Do the rich always get richer by investing in a cryptocurrency for which new coins are issued according to a proof-of-stake (PoS) protocol? We answer this question in the negative: Without trading, the investor shares in the cryptocurrency are martingales that converge to a well-defined limiting distribution and, hence, are stable in the long run. This result is robust to allowing trading when investors are risk neutral. Then, investors have no incentive to accumulate coins and gamble on the PoS protocol but weakly prefer not to trade.
参考文献：Ioanid Roşu, Fahad Saleh. Evolution of Shares in a Proof-of-Stake Cryptocurrency. Management Science, 2021, 67(2), 661-672.
General hospitals across the world are becoming larger (i.e., admitting more patients each year) and more complex (i.e., offering a wider range of services to patients with more diverse care needs). Prior work suggests that an increase in patient volume in a hospital service is associated with reduced costs per patient in that service. However, it is unclear how volume changes in one service affect the costs of the other services in the same hospital. This paper investigates such volume-cost spillover effects between elective and emergency admissions and across specialties, using condition-level panel data comprising all acute hospital trusts in England over a period of 10 years. We provide evidence that increased elective volume at a hospital is associated with an increase in the cost of emergency care (a negative spillover). Furthermore, for emergency admissions, we find evidence that increased emergency activity in one specialty is associated with lower costs of emergency care in other specialties (a positive spillover). By contrast, we find no evidence of spillover effects across specialties for elective admissions. We discuss the implications of these findings for individual hospital growth strategies and for the regional organization of hospital systems.
参考文献：Michael Freeman, Nicos Savva, Stefan Scholtes. Economies of Scale and Scope in Hospitals: An Empirical Study of Volume Spillovers. Management Science, 2021, 67(2), 673–697.
Do mass media bias content in favor of advertisers? If so, what market conditions limit or exacerbate this bias? We examine the relationship between advertising by auto manufacturers in U.S. newspapers and news coverage of car safety recalls between 2000 and 2014. This context allows us to separate the influence of advertisers, who prefer less coverage, from that of readers, who prefer more information about the safety risks associated with the recalls. Consistent with theoretical predictions, we find that newspapers provide less coverage of recalls issued by manufacturers that advertised more regularly on their pages over the previous two years. The effect is especially pronounced for more severe recalls, which are more likely to hurt manufacturers' reputations. Competition for readers from other newspapers mitigates proadvertiser bias, and competition for advertising by online platforms exacerbates it. We also present suggestive evidence that less news coverage of recalls is associated with more fatal car accidents.
参考文献：Graham Beattie, Ruben Durante , Brian Knight, Ananya Sen. Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls. Management Science, 2021, 67(2), 698–719.
Using recent chief financial officer surveys, we examine the sensitivity of investment plans to interest rate expectations and find that, for most firms, investment is extremely insensitive to interest rate decreases and only modestly more responsive to increases. Firms cite ample cash holdings as the most frequent reason to explain their lack of sensitivity. This result is consistent with dynamic models of corporate behavior in which firms build cash buffers in anticipation of potential changes in external financing conditions. In the cross section, we find that the investment plans tend to be the least sensitive to interest rate changes at firms that do not expect to borrow over the coming year and firms facing less-binding financing constraints.
参考文献：Steven A. Sharpe, Gustavo A. Suarez. Why Isn't Business Investment More Sensitive to Interest Rates? Evidence from Surveys. Management Science, 2021, 67(2), 720–741.
Firms face a trade-off between patenting, thereby disclosing innovation, and secrecy. We show that this trade-off interacts with firms' financing choices. As a shock to innovation disclosure, we study the American Inventor's Protection Act that made firms' patent applications public 18 months after filing, rather than when granted. We find that such increased innovation disclosure helps firms switch lenders, resulting in lower cost of debt, and facilitates their access to syndicated-loan and public capital markets. Our evidence lends support to the idea that public-information provision through patents and private information in financial relationships are substitutes, and that innovation disclosure makes credit markets more contestable.
参考文献：Farzad Saidi, Alminas Žaldokas. How Does Firms' Innovation Disclosure Affect Their Banking Relationships?. Management Science, 2021, 67(2), 742–768.
