Chuck Pierce Publishes a Series of Human Resource and Research Methods Papers
Aguinis, H., Culpepper, S.A., & Pierce, C.A. (in press). Revival of test bias research in preemployment testing. Journal of Applied Psychology.
We examined the accuracy of the predominant method in HR management for assessing test bias in employee selection. Over 40 years of research using this traditional method suggests that test bias in HR selection devices doesn't exist. Results from our study raise questions about the established conclusion that test bias doesn't exist in HR selection and point to the need to revive test bias research in the context of HR testing and selection.
Aguinis, H., Pierce, C.A., & Culpepper, S.A. (2009). Scale coarseness as a methodological artifact: Correcting correlation coefficients attenuated from using coarse scales. Organizational Research Methods, 12, 623-652.
Researchers in the organizational sciences often use coarse measurement scales. We assess the accuracy of a method for disattenuating correlation coefficients that are biased by scale coarseness in primary-level and meta-analytic studies. We provide researchers with a free web-based computer program that performs the necessary computations to disattenuate the biased correlations.
Finance Insurance & Real Estate (FIR) Department is delivering on cross-disciplinary research and industry collaboration
Jain, Pankaj K., Jain, Sakshi & Rezaee, Zabihollah. Stock market reactions to regulatory investigations: Evidence from options backdating. Research in Accounting Regulation (forthcoming).
The Fogelman College of Business & Economics, in collaboration with corporate partners, is taking the lead in cross-disciplinary research on financial regulations. The article by P.K. Jain (Department of Finance, Insurance & Real Estate), Zabi Rezaee (School of Accounting), and Sakshi Jain (from top four accounting firm Deloitte) was recently accepted in Research in Accounting Regulation, a leading journal in the field. The research finds that investor reactions to accounting probes are modest for internal investigation, larger for SEC probes, and the most severe for Department of Justice investigations.
Sandra Mortal Publishes Research on Financial Markets
McBrady, M., Mortal, S. and Schill, M., “Do Firms Believe in Interest Rate Parity?” Review of Finance, forthcoming
Using a broad sample of international corporate bond offerings, we provide evidence that corporate borrowers make opportunistic currency choices, in that they denominate the currency of their bonds in a manner that is inconsistent with a belief in either covered or uncovered interest rate parity. Using firm-level tests, we identify a number of characteristics of firms that engage in opportunistic behavior. We observe that large issuers located in developed markets with investment-grade ratings and low cash flow characterize those firms that are responsive to covered borrowing rate differences across currencies. Corporate responsiveness to uncovered borrowing rate differences appears more general. We observe that although the gains firms achieve through opportunistic currency denomination are economically significant, the yield differential tends to systematically decline after issuance. This finding suggests that opportunistic issuance by corporations may be a primary mechanism for driving covered interest yields toward parity.
Butler, A. W., Fauver, L., and Mortal, S., “Corruption, Political Connections, and Municipal Finance,” Review of Financial Studies, 22(7), 2009, 2873-2905.
We show that state corruption and political connections have strong effects on municipal bond sales and underwriting. Higher state corruption is associated with greater credit risk and higher bond yields. Corrupt states can eliminate the corruption yield penalty by purchasing credit enhancements. Underwriting fees were significantly higher during an era when underwriters made political contributions to win underwriting business. This pay-to-play underwriting fee premium exists only for negotiated bid bonds where underwriting business can be allocated on the basis of political favoritism. Overall, our results show a strong impact of corruption and political connections on financial market outcomes. This article has been featured in various media outlets including Forbes magazine.
Lipson, M. L., and Mortal, S., “Capital Structure and Liquidity,” Journal of Financial Markets, 12, 2009, 611-644
We examine the relation between equity market liquidity and capital structure. We find that firms with more liquid equity have lower leverage and prefer equity financing when raising capital. For example, after sorting firms into size quintiles and then into liquidity quintiles, the average debt-to-asset ratio of the most liquid quintiles is about 38% while the average for the least liquid quintiles is 55%. Similar results are observed in panel analyses with clustered errors and using instrumental variables. Our results are consistent with equity market liquidity lowering the cost of equity and, therefore, inducing a greater reliance on equity financing.
Fabian examines overseas expansion decisions by Colombian business leaders
Fabian, F.H., Molina, H., and Labianca, G. 2009. Understanding Decisions to Internationalize by Small- and Medium-Sized Firms in an Emerging Market. Management International Review. 49(5): 537-564.
Coauthoring with an administrative dean at a top Colombian business school, we were able to examine the perceptions that differentiated key Colombian decision-makers in 168 small and medium sized enterprises who decided to either internationalize their operations, or remain domestic. We tested an integrative model that compared managerial perceptions of competitive, macro-environmental and neo-institutional factors. We found that having foreign MNEs in the home market significantly increased decisions to internationalize by Colombian managers. Other factors significantly related to the decision to internationalize included the presence of internationalizing domestic competitors, anticipated product acceptance, and internationalizing suppliers. Importantly, we discovered that certain institutional and macro-environmental factors (e.g., a harsh and risky economy) did not drive the internationalization decision, and we posit this may reflect important contextual features of the Colombian business environment.
Emin Babakus Publications
Babakus, Emin, Ugur Yavas, and Nicholas J. Ashill (2009), “The Role of Customer Orientation as a Moderator of the Job Demand – Burnout – Performance Relationship: A Surface-Level Trait Perspective,” Journal of Retailing, 85 (4), 480–492.
This study expands upon previous research on frontline service employee burnout, and examines the role of customer orientation (CO) in the burnout process. Using data from frontline bank employees in New Zealand, the study investigates both the direct relationships of CO to burnout and job outcomes (job performance and turnover intentions) and the buffering role of CO concerning the relationships between job demands, burnout, and job outcomes. The results show that burnout mediates the effects of job demands and job resources on job performance and turnover intentions. Besides being directly related to burnout and job performance, CO also buffers the dysfunctional effects of job demands on burnout and job outcomes.
Davis, Peter S., Emin Babakus, Paula Danskin Englis, and Tim Pett (2010), “The Influence of CEO Gender on Market Orientation and Performance in Service SMEs,” Journal of Small Business Management (forthcoming).
This study examines the effects of CEO gender on market orientation and performance (growth and profitability) among a sample of small and medium-sized service businesses (SMEs). Gender was found to have significant indirect effects (via market orientation) on both market performance (growth) and financial performance (profitability). That is, female-led service SMEs perform significantly better due to their stronger market orientation relative those led by males. The findings further suggest that female-led firms were slightly better than their male-led counterparts in transmitting market performance into financial performance, although the differences were not statistically significant