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(2020)ThesisThis thesis consists of three chapters. It studies, as a broad theme, the effectiveness of several institutional changes on individual decision-making based on experimental evidence. Chapter 1 is self-contained, with results purely based on a laboratory experiment. Chapter 2 and Chapter 3 are based on one field experiment in education. Chapter 2 describes the experimental settings and presents the overall results of the experiment, whereas Chapter 3 extends the analysis and focuses on treatment effects on women and men respectively. Chapter 1 shows how reward or punishment opportunities change contributions in a public goods game with 'privileged' members, where 'privilege' indicates that one's per-unit contribution to the public good produces a higher monetary return than is the case for others in the group. The main finding is that reward opportunities strongly increase group contributions in such groups while punishment opportunities do not. Reward also mitigates contribution decay over successive periods and improves social welfare. Chapter 2 mainly studies how rank incentives (i.e., relative performance information) in a milestone-based online assignment system affect students' academic performance. I find that rank incentives increase the likelihood of a student putting more effort in the online assignment. Rank incentives also have positive effects on low-performing students' exam marks while they have negative effects on high-performing students' exam marks. The positive effects seem driven by increased self-perceived stress, increased effort, and decreased procrastination. The negative effects seem driven by increased self-perceived happiness and re-allocation of effort. Chapter 3 studies how rank incentives and milestone information (i.e., information with reference to achievement milestones corresponding to different amounts of points earned) affect men's and women's academic performance differently. Women with access to the rank incentives experience a 0.19 SDs mark decrease in the first midterm, compared to women without this access. In the absence of relative performance information, men with access to the milestone information experience a 0.26 SDs mark increase in the final exam, compared to men without the access. The negative effects on women seem driven by their increased stress level, whereas men's improved exam performance seem driven by increased effort.
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(2020)ThesisI investigate the role of foreign patents (patents issued in countries outside of the US) in US firms’ patent portfolios. Foreign patents are substantial and prevalent for US firms. Foreign patents form about 39% of the average patent portfolio of US firms. Firms with foreign patent applications are financially stable, and these firms have a higher percentage of foreign sales to total sales. Besides, I exploit exogenous shocks to foreign sales (free trade agreements and bilateral investment treaties) to identify the effect of foreign sales on the propensity to foreign patent. I find firms with a larger percentage of foreign sales have a higher propensity to foreign patent. Additional analysis reveals US firms have a higher propensity to patent in countries with strong patent rights.
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(2020)ThesisThis thesis is composed of three stand-alone research studies relating to the recent unconventional monetary policy adopted by the Bank of Japan (BOJ). The first study investigates the impact of the BOJ’s policy on stock prices and corporate activities. The empirical results show that the policy has generated heterogenous effects on stock prices. Firms with disproportionately higher BOJ investment experience significantly positive stock returns both in the short term and the long term. Corresponding to the positive price impact, the cost of equity capital reduces and firm value increases. However, further tests fail to find evidence of any real impact. Firms that benefit from a reduction in cost of equity capital do not increase external financing, corporate investment and employment. The concentrated capital structure in Japan and the biased investment scheme adopted may explain this weak policy impact. The second study examines whether and how excess reduction in free float affects stock liquidity. Using the BOJ’s equity purchase program as a natural experiment to tackle endogeneity problems, the results show that firms that experience a larger reduction in free float exhibit a reduction in stock liquidity. The negative effect of free float reduction on stock liquidity survives a battery of robustness tests. Further analyses of the underlying channels show that the number of common shareholders and institutional shareholders in a firm significantly decrease. These findings are consistent with a lack of free floating shares introducing frictions in the process of liquidity provision. The third study examines whether an increase in exchange traded funds (ETF) ownership via indexed investment impedes or improves price efficiency. Utilizing Japan’s ETF purchase program as the identification strategy, empirical tests show that prices of stocks that experience an increase in ETF ownership become less efficient in that they deviate more from a random walk and exhibit longer delays in responding to market information. An increase in ETF ownership is also associated with an increase in post-earnings announcement drift, a decline in analyst coverage, and a reduction in the coefficient of current returns to future earnings. These results together suggest that an excessive increase in ETF ownership curbs information arbitrage activities and results in less informative security prices.
