Business Commons^™

Detecting Concealment Of Intent In Transportation Screening: A Proof Of Concept, Judee K. Burgoon, Douglas P. Twitchell, Matthew L. Jensen, Thomas O. Meservy, Mark Adkins, John Kruse, Amit V. Deokar, Gabriel Tsechpenakis, Shan Lu, Dimitris N. Metaxas, Jay F. Nunamaker Jr., Robert E. Younger

Faculty Publications

Transportation and border security systems have a common goal: to allow law-abiding people to pass through security and detain those people who intend to harm. Understanding how intention is concealed and how it might be detected should help in attaining this goal. In this paper, we introduce a multidisciplinary theoretical model of intent concealment along with three verbal and nonverbal automated methods for detecting intent: message feature mining, speech act profiling, and kinesic analysis. This paper also reviews a program of empirical research supporting this model, including several previously published studies and the results of a proof-of-concept study. These studies …

An Empirical And Consumer Psychology Analysis Of Trademark Distinctiveness, Thomas R. Lee, Eric D. Derosia, Glenn L. Christensen

Faculty Publications

This article analyzes the taxonomy of trademark distinctiveness that has long been endorsed in the courts and scholarly commentary. This distinctiveness scale is routinely justified on the basis of an assumption about consumer psychology: that consumers perceive suggestive, arbitrary, or fanciful marks as source-indicating, but see descriptive marks as "merely descriptive." Although this core premise of trademark law is a fundamental matter of consumer psychology, it has never been subjected to scrutiny under the light of consumer psychology theory and empirical analysis. We offer a consumer psychology model for questioning the law of distinctiveness (or "source indication") and then test …

Reinforcement Learning And Savings Behavior, James J. Choi, David Laibson, Brigitte C. Madrian, Andrew Metrick

Faculty Publications

We show that individual investors over-extrapolate from their personal experience when making savings decisions. Investors who experience particularly rewarding outcomes from 401(k) saving—a high average and/or low variance return—increase their 401(k) savings rate more than investors who have less rewarding experiences. This finding is not driven by aggregate time-series shocks, income effects, rational learning about investing skill, investor fixed effects, or time-varying investor-level heterogeneity that is correlated with portfolio allocations to stock, bond, and cash asset classes. We discuss implications for the equity premium puzzle and interventions aimed at improving household financial outcomes.

Measuring Marital Satisfaction: A Comparison Of The Revised Dyadic Adjustment Scale And The Satisfaction With Married Life Scale, Peter J. Ward, Neil R. Lundberg, Ramon Zabriskie, Kristen Berrett

Faculty Publications

Marital satisfaction has been psychometrically measured using many different instruments not soundly based on theory. The Revised Dyadic Adjustment Scale (RDAS), consisting of 14 items, is commonly accepted by researchers and practitioners tomeasure marital satisfaction but was not specifically designed to measuremarital satisfaction. The Satisfaction with Married Life Scale (SWML), consisting of five items, is a short scale specifically targeted toward measuring marital satisfaction. An online sample collected from 1,187 couples throughout the United States was used to compare these instruments’ correlation (r¼.782), factor structures, reliability (SWML, a¼.958; RDAS, a¼.943), theoretical foundation, and validity. These instruments are on parity with …

Reducing The Complexity Costs Of 401(K) Participation Through Quick Enrollment, James J. Choi, David Laibson, Brigitte C. Madrian

Faculty Publications

Previous research has shown that 401(k) participation increases dramatically when companies switch from an opt-in to an opt-out (or automatic) enrollment regime (Madrian and Shea 2001; Choi et al. 2004; Choi et al. 2006). Although automatic enrollment has been widely touted as an effective tool for encouraging saving, it has its detractors. Some libertarians dislike automatic enrollment because they view it as coercing individuals into the company-chosen default contribution rate and asset allocation. Indeed, the vast majority of automatically enrolled employees passively accept all of the defaults in the short run, and many remain at those defaults for years (Choi …

