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End date: 2020 × Start date: 2020 × Item Type: Publication × search.filters.applied.f.resourcesubtype: Dissertation ×

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Essays on the effectiveness and implications of governments' green product incentives

2020-07-22 , He, Cheng

In my dissertation, I empirically study the impact of two of the most common types of state-level government incentives, i.e., HOV-lane exemption and tax credit, in the U.S. automobile industry. Assessing the impact of monetary and non-monetary green-product incentives is challenging given the endogenous nature of governments' incentive provisions. To identify the effect of government incentives on unit sales of green and non-green vehicles, both essays take advantage of policy changes in various U.S. states. From a methodological standpoint, I employ a a multitude of quasi-experimental methods, including difference-in-differences with Coarsened Exact Matching, regression discontinuity in time, and border strategy. The first essay explores the impact of HOV incentive launch and termination in California and Utah on the unit sales of green and non-green vehicles. Unlike previous studies that only examine the launch of the HOV incentive and find an insignificant impact on green vehicle sales, this essay concentrates on its termination. The findings suggest that the termination of the HOV incentive decreases unit sales of green vehicles covered by the incentive by 14.4%. I also provide suggestive evidence that this significant negative effect of HOV incentive termination is through a mechanism related to the primary benefit the incentive provides: time saving. More precisely, the results indicate that the negative effect is more pronounced in counties where consumers value time saving more (i.e., counties with higher income and longer commute to work). In addition, the termination shifts consumers to non-green vehicles with higher performance. Importantly, in line with prior literature, the launch of the HOV incentive is not found to have a significant effect on green vehicle sales. This means that 1) the effect of termination is not simply the opposite of that of launch and 2) the net effect of the HOV incentive is negative. Combined together, the findings imply that governments' green product incentives could backfire. The second essay examines the impact of tax-credit incentive launch in South Carolina on the unit sales of green vehicles and non-green vehicles. Using quasi-experimental methods, I find that the introduction of the tax-credit incentive leads to a 25.1% increase in the unit sales of green vehicles, while the unit sales of non-green vehicles remain unchanged. I also provide suggestive evidence that the tax-credit incentive is effective through the cost-saving mechanism. Specifically, the tax-credit incentive is more effective in counties where consumers value cost saving more (i.e., counties with lower income). Additionally, the incentive induces substitution from non-green vehicles with high fuel efficiency. The results also indicate that the tax-credit incentive does not result in market expansion for green vehicles. Therefore, the increased demand for green vehicles covered by the tax-credit incentive mainly comes from demand substitution from gasoline vehicles with high fuel efficiency.

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Courageous Followership: An Investigation of the Nature, Antecedents, and Outcomes of a Multidimensional Construct

2020-06-17 , Hogan, Toschia M.

Evolving views of followers and power in today’s increasingly complex and turbulent business environments provides a backdrop for the emergence of scholarly and industry intrigue in the role and behavior of followers. Surprisingly, although it is widely acknowledged that without followers, there is no leader and that followership shapes employee performance, empirical investigations of effective followership remains scarce. Thus, in this dissertation, I examine the nature of followership and the coinciding influence of courage in followers. Specifically, integrating the nascent followership and courage literature, I introduce a new conceptualization of courageous followership and validate a newly developed multi-dimensional measure of the construct (Study 1). In a separate study, integrating event system and trait activation theories to develop and test an interactionist model, I investigate whether perceptions of leader characteristics (i.e., resilience and relational energy) foster followership behavior (i.e., courageous followership) and followership outcomes (i.e., follower creativity). Furthermore, I hypothesize that the strength of a weak situation (i.e., disruptive event criticality) influences the relationship between leader resilience and courageous followership and more so when perceptions of leader relational energy are high. The findings of the person-event interactionist model illustrate the independent and synergistic causes of a new type of followership behavior and substantiate the effectiveness of followership in inspiring meaningful outcomes for employees. Theoretical and practical implications, along with directions for productive future followership research, are discussed.

