Faculty Research

Synopsis:

The UC Davis Graduate School of Management with the Forum for Women Entrepreneurs and Executives is proud to publish the fourth annual "UC Davis Study of California Women Business Leaders: A Census of Women Directors and Executive Officers."

Synopsis:

Although stigma has been studied extensively in psychology and sociology, there has been little research on stigmatization in organizational settings. This special topic forum, which includes four articles, builds on previous social science research and expands its coverage both to individuals within organizations and to organizations themselves. As we note here, these four articles provide an opportunity to examine not only the harm caused by stigma but its potential benefits as well.

Synopsis:

This study derives and tests an economic framework that explains the relation between corporate governance and the fees paid by companies for auditing. Importantly, our framework posits and we find that auditing and governance are co-determined by two countervailing relations, namely, a fee-increasing relation because auditing services provide one means to attain better governance, and a fee-decreasing relation because auditors incorporate the benefits of better governance in pricing their services. The study period provides an interesting setting for testing the framework because it covers the passage of the Sarbanes-Oxley legislation, which imposed substantial cost on many companies to strengthen governance, including increased spending on auditing and internal control. Yet, after controlling for such increased spending, our results also suggest that better governance reduces the cost of auditing. Our framework explains that this offset occurs because even though better governance (including auditing) is costly, it also enhances the quality of financial statements and internal controls, which enables auditors to decrease the price of audit risk and reduce fees.

Synopsis:

The topic of nonprofit commercialization has received increased attention from various groups including donors, regulators, and researchers. Perhaps the most commercial of all activities undertaken by nonprofits are those considered to be so far removed from an organization's exempt mission that the Internal Revenue Services (IRS) considers them to be taxable. Examination of these taxable activities can provide unique and valuable insights into the effects of purely commercial activities on nonprofit behavior. Nonprofits report their taxable activities on the confidential IRS 990-T. Although some information on taxable activities is reported on the publicly available IRS 990, unavailability of the IRS 990-T has prevented prior examination of its accuracy and reliability. Using a unique data set of otherwise confidential IRS 990-Ts, the authors calibrate the reliability of taxable activities as reported on the IRS 990, providing a roadmap for researchers to follow when examining nonprofits' taxable activities using publicly available data.

Synopsis:

Current trends in telecommuting and non-territorial office design have changed what it means to work in an on-site office and, subsequently, have increased the number of functions office design is expected to serve. At the same time, innovations in technology and design provide today's managers more choices than ever when outfitting their offices. This article offers a framework of leveraged office design that illustrates how managers can make design choices that both capitalize on the newest innovations in office design and serve the emerging needs of corporate workers. The framework specifically explores three functions of workplace design: instrumental functions, such as improving decision making and inter-group collaboration; symbolic functions, such as affirming individual distinctiveness and group status; and aesthetic functions, such as allowing for desired sensory experiences and promoting a sense of place attachment. This framework illustrates how organizations can capitalize on all three functions through their choices in office décor and layout.

Synopsis:

Have you met Stuart? He’s a redheaded punk with long sideburns who loves to trade. “I don’t want to beat the Market,” says Stuart. “I wanna grab it, sock it in the gut a couple of times, turn it upside down, hold it by the pants and shake it ‘til all those pockets empty out all the spare change.”

Or perhaps you’ve seen the tow truck driver who rescues drivers in broken-down cars because he just likes helping people. He owns his own island. (“Well, technically, it’s a country.”)

Finally, you may have seen the suburban mom who, returning home from jogging with a friend, punches a few keys on her computer, sells a little biotech stock, and announces, “I think I just made about $1,700.” Her deflated friend confesses, “I have mutual funds.” These people are investors in a fictional world created by ad agencies. A world in which trading is an excellent form of cheap entertainment and going it on your own is the only way to go. Does frequent trading bring the same sudden riches to real investors that it showers upon their fictional counterparts?

To answer this, and related questions, we have analyzed the account records of thousands of investors. Our analyses have used data from discount and retail brokerage f rms in the U.S. We have also analyzed the trading records of all investors in Taiwan. Perhaps one of the most compelling and consistent lessons from these studies is the observation that individual investors trade too often and to their detriment. Though frequent trading may be profi table for brokerage firms and the fictional characters who populate their advertisements, it is not profitable for most individual investors. Why do individual investors trade so frequently, if it hurts their performance? We believe one of the main reasons that they do so is overconfidence.

Synopsis:

Many public pension funds engage in institutional activism. These funds use the power of their pooled ownership of publicly traded stocks to affect changes in the corporations they own. I review the theory and empirical evidence underlying the motivation for institutional activism. In theory, the merits of institutional activism hinge critically on two agency costs: (1) the conflicts of interest between corporate managers and shareholders, and (2) the conflicts of interest between portfolio managers and investors. This leads to two types of institutional activism: shareholder activism and social activism. While portfolio managers can use their position to monitor conflicts that might arise between managers and shareholders (shareholder activism), they can also abuse their position by pursuing actions that advance their own moral values or political interests at the expense of investors (social activism). Which of these effects dominates the actions of portfolio managers will determine the value of activism and is an empirical issue. Perhaps the most high profile activism has been pursued by CalPERS with their annual focus list. I document that CalPERS has pursued reforms at focus list firms that would increase shareholder rights and (imprecisely) estimate the total wealth creation from this shareholder activism to be $3.1 billion between 1992 and 2005. Unrelated to the focus list program, CalPERS has also pursued social activism (e.g., the divestment of tobacco stocks). In general, I argue that institutional activism should be limited shareholder activism where there is strong theoretical and empirical evidence indicating the proposed reforms will increase shareholder value. At times, institutions will be forced to take engage in social activism and take positions on sensitive issues. In these situations, I argue portfolio managers should pursue the moral values or political interests of their investors rather than themselves.

Synopsis:

There are two explanations of organizational crime. The dominant one assumes that people make discrete decisions and develop positive dispositions to engage in crime before embarking on criminal behavior. An emerging alternative assumes that people often embark on criminal behavior through a process and without first developing positive dispositions. The authors review the dominant explanation of organizational crime, delve into its two main variants, and provide examples of each. They also review the emerging alternative explanation and outline a variant of this approach that analyzes collective corruption, a form of crime that involves the sustained coordination of multiple organizational participants. Then they propose five ways to extend this model of collective corruption and illustrate their extension by drawing on a detailed account of an illegal stock market transaction taken from "Den of Thieves," by James Stewart. The authors conclude by considering the theoretical and policy implications of the alternative perspective.