Lockups Revisited, James C. Brau, Val E. Lambson, Grant Mcqueen

Faculty Publications

Lockups are agreements made by insiders of stock-issuing firms to abstain from selling shares for a specified period of time after the issue. Brav and Gompers (2003) suggest that lockups are a bonding solution to a moral hazard problem and not a signaling solution to an adverse selection problem. We challenge this conclusion theoretically and empirically. In our model, insiders of good firms signal by putting and keeping (locking up) their money where their mouths are. Our model yields two comparative statics: lockups should be shorter when a firm is i) more transparent and/or ii) more risky. Using a sample …

Procter & Gamble’S Pur Water Purifier: The Hunt For A Sustainable Business Model, Lisa Jones Christensen, Jessica Thomas

Faculty Publications

Over the last 6 years, under the leadership of Dr. Greg Allgood, director of the Children’s Safe Drinking Water Program, P&G has helped to distribute 65 million PuR packets. These packets have been used to purify 650 million liters of water, most often in rural locations. Over time, and through a variety of deliberate partnerships that Allgood cultivated in 10 countries, P&G has tested three different sales and distribution models: commercial marketing, social marketing and disaster relief-- each with varying degrees of success. Drawing from past successes and failures, Allgood is considering how to fulfill P&G’s aggressive commitment to providing …

An Exploration Of A Model Of Social Networks And Multilateral Negotiations, Bruce Money, Chad R. Allred

Faculty Publications

Multilateral (many‐party) negotiations are much more complex than traditional two‐party negotiations. In this article, we explore a model of social network activity, especially clique formation, among parties engaged in multilateral negotiation and the implications that such networks might have on the negotiation process and outcome. Using data collected from 375 subjects participating in a negotiation simulation, our results reveal that, primarily, the negotiator’s perspectives of clique formation (coalition building) — both his or her own and the other party’s — have unique effects on the integrative, problem‐solving approaches used in the process and on the negotiator’s satisfaction with outcomes. Secondarily, …

Family Leisure Satisfaction And Satisfaction With Family Life, Joel R. Agate, Ramon B. Zabriskie, Sarah Taylor Agate, Raymond Poff

Faculty Publications

The purpose of this study was to examine the relationship between family leisure satisfaction and satisfaction with family life. Zabriskie’s Family Leisure Activity Profile was used to measure family leisure satisfaction. The Satisfaction with Family Life Scale was used to measure satisfaction with family life. The sample consisted of 898 families from throughout the United States. Results indicated a relationship between all family leisure satisfaction variables and satisfaction with family life. Data collected from parents and youth provided insight into the relationship between family leisure satisfaction and satisfaction with family life. At the parent, youth, and family levels, core family …

Determinants Of Vertical Integration: Financial Development And Contracting Costs, Daron Acemoglu, Simon Johnson, Todd Mitton

Faculty Publications

We study the determinants of vertical integration in a new data set of over 750,000 firms from 93 countries. We present a number of theoretical predictions on the interactions between financial development, contracting costs, and the extent of vertical integration. Consistent with these predictions, contracting costs and financial development by themselves appear to have no effect on vertical integration. However, we find greater vertical integration in countries that have both greater contracting costs and greater financial development.We also show that countries with greater contracting costs are more vertically integrated in more capital-intensive industries.

Learning By Trading, Amit Seru, Tyler Shumway, Noah Stoffman

Faculty Publications

Using a large sample of individual investor records over a nine-year period, we analyze survival rates, the disposition effect and trading performance at the individual level to determine whether and how investors learn from their trading experience. We find evidence of two types of learning: some investors become better at trading with experience, while others stop trading after realizing that their ability is poor. A substantial part of overall learning by trading is explained by the second type. By ignoring investor attrition, the existing literature significantly overestimates how quickly investors become better at trading.

