in particular, examine the coupling of the little radion to matter. Furthermore, we show that Goldberger-Wise stabilization can be successfully implemented on such spaces. Our results demonstrate that realistic low-energy effective theories can be constructed on these spaces, and have relevance for existing models in the literature.Comment: 1+24 page