Faculty Research

When it comes to business research and theory, McCombs is one of the top institutions in the United States, with faculty and doctoral students who consistently produce some of the most important new work to be found in American business schools. Below are a few current topics being studied at McCombs, including two that were presented to students in the Undergraduate Business Council’s Faculty Research Speaker Series.

Starks Studies “January Effect”
There is new evidence to support the strategy of using closed-end bond funds to make a quick profit at the start of a new year. As reported in Smart Money magazine, research co-authored by Laura Starks, chair of the Department of Finance, showed conclusively that tax selling is behind this “January Effect.” Starks and her co-authors chose closed-end municipal bond funds because their price can be tracked separately from the value of their assets and because their owners tend to be particularly focused on taxes. That allowed the researchers to tell whether the price changes were due to fundamentals or to investor behavior. Their findings, recently published in the Journal of Finance, are striking. The 168 funds in their sample returned an average of 2.21 percent each January between 1990 and 2000, versus just 0.19 percent, on average, in each of the other 11 months.

Managers Must Reinforce Positive Methods for Change
There are good ways and bad ways for an individual to attempt to bring about changes within an organization or workplace, according to Paul Martorana, assistant professor of management. Normative actions are the positive ways employees bring attention to problems and potential new ideas to management. An example Martorana cited was when Hewlett-Packard workers staged a toga play to demonstrate some grievances and suggest alternatives. The skit was eventually viewed by the company’s CEO who took their suggestions seriously enough to implement a few of them. The bad ways are non-normative actions, such as the sabotage-type behavior expressed by a group of disgruntled Bank of America employees. They planted a “logic bomb” in the company’s computer system, destroying an entire client database. “It’s important that when you become a leader or manager that you instill in your employees—or have your management have as a culture within your organization—the importance of normative ways to achieve change,” Martorana said.

Sarbanes-Oxley: Bitter Pill But Good Medicine, Says Prentice
In his lecture, “Sarbanes-Oxley Unfolding,” Robert Prentice, professor of information, risk, and operations management, outlined the Sarbanes-Oxley Act of 2002. The act covers issues such as accounting reform, corporate responsibility, disclosure, governance, new crimes and punishments. Prentice said that while there is a consensus regarding the regulation of accounting and corporate responsibility, the decision is not simply a government movement—corporate newsmakers such as Enron and WorldCom were to blame. “Overall, it’s going to be good for capital markets in America,” he said, “but boy, is it a pain.”

Don’t Believe Everything You See on CSI
Nearly everyone assumes that forensic evidence, such as fingerprints, hair samples, bite marks and tire tracks, provides powerful—if not irrefutable—proof of guilt in criminal cases. Jay Koehler, a professor in the Department of Information, Risk, and Operations Management, challenges that assumption. “Forensic science is a lot less scientific than most of us have been led to believe,” said Koehler, exempting from this assessment DNA evidence, which has been shown to be highly accurate. Koehler criticized the forensic science industry for being reluctant to set standards for training, proficiency testing and courtroom presentations.

Super Bowl Ads Using Extreme Humor May Alienate Some Customers
Researchers in the Marketing Department found that Super Bowl ads using extreme humor may be striking the wrong chord with some consumers. Professors Leigh McAlister and Wayne Hoyer and doctoral student Jennifer Young studied reactions to humor in Super Bowl commercials and analyzed points at which storylines escalate the level of “abnormal behavior,” which usually causes intense feelings about the ad. “There are always these moments when a distinct split in a consumer’s reaction occurs,” McAlister said. “Targeted consumers react positively. Those customers who are not part of the target market react negatively.” The problem for large companies is that while a Super Bowl ad may work very well at capturing the interest of the target audience—usually young, heterosexual males—it may turn off many non-target audience members. “The danger here is that marketers may be affecting their whole portfolio of brands,” Young said.