Mental Accounting In Portfolio Choice: Evidence From A Flypaper Effect, James J. Choi, David Laibson, Brigitte C. Madrian

Faculty Publications

Consistent with mental accounting, we document that investors sometimes choose the asset allocation for one account without considering the asset allocation of their other accounts. The setting is a firm that changed its 401(k) matching rules. Initially, 401(k) enrollees chose the allocation of their own contributions, but the firm chose the match allocation. These enrollees ignored the match allocation when choosing their own-contribution allocation. In the second regime, enrollees simultaneously selected both accounts’ allocations, leading them to mentally integrate the two. Own-contribution allocations before the rule change equal the combined own- and match-contribution allocations afterwards, whereas combined allocations differ sharply …

Optimal Defaults And Active Decisions, Gabriel D. Carroll, James J. Choi, David Laibson, Brigitte C. Madrian, Andrew Metrick

Faculty Publications

Defaults often have a large influence on consumer decisions. We identify an overlooked but practical alternative to defaults: requiring individuals to make an explicit choice for themselves. We study such “active decisions” in the context of 401(k) saving. We and that compelling new hires to make active decisions about 401(k) enrollment raises the initial fraction that enroll by 28 percentage points relative to a standard opt-in enrollment procedure, producing a savings distribution three months after hire that would take 30 months to achieve under standard enrollment. We also present a model of 401(k) enrollment and derive conditions under which the …

Earnings Management In Ipos: Post-Engagement Third-Party Mitigation Or Issuer Signaling?, James C. Brau, Peter M. Johnson

Faculty Publications

Initial public offering (IPO) firms typically hire auditors, underwriters, and attorneys to assist in the IPO process. Many firms that take the IPO route are also backed by venture capitalists. In the extant literature, these four specialists (auditors, underwriters, attorneys, and venture capitalists) are termed third-party certifiers. In this study, we examine 3900 IPOs from 1985 to 2005 and document a significant negative and robust correlation between IPO firm earnings management and the presence of prestigious third-party certifiers. Next, we test if this correlation is driven by (1) IPO firms attempting to signal firm quality or (2) third-party certifiers mitigating …

Contributions Of Family Leisure To Family Functioning Among Families That Include Children With Developmental Disabilities, Dorthy C. H. Dodd, Ramon Zabriskie, Mark A. Widmer, Dennis Eggett

Faculty Publications

The purpose of this study was to examine the relationship between family leisure involvement and family functioning among families that include children with developmental disabilities. The sample consisted of 144 families (144 parents and 60 youth). Data were analyzed from the parent, youth, and family perspective. The Family Leisure Activity Profile (FLAP) was used to measure family leisure involvement. FACES II was used to measure family functioning. A scale based upon the definition, classification, and systems of support manual of the American Association on Mental Retardation adapted by Dyches was used to measure the level of support needed by the …

The Cmc Interactivity Model: How Interactivity Enhances Communication Quality And Process Satisfaction In Lean-Media Groups, Paul Benjamin Lowry, Nicholas C. Romano Jr., Jeffrey L. Jenkins, Randy W. Guthrie

Faculty Publications

Process satisfaction is one important determinant of work group collaborative system adoption, continuance, and performance. We explicate the computermediated communication (CMC) interactivity model (CMCIM) to explain and predict how interactivity enhances communication quality that results in increased process satisfaction in CMC-supported work groups. We operationalize this model in the challenging context of very large groups using extremely lean CMC. We tested it with a rigorous field experiment and analyzed the results with the latest structural equation modeling techniques. Interactivity and communication quality dramatically improved for very large groups using highly lean CMC (audience response systems) over faceto- face groups. Moreover, …

Audit Standard Setting And Inspection For U.S. Public Companies: A Critical Assessment And Recommendations For Fundamental Change, Steven M. Glover, Douglas F. Prawitt, Mark H. Taylor

Faculty Publications

The Sarbanes-Oxley Act of 2002 (SOX) established the Public Company Accounting Oversight Board (PCAOB) to oversee the public accounting firms that audit publicly traded companies in the U.S. In this commentary we outline why we believe the PCAOB’s audit standard setting and inspection models are inefficient and dysfunctional. We assert that the Board’s ability to achieve its mission is limited by its early choices, together with its incentives, organizational composition, and structure. We support our assertions with a number of indicators of serious problems and flaws in the current approach. We also present high-level recommendations for change for policy makers, …