We identify analysts' information acquisition patterns by linking EDGAR (Electronic Data Gathering, Analysis, and Retrieval) server activity to analysts' brokerage houses. Analysts rely on EDGAR in 24% of their estimate updates with an average of eight filings viewed. We document that analysts' attention to public information is driven by the demand for information and the analysts' incentives and career concerns. We find that information acquisition via EDGAR is associated with a significant reduction in analysts' forecasting error relative to their peers. This relationship is likewise present when we focus on the intensity of analyst research. Attention to public information further enables analysts to provide forecasts for more time periods and more financial metrics. Informed recommendation updates are associated with substantial and persistent abnormal returns, even when the analyst accesses historical filings. Analysts' use of EDGAR is associated with longer and more informative analysis within recommendation reports.
参考文献：Brian Gibbons, Peter Iliev, Jonathan Kalodimos. Analyst Information Acquisition via EDGAR. Management Science, 2021, 67(2), 769–793.
As a platform improves trust between the two sides of its market to facilitate matching and transactions, it faces an increased risk of disintermediation: with sufficient trust, the two sides may circumvent the platform to avoid the platform's fees. In this paper, we investigate the relationship between increased trust and disintermediation by leveraging a randomized control trial in an online freelance marketplace. We find that enhanced trust increases the likelihood of high-quality freelancers being hired. However, when the trust level is sufficiently high, it also increases disintermediation, which offsets the revenue gains from the increase in hiring high-quality freelancers. We also identify heterogeneity across clients and freelancers in their tendencies to disintermediate. We discuss strategies that platforms can use to mitigate the tension between trust building and disintermediation.
参考文献：Grace Gu, Feng Zhu. Trust and Disintermediation: Evidence from an Online Freelance Marketplace. Management Science, 2021, 67(2), 794–807.
We study whether and how a firm can enhance social contagion simply by varying the message shared by customers with their friends. We focus on two key components of information contained in the message—information about the sender's purchase status prior to referral and information about the existence of referral rewards—and their impacts on the recipient's purchase decision and further referral behavior. In collaboration with an online daily-deal platform, we design and conduct a large-scale randomized field experiment involving more than 75,000 customers to identify the causal effect of different message designs on creating social contagion. We find that small variations in message content can have a significant impact on both recipients' purchase and referral behaviors. Specifically, we find that (1) adding only information about the sender's purchase status increases the likelihood of the recipient's purchase but has no impact on follow-up referrals, (2) adding only information about referral reward increases the recipient's follow-up referrals but has no impact on purchase likelihood, and (3) adding information about both the sender's purchase and the referral rewards increases neither the likelihood of purchase nor follow-up referrals. We build a model to analyze the tradeoff between more adoption and more diffusion and implement the best-performing message design in a production system with millions of shared messages per year (with a projected increase in net profits of more than US$1 million per year). We further exploit the rich heterogeneity in deal, recipient, sender, and social-tie characteristics and examine the mechanisms underlying the effect of message design. The results suggest that both social learning and social utility are at work, and the attenuation in the recipient's purchase is mainly driven by a decrease in social learning resulting from credibility concerns. The findings of the study provide actionable guidelines to firms for optimal design of messages at the aggregate and more granular levels.
参考文献：Tianshu Sun, Siva Viswanathan, Elena Zheleva. Creating Social Contagion Through Firm-Mediated Message Design: Evidence from a Randomized Field Experiment. Management Science, 2021, 67(2), 808-827.
We study a pricing and information provisioning game between a better-informed seller (such as a retailer) and its customers. The seller is (ex post) better informed about product availability and can choose how to communicate this information to the customers. The customers are heterogeneous in their valuation for the product. The firm optimizes on publicly posted prices (which are the same for all customers) and its information provisioning (which can be personalized). Using a Bayesian persuasion framework, we find that public information provisioning, in which the firm sends the same information to all customers, has limited value. However, personalized information provisioning, in which the firm can share different information with different customers, has significant value and has attributes very similar to personalized pricing.
参考文献：Kimon Drakopoulos, Shobhit Jain, Ramandeep Randhawa. Persuading Customers to Buy Early: The Value of Personalized Information Provisioning. Management Science, 2021, 67(2), 828-853.
In services where teams come together for short collaborations, managers are often advised to strive for high team familiarity so as to improve coordination and consequently, performance. However, inducing high team familiarity by keeping team membership intact can limit workers' opportunities to acquire useful knowledge and alternative practices from exposure to a broader set of partners. We introduce an empirical measure for prior partner exposure and estimate its impact (along with that of team familiarity) on operational performance using data from the London Ambulance Service. Our analysis focuses on ambulance transports involving new paramedic recruits, where exogenous changes in team membership enable identification of the performance effect. Specifically, we investigate the impact of prior partner exposure on time spent during patient pickup at the scene and patient handover at the hospital. We find that the effect varies with the process characteristics. For the patient pickup process, which is less standardized, greater partner exposure directly improves performance. For the more standardized patient handover process, this beneficial effect is triggered beyond a threshold of sufficient individual experience. In addition, we find some evidence that this beneficial performance impact of prior partner exposure is amplified during periods of high workload, particularly for the patient handover process. Finally, a counterfactual analysis based on our estimates shows that a team formation strategy emphasizing partner exposure outperforms one that emphasizes team familiarity by about 9.2% in our empirical context.