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(2020)ThesisThis thesis consists of three stand-alone research projects on corporate ownership structure across countries, insider trading, and passive institutional investors. The first study examines the effect of social trust on corporate ownership structure. Using a large sample of public firms across 42 countries, I find that a culture of trust in a country leads to a more dispersed corporate ownership structure. I also investigate how trust affects the evolution of ownership structure following firms’ IPO and the channels through which trust leads to dispersed ownership. I show that corporate ownership is more likely to become widely held and diffuses at a faster speed in countries with a higher level of social trust. Trust also encourages the selling of block ownership by large shareholders and the use of equity financing by firms. The second study investigates whether fast economic integration but slow legal integration leads to more aggressive insider trading by foreigners in possession of material non-public information about domestic firms. Using a large sample of mergers and acquisitions (M&As) around the world, I find systematically a higher likelihood of insider trading in target firm securities before the announcements of cross-border deals compared to domestic deals. The difference is mainly driven by cross-border deals where the acquirer is from a country with high corruption and low social norms, and where the target is in a country with stricter enforcement of insider trading laws. The third study examines the role of family interest in explaining and influencing individual funds’ voting behaviour. Specifically, I focus on the voting patterns of index funds in the event of corporate M&As. I find that the interest of fund families in the target is significantly positively associated with the likelihood of an affiliated index fund voting for a deal in the bidder merger approval meeting. However, an index fund’s own interest in the target does not explain its voting pattern. A higher level of aggregate bidder ownership held by fund families that have greater active interest in the target is also associated with worse deal performance. Taken together, the evidence suggests that cooperation between active and index funds within fund families potentially weakens the resistance of bidder shareholders to bad mergers.
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(2021)ThesisHousing wealth is typically the largest component of retirees’ portfolios. Although economic theory predicts that retirees would benefit from using housing wealth as a source of retirement funding, the take-up of enabling products and approaches is low. This thesis addresses three key areas in the utilization of housing wealth in retirement: (i) identification of the preferred home equity release approach for different types of households; (ii) exploration of means to address behavioral impediments to the utilization of housing wealth through equity release products; (iii) investigation of potential demand for long-term care insurance (LTCI) financed through home equity release. Chapter 3 investigates the preferred home equity release approach for retirement, given available options (i.e., downsizing, reverse mortgages, the government-offered Pension Loans Scheme, and home reversion–type schemes) and reflects the current tax, superannuation, and age pension rules in Australia. We use state-of-the-art economic and actuarial modeling to identify the preferred approach for the use of housing wealth by Australian retirees with different marital status, wealth portfolios, and preferences. Chapter 4 uses an online experimental survey administered to a representative sample of Australian (pre-)retiree homeowners to explore whether information framing to address mental accounting and narrow choice bracketing can enhance the demand for reverse mortgages. The information framing to address mental accounting significantly increases the stated demand for reverse mortgages. Chapter 5 presents the results of an online experimental survey administered to a representative sample of Chinese (pre-)retiree homeowners to investigate the demand for LTCI financed through home equity release. We find that access to home equity release products significantly increases the stated demand for LTCI and that the preferred approach is to use a reverse mortgage. Overall, the findings in this thesis confirm that retirees would benefit from using housing wealth to finance retirement. The results also identify approaches to reduce the gap between theoretical and actual demand for home equity release products. The findings provide evidence that government and private providers can use to address barriers to increasing interest in and take-up of home equity release products and to develop new products to enhance the utilization of housing wealth in retirement.