Expected Idiosyncratic Skewness, Brian H. Boyer, Todd Mitton, Keith Vorkink

Faculty Publications

We test the prediction of recent theories that stocks with high idiosyncratic skewness should have low expected returns. Because lagged skewness alone does not adequately forecast skewness, we estimate a cross-sectional model of expected skewness that uses additional predictive variables. Consistent with recent theories, we find that expected idiosyncratic skewness and returns are negatively correlated. Specifically, the Fama-French alpha of a low-expected-skewness quintile exceeds the alpha of a high-expected-skewness quintile by 1.00% per month. Furthermore, the coefficients on expected skewness in Fama-MacBeth cross-sectional regressions are negative and significant. In addition, we find that expected skewness helps explain the phenomenon that …

Creating Automated Plans For Semantic Web Applications Through Planning As Model Checking, Bonnie Brinton Anderson, James V. Hansen, Paul Benjamin Lowry

Faculty Publications

The uncertainties of planning engendered by nondeterminism and partial observability have led to a melding of model checking and artificial intelligence. The result is planning as model checking. Because planning as model checking tests sets of states and sets of transitions at once, rather than single states, the method remains robust and viable in domains of large state spaces and varying levels of uncertainty.

We develop a test bench for Semantic Web agents and use model-based planning to derive strong plans, strong cyclic plans, and weak plans. Our results suggest potential robustness and efficacy in devising plans for agent actions …

Investor Flows And Stock Market Returns, Brian H. Boyer, Lu Zheng

Faculty Publications

This study simultaneously analyzes the relation between aggregate stock market returns and cash flows (net purchases of equity) from a broad array of investor groups in the United States over a long period of time from 1952 to 2004.We find strong evidence that quarterly flows are autocorrelated for each of the different investor groups.We further document a significant and positive contemporaneous relation between stock market returns and flows of Mutual Funds and Foreign Investors.

Engaging Embedded Information: Toward A Holistic Theory Of Knowledge Transfer In Organizations, Michael P. Thompson, Robert J. Jensen, Kristen Detienne

Faculty Publications

Purpose – The purpose of this paper is to propose a model of knowledge transfer that takes into account both the perspective of the sender and the perspective of the receiver, with an emphasis on the latter. The contention is that, although externalizing knowledge residing in an individual or group and making it accessible to others either through direct communication or embedding information in the organizational system is a necessary component of knowledge transfer, it is not the only component. An equal, but understudied, share of the knowledge transfer effort takes place when the receiver of the knowledge engages with …

Corporate Social Responsibility In Sport: An Overview And Key Issues, Paul C. Godfrey

Faculty Publications

Sport—writ large—exists as a significant social institution, both in terms of economic and social impacts on the society of which it is a key part. This essay provides a systematic introduction to the concept of corporate social responsibility (CSR) for sport management scholars and practitioners. I review the historical development of CSR in the United States, provide a summary of the major theories and models currently in use by theorists and researchers, and identify key issues facing the CSR discourse. I conclude by returning to the notion of sport as an institution and try to raise questions, as an outsider, …

An Empirical Analysis Of Mexican And Us Closed-End Mutual Fund Ipos, James C. Brau, Javier Rodriguez

Faculty Publications

We examine 135 Mexican closed-end fund IPOs and 370 Mexican non-fund IPOs that issued between 1994 and 2003 along with 217 contemporaneous US fund IPOs and document three primary results. First, we find that Mexican IPOs in the aggregate experience no significant underpricing, unlike their US IPO counterparts. Both Mexican and US IPOs experience significantly negative long-run performance. Second, Mexican closed-end fund IPOs experience positive long-run performance, significantly better than Mexican non-fund IPOs which experience negative long-run performance. Unlike Mexican fund IPOs, US fund IPOs experience negative long-run performance. Third, we find that both Mexican and US debt-backed closed-end fund …

Evaluating Impacts Of Microfinance Institutions Using Guatemalan Data, James C. Brau, Shon Hiatt, Warner Woodworth

Faculty Publications

Purpose – The purpose of this paper is to investigate microlending outcomes among Latin American non-governmental organizations (NGOs), specifically microfinance institutions (MFIs). While there is a growing movement of non-profit ventures channeling small loans to the poor worldwide, assessments of their impacts are lacking. Thus, field interviews with clients who had various degrees of involvement in the process of receiving microloans from MFIs were conducted over a summer in Guatemala.