参考文献：Zeynep Akşin, Sarang Deo, Jónas Oddur Jónasson, Kamalini Ramdas. Learning from Many: Partner Exposure and Team Familiarity in Fluid Teams. Management Science, 2021, 67(2), 854-874.
Trade credit insurance (TCI) is a risk management tool commonly used by suppliers to guarantee against payment default by credit buyers. TCI contracts can be either cancelable (the insurer has the discretion to cancel this guarantee during the insured period) or noncancelable (the terms cannot be renegotiated within the insured period). This paper identifies two roles of TCI: the (cash flow) smoothing role (smoothing the supplier's cash flows) and the monitoring role (tracking the buyer's continued creditworthiness after contracting, which enables the supplier to make efficient operational decisions regarding whether to ship goods to the credit buyer). We further explore which contracts better facilitate these two roles of TCI by modeling the strategic interaction between the insurer and the supplier. Noncancelable contracts rely on the deductible to implement both roles, which may result in a conflict: a high deductible inhibits the smoothing role, whereas a low deductible weakens the monitoring role. Under cancelable contracts, the insurer's cancelation action ensures that the information acquired is reflected in the supplier's shipping decision. Thus, the insurer has adequate incentives to perform its monitoring function without resorting to a high deductible. Despite this advantage, we find that the insurer may exercise the cancelation option too aggressively; this thereby restores a preference for noncancelable contracts, especially when the supplier's outside option is unattractive and the insurer's monitoring cost is low. Noncancelable contracts are also relatively more attractive when the acquired information is verifiable than when it is unverifiable.
参考文献：S. Alex Yang, Nitin Bakshi, Christopher J. Chen. Trade Credit Insurance: Operational Value and Contract Choice. Management Science, 2021, 67(2), 875-891.
The price of new brand-name prescription drugs has been rising fast in the United States. For example, the Amgen cholesterol drug Repatha had an initial list price of $14,523 per year. Patients, even with insurance coverage, must pay out of pocket a significant portion of this price. The treatment might not be successful, and this possibility reduces risk-sensitive patients' incentives to purchase the drug. The high price together with the chance of negative treatment outcomes may lead payers to deny coverage for the drug. Outcome-based pricing has been proposed as a way to reallocate the risks and improve both payer resource allocation and patient access to drugs. According to an outcome-based rebate contract between Amgen and Harvard Pilgrim Healthcare, if a patient on Repatha suffers a heart attack or a stroke, both patient and insurer are refunded the cost of the drug. We use a stylized model to analyze the effect of outcome-based pricing via rebates. Our model captures the interaction between heterogenous, price-sensitive, risk-sensitive patients who decide whether to purchase the drug; a payer deciding whether to provide coverage for the drug; and a price-setting pharmaceutical firm seeking to maximize expected profits. We find that, in many cases, a pharmaceutical firm and payer cannot simultaneously benefit from outcome-based pricing, and who will benefit is determined by the probability of treatment success. Outcome-based pricing thus appears unlikely to solve the issues of high drug prices and high payer expenditures. However, supplementing outcome-based pricing with a transfer payment from firm to payer can make payer and firm (but not necessarily the patients) better off than under uniform pricing when the drug has a low chance of success.
参考文献：Elodie Adida. Outcome-Based Pricing for New Pharmaceuticals via Rebates. Management Science, 2021, 67(2), 892-913.
Initial coin offerings (ICOs) are an emerging form of fundraising for blockchain-based startups. We examine how ICOs can be leveraged in the context of asset tokenization, whereby firms issue tokens backed by future assets (i.e., inventory) to finance growth. We (i) make suggestions on how to design such “asset-backed” ICOs—including optimal token floating and pricing for both utility and equity tokens (a.k.a. security token offerings)—taking into account moral hazard (cash diversion), product characteristics, and customer demand uncertainty; (ii) make predictions on ICO success/failure; and (iii) discuss implications on firm operating strategy. We show that in unregulated environments, ICOs can lead to significant agency costs, underproduction, and loss of firm value. These inefficiencies, however, fade as product margins and demand characteristics (mean/variance) improve, and they are less severe under equity (rather than utility) token issuance. Importantly, the advantage of equity tokens stems from their inherent ability to better align incentives and thus continues to hold even absent regulation.
