Explore research and publications from the faculty at McCombs School of Business.
Assessment of the Effectiveness of Identity-Based Public Health Announcements in Increasing the Likelihood of Complying With COVID-19 Guidelines: Randomized Controlled Cross-sectional Web-Based Study
Alexander S. Dennis, Patricia Moravec, Antino Kim, and Alan R. Dennis; JMIR Public Health and Surveillance 7(4), e25762
Public health campaigns aimed at curbing the spread of COVID-19 are important in reducing disease transmission, but traditional information-based campaigns have received unexpectedly extreme backlash. This study aimed to investigate whether customizing of public service announcements (PSAs) providing health guidelines to match individuals’ identities increases their compliance. We conducted a within- and between-subjects, randomized controlled cross-sectional, web-based study in July 2020. Participants viewed two PSAs: one advocating wearing a mask in public settings and one advocating staying at home. The control PSA only provided information, and the treatment PSAs were designed to appeal to the identities held by individuals; that is, either a Christian identity or an economically motivated identity. Participants were asked about their identity and then provided a control PSA and treatment PSA matching their identity, in random order. The PSAs were of approximately 100 words.We recruited 300 social media users from Amazon Mechanical Turk in accordance with usual protocols to ensure data quality. In total, 8 failed the data quality checks, and the remaining 292 were included in the analysis. In the identity-based PSA, the source of the PSA was changed, and a phrase of approximately 12 words relevant to the individual’s identity was inserted. A PSA tailored for Christians, when matched with a Christian identity, increased the likelihood of compliance by 12 percentage points. A PSA that focused on economic values, when shown to individuals who identified as economically motivated, increased the likelihood of compliance by 6 points. Using social media to deliver COVID-19 public health announcements customized to individuals’ identities is a promising measure to increase compliance with public health guidelines.
Collateral Misreporting in the Residential Mortgage-Backed Security Market
Samuel Kruger and Gonzalo Maturana; Management Science 67(5), 2729-2750
Securitized mortgage appraisals routinely target pre-specified valuations, 45% of purchase loan appraisals exactly equal purchase prices, and appraisals virtually never fall below purchase prices. As a result, appraisals exceed automated valuation model (AVM) valuations 60% of the time and are 5% higher than AVM valuations on average. High appraisals and indicators of appraisal targeting predict loan delinquency and residential mortgage-backed security (RMBS) losses and are priced at the loan level through higher interest rates, but have essentially no impact on RMBS pricing. Selection bias simulations and unfunded loan application appraisals indicate that high appraisals are intentional. The extent to which appraisals exceed AVM valuations varies across loan officers, mortgage brokers, and appraisers, and high appraisals are associated with more repeat business for appraisers, potentially incentivizing appraisers to inflate their appraisals.
Do Marketers Matter for Entrepreneurs? Evidence from a Field Experiment in Uganda
Stephen J. Anderson, Pradeep Chintagunta, Frank Germann, and Naufel Vilcassim; Journal of Marketing 85(3), 78-96
Promoting growth by differentiating products is a core tenet of marketing. However, establishing and quantifying marketing’s causal impact on firm growth, while critical, can be difficult. This article examines the effects of a business support intervention in which international professionals from different functional backgrounds (e.g., marketing, consulting) volunteered time to help Ugandan entrepreneurs improve growth. Findings from a multiyear field experiment show that entrepreneurs who were randomly matched with volunteer marketers significantly increased firm growth: on average, monthly sales grew by 51.7%, monthly profits improved by 35.8%, total assets increased by 31.0%, and number of paid employees rose by 23.8%. A linguistic analysis of interactions between volunteers and entrepreneurs indicates that the marketers spent more time on product-related topics than other volunteers. Further mechanism analyses indicate that the marketers helped the entrepreneurs focus on premium products to differentiate in the marketplace. In line with the study’s process evidence, firms with greater market knowledge or resource availability benefited significantly more than their peers when matched with volunteer marketers. As small-scale businesses form the commercial backbone of most emerging markets, their performance and development are critically important. Marketers’ positive impact on these businesses highlights the need for the field’s increased presence in emerging markets.
Do Political Connections Induce More or Less Opportunistic Financial Reporting? Evidence from Close Elections Involving SEC-Influential Politicians
Ross Jennings, Antonis Kartapanis, and Yong Yu; Contemporary Accounting Research 38(2), 1177-1203
This study explores close US congressional elections involving politicians who have influence over the SEC to examine the effect of firms' political connections on their financial reporting. This question is important in understanding the overall effect of political connections on financial reporting. Our difference-in-differences tests reveal no evidence that firms experiencing a relative increase in political connections report more opportunistically after close elections in anticipation of preferential treatment by the SEC in its enforcement actions. In contrast, we find evidence that these firms report less opportunistically in response to an increase in their connections with SEC-influential politicians. Further tests show that our findings are unlikely to be driven by capital market pressure, managerial equity incentives, or corporate governance. Overall, our results are consistent with political connections mitigating opportunistic reporting through enhanced scrutiny by the SEC of politically connected firms' financial reporting. Our findings provide new insights into the interactions among political connections, SEC oversight, and financial reporting by showing how politically connected firms alter their financial reporting in anticipation of differential treatment by the SEC.
Examining the Examiners: SEC Error Detection Rates and Human Capital Allocation
Matthew Kubic; The Accounting Review 96(3), 313-341
The ability to detect misreporting is an important aspect of financial reporting regulation. I derive a measure of SEC error detection rates using information from comment letter reviews. Conditional on the SEC issuing a comment letter, I find that the review team detects an error resulting in a restatement in 4.6 percent of cases, while firms eventually restate financial reports for 13.6 percent of periods under review. My measure of SEC error detection rates is the ratio of reviews that detect an error to total reviews that could have detected an error. I document a positive association between detection rates and review team size. Using a novel approach to identify examiner characteristics, I show that this association is driven by the number of accountants on the review team. I find an economically insignificant association between individual examiner performance and economic or career incentives.