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(2021)ThesisThis thesis examines the role of public information on equity prices. In the first study, we add new evidence that news increases investor disagreement. First, we find that stock prices are convex in relation to news, confirming that prices on news days reflect the risk compensation of opinion divergence. Second, using unexplained trading volume as a proxy for investor disagreement, we find that investor disagreement is positively priced in the cross-section, confirming that news increases investor disagreement. Finally, we distinguish empirically between two competing channels regarding how trading volume gets incorporated into asset prices when trading volume is a proxy for disagreement. We find that news-day unexplained trading volume is associated with high liquidity and low average bias, which reduces the effect of optimistic views. In the second study, motivated by the existing evidence that investors misreaction to news generates skewness and creates mispricing, we draw novel evidence that investors inability to interpret news correctly contributes to the pricing of skewness. Specifically, we find that only the skewness extracted from observed corporate news-day returns is negatively priced. This effect is particularly pronounced for stocks with greater asymmetric responses to good and bad news, and investors lottery preferences do not explain these results. Collectively, our findings suggest that accounting for endogeneity in skewness rather than treating skewness as an exogenous characteristic (lottery feature) of the return distribution is critical for understanding the negative relationship between skewness and future returns. In the final study, we examine the effect of Mercury Retrograde on stock market returns. Focusing on market indexes in 48 countries, we find that the average market returns in Mercury Retrograde periods are about 3.22% annually lower than those in other periods. This effect comes from a belief channel: investors who hold an astrological belief that Mercury Retrograde can destroy their decision-making will stay away from the market. This belief results in a higher risk premium required by remaining investors in sharing more risk. We further confirm that this belief channel concerns belief in ancient Greek culture, highlighting the importance of ancient culture in equity prices. Collectively, our findings suggest that investors may deem some ancient cultures important and behave accordingly.
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(2021)ThesisThe ‘bamboo ceiling’ is a metaphorical term used to explain the underrepresentation of Asians in leadership positions. This includes the individual, cultural and organisational barriers and challenges that Asians encounter on their way to attaining higher-level positions in Western organisations. The aim of this thesis is to provide a more informed understanding of the bamboo ceiling effect and to shape research questions that are of priority areas for knowledge sharing. Chapter 1 introduces the thesis topic and presents a review of the literature on the bamboo ceiling effect. In examining the literature, I synthesise the major findings in the literature, and subsequently gain further insight into under-examined areas. I pool together a series of research questions to guide the subsequent empirical studies (Chapter 2 and Chapter 3) that help explain the bamboo ceiling effect and its potential solutions. Chapter 2 focuses on the lack of knowledge in explaining the bamboo ceiling effect through an emotions perspective—namely, the mediating effect of perceived ability to manage emotions as a way to understand the differences in the leadership promotability of male and female Asian and Caucasian leaders. Chapter 3 addresses the limitations in the field to investigate potential solutions to eliminate the bamboo ceiling. This chapter presents the effect of race of mentors and role models through a two-wave field study, and applies signaling theory and similarity attraction paradigm to highlight the potential benefits for Asians of having a Caucasian mentor and an Asian role model towards their self-perceived leadership promotability. Chapter 4 presents the thesis’ overarching theoretical and practical contributions, alongside limitations and future research proposals.