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Essays on financial intermediation and household finance

2020-07-14 , Paradkar, Nikhil Dilip

This dissertation consists of three essays on the intersection of financial intermediation and household finance. In the first essay, using proprietary account-level data from a major credit bureau, I examine the impact of stress tests on bank risk-taking in the U.S. consumer credit card market. I decompose credit supply and demand effects by exploiting credit card--level data on limits and balances matched to both consumers and banks. For the same consumer, I examine the lending response of banks experiencing higher stress test--induced capital requirements (i.e., high-exposure banks) relative to less-exposed banks. I find that the earlier rounds of stress tests induced high-exposure banks to sharply reduce credit limits, especially for ex-ante risky borrowers. In contrast, in later rounds of stress tests, high-exposure banks increased limits for risky consumers. Consistent with higher bank risk-taking in later rounds, cards issued by highly exposed banks have a higher ex-post likelihood of default. Additionally, I document that more affected non-prime borrowers are more likely to default subsequently, and that this effect is markedly pronounced for the low-income and less-educated consumer segments. My findings suggest that stress test--induced increases in capital requirements can encourage higher bank risk-taking, with distributional consequences for consumer creditworthiness. In the second essay, using comprehensive credit bureau data, we study how obtaining marketplace lending (MPL) credit impacts consumers' future borrowing capacities and outcomes. We find that MPL borrowers' credit scores improve temporarily after loan origination relative to observably similar bank borrowers and borrowers with unmet credit demand, but MPL borrowers default at higher rates subsequently. We show that the initial improvement in capacities is somewhat mechanical, while the subsequent deterioration in outcomes indicates MPLs' screening is weaker relative to banks. MPL screening relative to banks is especially weaker when banks have relationship-based information and when MPL platforms provide less information to MPL investors. In the third essay, using comprehensive credit card--borrower--bank matched data of approximately 500 million credit cards in the U.S., we analyze how a sharp unexpected decline in banks' short-term wholesale funding in 2008 affected their consumers. We decompose credit supply and demand effects using the sudden dry-up of short-term wholesale funding (which accounted for 17.8% of bank funding pre-2008) and account-level data on credit card limits and balances. For the same consumer, credit card issuers experiencing a 10% greater decline in wholesale funding reduced credit limits by 0.9% more relative to other issuers. Consumers' aggregate card balances decreased by 0.32% for a 1% reduction in aggregate limits induced by the wholesale funding liquidity shock. We document significant heterogeneity in the pass-through of the bank liquidity shocks with banks cutting credit limits by more for credit-constrained consumers (e.g., lower credit-score and higher credit utilization consumers). These consumers respond by cutting their consumption as they are less able to borrow from alternate sources. Moreover, this consumption decline is long-lasting for these credit-constrained consumers. Our results highlight that when banks face liquidity shocks, they are more likely to pass on these shocks to consumers who are least able to hedge against them. Consequently, our results show who bears the real costs of fragile bank funding structures.

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Behavioral research on sustainable and socially/environmentally responsible operations

2020-06-16 , Mahmoudzadeh, Mahdi

With the growth of global interest in sustainability and social responsibility, more companies and manufacturers have started practicing sustainable operations and social and environmental responsibility in their supply chains. Recent advancements in the field of behavioral economics have uncovered many relevant insights that can be of help in understanding interests and motives among different entities in supply chains including suppliers, manufacturers, policy makers, and customers. Utilizing both experimental and analytical methods, this dissertation's focus is to incorporate some of the relevant insights from behavioral economics into topics related to sustainable operations, circular economy, and social responsibility in supply chains. The first chapter looks at replacement purchases and buyback schemes by durable goods manufacturers. In contrast to the classical model and conventional wisdom that ignore the relevance of framing effects in difference schemes, this chapter explores the framing difference between trade-ins and upgrades and studies how relaxing the equivalence assumption modifies predictions of the classical model and provides predictions more in line with today's durable goods markets. The second chapter looks at social/environmental responsibility in supply chains and examines what type of consumer reactions—encouraging ones that highlight the value of responsible sourcing or discouraging ones that highlight the possibility of a consumer boycott—can lead supply chains towards more responsible sourcing. Our results enrich the normative model's insights and lead to a straightforward recommendation for NGOs that is also in line with what can be expected from consumers. This third chapter, motivated by Best Buy's recent recycling program, studies the potential of a charging for recycling program from a circular economy perspective. We find evidence that, in contrast to the long-standing practice of free recycling, charging for recycling can increase adoption of green electronics among consumers. This chapter suggests that current environmental laws that prohibit retailers from charging for recycling may be counterproductive to circular economy.

