Contributions published at Strategic Management and Business Policy (Egon Franck)

Using representative and geocoded data from the Swiss Household Panel and the Swiss Business Census, we estimate the effect of sports activity on health care utilization and health. Because sports activity is likely correlated with unobserved determinants of health care utilization and health, we use the number of sports facilities within 6 miles of the individual’s residence as an instrument. We find that doing sports at least once a week significantly reduces the number of doctor visits, overweight and sleeping problems. The magnitudes of these effects are larger in the IV estimations than in OLS estimations, which are biased toward zero due to reporting errors in sports activity and an omitted variable bias. To know the magnitudes of the causal effects is crucial for any kind of cost-benefit analysis of promoting individual sports activity.

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Existing evidence shows that decision-makers’ social ties to internal co-workers can lead to reduced firm performance. In this paper, we show that decision-makers’ social ties to external transaction partners can also hurt firm performance. Specifically, we use 34 years of data from the National Basketball Association and study the relationship between a team's winning percentage and its use of players that the manager acquired through social ties to former employers in the industry. We find that teams with “tie-hired-players” underperform teams without tie-hired-players by 5 percent. This effect is large enough to change the composition of teams that qualify for the playoffs. Importantly, we show that adverse selection of managers and teams into the use of tie-hiring procedures cannot fully explain this finding. Additional evidence suggests instead that managers deliberately trade-off private, tie-related benefits against team performance.

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We empirically investigate how performance expectations affect top manager replacements. We do so by approximating performance expectations based on professional bookmaker betting odds in professional soccer, thus capturing the effect on the dismissal probability of team coaches. Controlling for team performance and unobserved team heterogeneity, we show that a one-standard-deviation increase of performance expectations nearly doubles the coach’s dismissal probability. Our study represents a strong test for the impact of performance expectations on managerial replacements because accurate performance measures are available at frequent intervals in the controlled field environment of professional soccer. The limitations of transferability are also discussed.

This paper investigates the puzzling coexistence of the quote-driven market structure characterized by traditional bookmakers and the order-driven market structure characterized by betting exchanges in the betting industry. Even though betting exchanges are considered as the superior business model due to less operational risk and lower information costs, bookmakers continue to be successful. We show that liquidity, which is only guaranteed at the bookmaker market, significantly improves the bookmakers' price competitiveness. Using matched panel data of both bookmaker and betting exchange odds for 17,682 soccer matches played worldwide, we find that a major bookmaker offers more favorable odds than a major betting exchange in the early pre-play betting period and less favorable odds shortly before match start.

This paper examines how liquidity affects market efficiency in a market environment where securities' fundamental values are revealed at a predetermined point in time. We employ differences in minimum tick sizes at the betting exchange Betfair which induce exogenous variation in liquidity. The results show that liquidity significantly decreases market efficiency for bets on weekend matches but not for bets on weekday matches. As uninformed noise bettors are more likely to bet on weekends than on weekdays, the type of liquidity seems to matter for market efficiency.

We explore two unexpected changes in flight regulations to estimate the causal effect of aircraft noise on health. Detailed measures of noise are linked with longitudinal data on individual health outcomes based on the exact address information. Controlling for individual heterogeneity and spatial sorting into different neighborhoods, we find that aircraft noise significantly increases sleeping problems and headaches. Models that do not control for such heterogeneity and sorting substantially underestimate the negative health effects, which suggests that individuals self‐select into residence based on their unobserved sensitivity to noise. Our study demonstrates that the combination of quasi‐experimental variation and panel data is very powerful for identifying causal effects in epidemiological field studies.

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Many  scholars  argue  that  the  delegation  of  decision  rights  to  independent  institutions  promotes trust and specific investments. We test this conjecture with variations of the trust game in which the back transfer decision is delegated to a third party. A randomly chosen third  party  with  a  fixed  payment  induces  larger  investments  over  time  although  the  experimental design rules out reputation building. Changes in the third party’s selection procedure  eliminate  this  benefit.  If  the  third  party  gets  a  reward  for  the  appointment,  delegation actually destroys trust. Investors (unwarrantedly) fear a diffusion of responsibility and lower back transfers in this case.