Amid growing calls for transparency and social and environmental responsibility, companies are employing different strategies to improve consumer perceptions of their brands. Some pursue internal initiatives that reduce their negative social or environmental impacts through responsible operations practices (such as paying a living wage to workers or engaging in environmentally sustainable manufacturing). Others pursue external responsibility initiatives (such as philanthropy or cause-related marketing). Through two experiments conducted in the field and complementary online experiments, we compare how transparency into these internal and external initiatives affects customer perceptions and sales. We find that transparency into both internal and external responsibility initiatives tends to dominate generic brand marketing in motivating consumer purchases, supporting the view that consumers take companies' responsibility efforts into account in their decision making. Furthermore, the results provide converging evidence that transparency into a company's internal responsibility practices can be at least as motivating of consumer sales as transparency into its external responsibility initiatives, incrementally increasing a consumer's probability of purchase by 6.40% and 45.85% across our two field experiments, conducted in social and environmental domains, respectively. Our results suggest that it may be in the interest of both business and society for managers to prioritize internal responsible operations initiatives to achieve both top- and bottom-line benefits while mitigating social and environmental harms.
参考文献：Ryan W. Buell, Basak Kalkanci. How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice. Management Science, 2021, 67(2), 932-950.
Organizations often require agents' private information to achieve critical goals such as efficiency or revenue maximization, but frequently it is not in the agents' best interest to reveal this information. Strategy-proof mechanisms give agents incentives to truthfully report their private information. In the context of matching markets, they eliminate agents' incentives to misrepresent their preferences. We present direct field evidence of preference misrepresentation under the strategy-proof deferred acceptance in a high-stakes matching environment. We show that applicants to graduate programs in psychology in Israel often report that they prefer to avoid receiving funding, even though the mechanism preserves privacy and funding comes with no strings attached and constitutes a positive signal of ability. Surveys indicate that other kinds of preference misrepresentation are also prevalent. Preference misrepresentation in the field is associated with weaker applicants. Our findings have important implications for practitioners designing matching procedures and for researchers who study them.
参考文献：Avinatan Hassidim, Assaf Romm, Ran I. Shorrer. The Limits of Incentives in Economic Matching Procedures. Management Science, 2021, 67(2), 951-963.
Platform businesses are typically resource-intensive and must scale up their business quickly in the early stage to compete successfully against fast-emerging rivals. We study a critical question faced by such firms in the novel context of multicategory two-sided platforms: how to optimally make investment decisions across two sides, multiple categories, and different time periods to achieve fast and sustainable growth. We first develop a two-category two-period theoretical model and propose optimal resource allocation strategies that account for heterogeneous within-category direct and indirect network effects and cross-category interdependence. We find that the proposed strategy shares the spirit of the allocation rules for multiproduct nonplatform firms and single-product platform firms, yet it does not amount to a simple combination of the existing rules. Interestingly, the business model that platforms adopt crucially determines the optimal strategy. Platforms that charge by user should adopt a “reinforcing” rule for both within- and cross-category allocations by allocating more resources toward the stronger growth driver. Platforms that charge by transaction should also adopt the reinforcing rule for within-category allocation, but follow a “compensatory” rule for cross-category and intertemporal allocations by allocating more resources toward the weaker growth driver. We use data from the daily deals industry to empirically identify the network effects, propose alternative allocation strategies stemming from our theoretical findings, and use simulations to show the benefits of these strategies. For instance, we show that reallocating 10% of the average observed investment from Fitness to Beauty can increase profits by up to 15.5% for some cities.
翻译：
参考文献：Hui Li , Qiaowei Shen, Yakov Bart. Dynamic Resource Allocation on Multi-Category Two-Sided Platforms. Management Science, 2021, 67(2), 984-1003.