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NETWORK ANALYSIS OF STOCK MARKETS

2020-06-22 , Wei, Fengrong

This dissertation consists of three essays on the application of network methods in finance study at the country-level, firm-level, and fund-level. In the first essay, we extend the analysis of globalization from the market factor to the rest of Fama-French factors and the Carhart momentum factor. The findings show that most of the sample local factors are significantly globalized, with the degree of globalization varying substantially across factors. Specifically, the market factor is the most globalized factor on average, followed by the momentum, size, value, profitability, and investment factors. In addition, we show that the impact of financial globalization has been imputed in the local factors, which explains the intriguing finding of integrated international asset pricing. That is, the local Fama-French factors outperform the global counterparts in pricing stocks, seemingly suggesting that stocks are priced as if financial markets were segmented despite the evident globalization. Our results indicate that this puzzle is attributable to the globalization of local factors. In the second essay, we propose a system-wide approach to the study of the firm-specific connections, which capture the distinct relatedness between firms through unique features, conditional on the U.S. market. The proposed approach provides a new system-wide and factor-free measurement of market integration. We find that the degree of the firm-specific connections has decreased over time, and industry and style attributes significantly positively affect these connections. By applying these connections, investors can consistently gain through holding relatively few stocks randomly chosen across communities clustered based on these connections. Moreover, this consistency of gains has increased substantially over time, pointing to the importance of considering the firm-specific connections in risk diversification. In the third essay, we use holding-linked network of mutual funds, measured by the similarity between funds' portfolios, to examine the network predictability of fund performance and flows. Using the new network method, we find evidence of significant predictability between funds with similar holdings. The predictability persists three to six months for alternative performance measures and at least twelve months for fund flows. In addition, a long-short strategy based on these holding links yields a significant annual alpha of about 4.5%. These findings reflect the similar underlying drivers of funds' portfolio holdings and show the persistent prediction of fund performance and flows by the holding linked network.

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Interactions and Innovation

2020-03-20 , Roche, Maria Patricia

Interaction between individuals is especially crucial for innovation as it enables the exchange and recombination of knowledge necessary to create new or improve existing technologies, processes, or products. In my dissertation, I examine the impact of interpersonal exchange on innovation in three different contexts: neighborhoods, co-working spaces, and university laboratories. On the neighborhood-level, I analyze how the physical layout of cities affects innovation by influencing the organization of knowledge exchange. Here, I exploit a novel data set covering all Census Block Groups in the contiguous United States with information on innovation outcomes, street infrastructure, as well as population and workforce characteristics. My results suggest that variation in street network density may explain regional innovation differentials beyond the traditional location externalities found in the literature. In the second chapter (co-authored), I examine the interplay between physical proximity and other proximity dimensions in predicting technology adoption decisions at one of the largest technology co-working spaces in the United States deriving important implications for firm performance. I discuss the role of balancing physical and other proximity dimensions in promoting the diffusion of ideas within a fast-changing entrepreneurial ecosystem through organizing personal interactions. Finally, in the third chapter, I analyze the impact of exposure to an entrepreneurial lab head on the innovative output of their PhD students. Using a unique matched sample of advisors and advisees in computer sciences and engineering at a top US research university, my findings indicate important hidden costs to academic entrepreneurship that fall largely on the shoulders of PhD students. Overall, this dissertation takes an important step towards understanding how the environments of knowledge producers impact innovation via the extent to which they enable or inhibit interpersonal exchange and influence the types of interactions that occur among individuals.

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