Design/methodology/approach – Using a dataset of 393 clients from Guatemalan MFIs, microfinance impacts from two dimensions are examined and impacts measured along financial and social dimensions by surveying new clients, …

A Behavioral Analysis Of Passphrase Design And Effectiveness, Mark Keith, Benjamin Shao, Paul Steinbart

Faculty Publications

Although the use of multiple methods of user authentication for IT system increases security, passwords are often the only credential required for access. Consequently, the challenge is to discover ways to improve password strength without impairing usability. Longer pass “phrases” have received increased attention as a solution to this challenge because they are potentially more resistant to attacks yet are easy to remember. Recent evidence, however, suggests that passphrases increase the likelihood of typographical errors resulting in login failures and negative user perceptions. This paper presents experimental results that demonstrate well-designed passphrases do not increase login failures and, thereby, generate …

Automatic, Multimodal Evaluation Of Human Interaction, Matthew L. Jensen, Thomas O. Meservy, Judee K. Burgoon, Jay F. Nunamaker Jr.

Faculty Publications

This article outlines an approach for automatically extracting behavioral indicators from video, audio, and text and explores the possibility of using those indicators to predict human-interpretable judgments of involvement, dominance, tension, and arousal. We utilized two-dimensional spatial inputs extracted from video, acoustic properties extracted from audio and verbal content transcribed from face-toface interactions to construct a set of multimodal features.Multiple predictive models were created using the extracted features as predictors and human-coded perceptions of involvement, tenseness, and arousal as the criterion. These predicted perceptions were then used as independent variables in classifying truth and deception. Though the predicted values for …

Internal Audit Quality And Earnings Management, Douglas F. Prawitt, Jason L. Smith, David A. Wood

Faculty Publications

Internal auditors often perform work that is relevant to their host entities’ financial reporting processes, yet little research attention has focused on the effects of internal auditing on companies’ external financial reporting. Using a unique and previously unavailable data set, we investigate the relation between internal audit function (IAF) quality and earnings management. We measure IAF quality using a composite measure comprising six individual components of IAF quality based on SAS No. 65, which guides external auditors in assessing the quality of an IAF with respect to its role in financial reporting. Earnings management is measured using two separate proxies, …

Blind Insights: A New Technique For Testing A Priori Hypotheses With Qualitative Methods, Eric D. Derosia, Glenn L. Christensen

Faculty Publications

The purpose of this paper is to propose and illustrate blind qualitative hypothesis testing, which is a qualitative research technique that further generalizes the well-known notion of “blindness” in research to include a qualitative researcher. The technique introduces a method to test a priori hypotheses using qualitative, emergent observation and analysis without the biasing influence of prior knowledge of the hypotheses being tested.

Disclosure Quality And The Mispricing Of Accruals And Cash Flow, Michael S. Drake, James N. Myers, Linda A. Myers

Faculty Publications

In this paper, we investigate the role that disclosure quality plays in the accurate valuation of accruals and cash flow. We predict that stock prices of firms with higher-quality disclosures more accurately reflect the persistence of accruals and cash flow. We test our predictions using analyst ratings of disclosure published in the annual Association for Investment Management and Research (AIMR) Corporate Information Committee Reports for the years 1982 through 1996. The results provide strong evidence of mispricing for the subset of firms with lower-quality disclosures and of a significant reduction in mispricing for the subset of firms with higher-quality disclosures. …

A Sense Of Things To Come: Future Research Directions In Sensory Marketing, Ryan S. Elder, Nilufer Z. Aydinoglu, Victor A. Barger, Cindy Caldara, Helen Haeeun Chun, Chan Jean Lee, Gina Mohr, Antonios Stamatogiannakis

Faculty Publications

The exciting exploration on sensory marketing presented in this book is just the foundation upon which to build future research. There are myriad unexplored questions and innumerable directions in which to take this research. Our goal in this chapter is not to provide an exhaustive array of these future directions, but rather to stimulate the reader into exploring new ideas. We present possible future directions for each sense individually (vision, audition, smell, touch, taste), and conclude with ideas for future research addressing the interplay among multiple senses within consumer behavior.