Firms in many industries engage in price obfuscation—tactics that intentionally make prices more difficult for consumers to discern. Although existing research has focused on the short-term financial gains that motivate firms to obfuscate, reputational concerns may at least partially counteract these incentives if consumers punish deceptive firms via loss of loyalty in future transactions and/or publicly observable negative feedback. This paper addresses the latter possibility, exploring the impact of mandatory shrouded surcharges on firm reputation in the U.S. hotel industry. Using data collected from two major online travel sites, I exploit differences in surcharge disclosure across booking channels to identify the causal effect of hidden “resort fees” on traveler ratings. I find that hidden fees decrease ratings by roughly 0.15 points (on a rating scale ranging from 1 to 5). The magnitude of this effect varies based on firm characteristics, and this variation is consistent with observed heterogeneity in resort fee adoption patterns: when the expected punishment is more severe, firms are substantially less likely to adopt shrouded surcharges. Results shed light on the extent to which reputational mechanisms may act as a check against price obfuscation and other similar practices intended to exploit boundedly rational consumers.
参考文献：Bennett Chiles. Shrouded Prices and Firm Reputation: Evidence from the U.S. Hotel Industry. Management Science, 2021, 67(2), 964-983.
Despite a recent surge in corporate activism, with firm leaders communicating about social-political issues unrelated to their core businesses, we know little about its strategic implications. This paper examines the effect of an employer communicating a stance about a social-political issue on employee motivation, using a two-phase, preregistered field experiment in an online labor market platform. Results demonstrate an asymmetric treatment effect of taking a stance depending on whether the employee agrees or disagrees with that stance. Namely, I observe a demotivating effect of taking a stance on a social-political issue with which employees disagree and no statistically significant motivating effect of taking a stance on a social-political issue with which employees agree. This study has important implications for the nascent scholarship on corporate activism, as well as the scholarship on strategic human capital management.
参考文献：Vanessa C. Burbano. The Demotivating Effects of Communicating a Social-Political Stance: Field Experimental Evidence from an Online Labor Market Platform. Management Science, 2021, 67(2), 1004-1025.
Many firms try to leverage consumers' interactions on social platforms as part of their communication strategies. However, information on online social networks only propagates if it receives consumers' attention. This paper proposes a seeding strategy to maximize information propagation while accounting for competition for attention. The theory of exchange networks serves as the framework for identifying the optimal seeding strategy and recommends seeding people that have many friends, who, in turn, have only a few friends. There is little competition for the attention of those seeds' friends, and these friends are therefore responsive to the messages they receive. Using a game-theoretic model, we show that it is optimal to seed people with the highest Bonacich centrality. Importantly, in contrast to previous seeding literature that assumed a fixed and nonnegative connectivity parameter of the Bonacich measure, we demonstrate that this connectivity parameter is negative and needs to be estimated. Two independent empirical validations using a total of 34 social media campaigns on two different large online social networks show that the proposed seeding strategy can substantially increase a campaign's reach. The second study uses the activity network of messages exchanged to confirm that the effects are driven by competition for attention.
参考文献：Sarah Gelper, Ralf van der Lans, Gerrit van Bruggen. Competition for Attention in Online Social Networks: Implications for Seeding Strategies. Management Science, 2021, 67(2), 1026-1047.
Precise, compared with round, asking prices lead to counteroffers and final agreements that are closer to the asking price. Consequently, popular advice for sellers is to set precise asking prices. We propose that the advice is useful, but only in a buyer's market, in which buyers counter below the asking price. In a seller's market, in which buyers counter above the asking price, sellers who wish to receive high counteroffers and sell for high prices should set round asking prices. A preregistered study (n = 1,809) shows that, compared with round asking prices, precise prices lead to higher counteroffers in a buyer's market but to lower counteroffers in a seller's market. The effect is driven by buyers' use of a finer-grained pricing scale when countering precise asking prices. An analysis of transactions (n = 8,278) from Amsterdam's 2017 real estate market, in which 70% of the properties were sold above the asking price, corroborates the experimental findings. Results show that increasing the roundness of the asking price by one decimal, for instance, from precise to the thousands to precise to the tens of thousands, was associated with an increase of 0.6% in the selling price, equivalent to €2,099 on average.
参考文献：Margarita Leib, Nils C. Köbis, Marc Francke, Shaul Shalvi, Marieke Roskes. Precision in a Seller's Market: Round Asking Prices Lead to Higher Counteroffers and Selling Prices. Management Science, 2021, 67(2), 1048-1055.