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(2021)ThesisEthical issues commonly occur within the frontline job context. Failure to handle ethical issues properly may incur damage to company reputation, making the management of frontline employees’ (FLEs) ethical strategies critical. Current literature suggests that ethical strategy is influenced by recognition of ethical issues, a subjective interpretive process that leads individuals to recognise distinct types of ethical issues. Unexpectedly, the existing theoretical frameworks do not account for variations in individuals' recognition of ethical issue types. The absence of such a theoretical framework has precluded previous studies investigating the implications of different ethical issue types on individual ethical decision-making. Building upon social cognition theory and the everyday problem-solving framework, this thesis proposes a theoretical framework that considers individual variations in ethical issue recognition and validates it across four sequential studies using Australian retail FLEs as the sample. Studies 1 and 2 employ a qualitative approach to explore the types of ethical issues being recognised by FLEs (Study 1) and FLEs’ ethical strategy types (Study 2). Studies 1 and 2 produce a taxonomy of ethical issues and a taxonomy of FLE ethical strategies, respectively. Study 3 uses a quantitative survey method to examine the implications of the different ethical issue types recognised by FLEs for ethical strategy, individual (i.e., customer-orientation, ethical ideology, organisational identification and moral identity) and contextual (i.e., ethical work climate, formal ethics system, and supervisor’s ethical leadership) factors, as well as FLE-perceived company reputation. The findings of Study 3 show that each type of ethical issue recognised by FLEs leads to different FLE ethical strategy types. In addition, each ethical issue type is related to different individual and contextual factors. Study 3 also reveals that FLEs’ ethical strategy types do not influence FLE-perceived company reputation. In contrast, using an experimental design, Study 4 demonstrates that FLEs’ ethical strategy types do affect consumer-perceived company reputation. Theoretically, this thesis contributes by establishing a framework accounting for the distinct types of ethical issues recognised by FLEs and the implications for their ethical decision-making process. From a practical perspective, this thesis provides guidelines for companies to manage FLEs’ ethical strategies so as to improve company reputation.
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(2021)ThesisReward-based crowdfunding is rapidly shaping up to be a revolutionary avenue for companies, especially start-ups, to broadcast their businesses and solicit capital through digital platforms. The platformized micro-investment mechanism in crowdfunding creates an unprecedented digital market that ensures a more fluid and granular distribution of financial resources. The Information Systems (IS) community has endeavored to shed light on this growing market by studying the decisive factors that motivate funders’ contributions and lead to crowdfunding success. Yet, despite its risky nature, no study thus far systematically investigates how risk perceptions emerge and impact funders’ investment behavior in reward-based crowdfunding and what companies can do to address funders’ risk concerns. To bridge these gaps, this thesis synthesizes contemporary knowledge on the contextual characteristics of crowdfunding and risks around diverse transactional environments to arrive at a typology of the risks encountered by funders when participating in reward-based crowdfunding. Drawing on the indispensable link between trust and risk, a holistic research model is constructed to: (1) postulate the impact of funders’ risk perceptions on their willingness to invest using a reward-based crowdfunding platform, (2) discern how different types of crowdfunding risks can be mitigated by enhancing the assessability of fundraiser’s trustworthiness, and (3) explore the optimum trust-building mechanisms that can facilitate funders’ assessments of fundraiser’s trustworthiness. Three experimental studies are conducted to validate the advanced research model empirically. The findings from the three studies yield theoretical insights on crowdfunding risks and mechanisms to diminish funders’ risk perceptions via trust-building. The results also yield actionable design principles that platform providers can adopt to help funders assess risk and improve their financing experience in this emerging market.
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(2021)ThesisEmerging technologies are radically changing the future of work. From artificial intelligence for customer support to robotics for performing surgery, the change is unprecedented in the history of most organisations. This thesis aims to understand and contribute rich, empirically informed insights into the phenomenon of the future of work in the context of emerging technologies from an organisational history perspective. The thesis comprises three related but standalone studies that discuss organisational trajectories and the implications of emerging technologies in three distinct organisational contexts. To explore this emerging and intrinsic phenomenon in organisations, this work adopts the historical narrativist approach and the qualitative case study method. The first study explores the interplay between tradition and technology at a pre-digital organisation when new technologies are introduced. The second study delves into the strategies and practices of realising historically embodied process knowledge when adopting a robotic process automation technology at a digitally reformed organisation. The third study traces the evolution of a strategic path towards technology and data driven innovation, from the foundation to the implementation of artificial intelligence technologies, at a born-digital organisation. Each of the three studies provides a distinct but complementary understanding on the role of organisational history by contributing to the theories of imprinting, organisational memory and path dependence. Collectively, the thesis studies contribute to our understanding of “how history matters” in the future of work. The thesis discussion contributes to the literature by integrating the implications of surface- and deep-level effects of emerging technologies for the future of work and how they are shaped by the distant, intermediate and immediate histories of organisations.