We analyze the bidding behavior of expectations-based loss-averse bidders in auctions with interdependent values. We emphasize the difference between the risk bidders face over whether they win the auction (extensive risk) and the risk they face over the value of the prize conditional on winning (intensive risk). The extensive risk creates an “attachment” effect, whereas the intensive risk operates via a “comparison” effect. How loss-averse bidders react to these different risks depends on whether they incorporate their bid into their reference point. Under “unacclimating personal equilibrium” (UPE), where bidders keep their expectations fixed when choosing their bids, both the extensive and intensive risks induce them to bid more aggressively. Moreover, bidders are exposed to the “winner’s curse” and a seller can attain higher revenue by hiding information in order to leverage the intensive risk. By contrast, under “choice-acclimating personal equilibrium” (CPE), where a bid determines both the reference lottery and the outcome lottery, the intensive risk creates a “precautionary bidding” effect that pushes bidders to behave less aggressively; whether this effect is reinforced or undermined by the extensive risk depends on a bidder’s likelihood of winning the auction. Furthermore, bidders are less aggressive than under UPE and can be subject to a “loser’s curse.” Yet, by committing to bidding less aggressively, such as by engaging in proxy bidding, loss-averse bidders are better off under CPE than UPE.
参考文献：Benjamin Balzer, Antonio Rosato. Expectations-Based Loss Aversion in Auctions with Interdependent Values: Extensive vs. Intensive Risk. Management Science, 2021, 67(2), 1056-1074.
We study the canonical problem of maximizing a stochastic submodular function subject to a cardinality constraint, where the goal is to select a subset from a ground set of items with uncertain individual performances to maximize their expected group value. Although near-optimal algorithms have been proposed for this problem, practical concerns regarding scalability, compatibility with distributed implementation, and expensive oracle queries persist in large-scale applications. Motivated by online platforms that rely on individual item scores for content recommendation and team selection, we study a special class of algorithms that select items based solely on individual performance measures known as test scores. The central contribution of this work is a novel and systematic framework for designing test score–based algorithms for a broad class of naturally occurring utility functions. We introduce a new scoring mechanism that we refer to as replication test scores and prove that as long as the objective function satisfies a diminishing-returns condition, one can leverage these scores to compute solutions that are within a constant factor of the optimum. We then extend these scoring mechanisms to the more general stochastic submodular welfare-maximization problem, where the goal is to partition items into groups to maximize the sum of the expected group values. For this more difficult problem, we show that replication test scores can be used to develop an algorithm that approximates the optimal solution up to a logarithmic factor. The techniques presented in this work bridge the gap between the rigorous theoretical work on submodular optimization and simple, scalable heuristics that are useful in certain domains. In particular, our results establish that in many applications involving the selection and assignment of items, one can design algorithms that are intuitive and practically relevant with only a small loss in performance compared with the state-of-the-art approaches.
参考文献：Shreyas Sekar, Milan Vojnovic, Se-Young Yun. A Test Score-Based Approach to Stochastic Submodular Optimization. Management Science, 2021, 67(2), 1075-1092.
We propose a dynamic portfolio choice model with the mean-variance criterion for log returns. The model yields time-consistent portfolio policies and is analytically tractable even under some incomplete market settings. The portfolio policies conform with conventional investment wisdom (e.g., richer people should invest more absolute amounts of money in risky assets; the longer the investment time horizon, the more proportional amount of money should be invested in risky assets; and for long-term investment, people should not short-sell major stock indices whose returns are higher than the risk-free rate), and the model provides a direct link with the constant relative risk aversion utility maximization in a complete market.
参考文献：Min Dai, Hanqing Jin, Steven Kou, Yuhong Xu. A Dynamic Mean-Variance Analysis for Log Returns. Management Science, 2021, 67(2), 1093-1108.
Because of the intangible and highly uncertain nature of innovation, investors may have difficulty processing information associated with a firm's innovation search strategy. Due to cognitive and strategic biases, investors are likely to pay more attention to unfamiliar explorative patents rather than incremental exploitative patents. We find that innovative firms focusing on exploitation rather than exploration tend to generate superior subsequent short-term operating performance. Analysts do not seem to detect this, as firms currently focused on exploitation tend to outperform the market's near-term earnings expectations. The stock market also seems unable to accurately incorporate information about a firm's innovation search strategy. We find that firms with exploitation strategies are undervalued relative to firms with exploration strategies and that this return differential is incremental to standard risk and innovation-based pricing factors examined in the prior literature. This result suggests a more nuanced view on whether stock market pressure hampers innovation, and may have implications for optimal firm financing choices and corporate disclosure policy.
参考文献：Tristan Fitzgerald, Benjamin Balsmeier, Lee Fleming, Gustavo Manso. Innovation Search Strategy and Predictable Returns. Management Science, 2021, 67(2), 1109-1137.
