Egon Franck, European club football after "five treatments" with Financial Fair Play - time for an assessment, In: UZH Business Working Paper Series, No. 377, 2018. (Working Paper)
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UEFA’s Club Licensing and Financial Fair Play Regulations impacted on European club football. After five distinct applications of the break-even requirement, which represents the cornerstone of these regulations, it is time for an assessment. How has the situation in European top-division football changed since the FFP regulation? The most recent financial data show that European club football is characterized by significant financial recovery and further polarization. How has the FFP regulation presumably affected this development? This article discusses plausible reasons why FFP has contributed to financial recovery but has not aggravated polarization. Understanding the drivers of polarization is essential before taking further regulatory steps. |
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Uschi Backes-Gellner, Rankings upon rankings – and no end in sight Discussion of “Quantitative and Qualitative Rankings of Scholars” by Rost and Frey, In: UZH Business Working Paper Series, No. 378, 2011. (Working Paper)
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Katja Rost and Bruno S. Frey address an important topic. They compare two kinds of rankings, a conventional allegedly "quantitative“ publication ranking, and a ranking based on the membership on editorial boards of academic journals, which they call "qualitative“. They find that the relation between the two rankings is not linear, but inversely u-shaped. Consequently, they argue that maximizing publication rankings may lead to a decline in research quality. Therefore, basing promotion decisions solely on publication rankings could be counterproductive for science and hence should be avoided. |
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Uschi Backes-Gellner, Agnes Bäker, Kerstin Pull, The opportunity costs of becoming a dean: Does leadership in academia crowd out research?, In: UZH Business Working Paper Series, No. 379, 2017. (Working Paper)
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Researchers in academia typically perform different tasks: research, teaching and services to the scientific community. We analyze the opportunity costs in terms of a potentially reduced publication productivity associated with becoming a dean in the German institutional setting where deans are non-professional expert-leaders who temporarily take the dean position. Theoretically, we distinguish between two different effects that relate deanship and publication productivity: a resource effect where publication productivity during and – as a result of potentially having developed a taste for service –also post deanship decrease as a result of a reduction of the available time for research and a self-selection effect where pre-deanship publication productivity is lower than that of peers who are not about to become dean. Based on a dataset of 1,110 business and economics researchers from German-speaking universities, we find evidence for a resource effect with leadership in academia reducing research productivity during and also post deanship. We find no evidence of a negative self-selection effect in the sense of less successful researchers being more likely to take the position of a dean. Reduced research productivity during and post deanship as compared to those researchers that never became dean is driven by those researchers who become dean in later periods of their career, i.e., presumably by those who deliberately shift their focus away from research and towards a stronger engagement in the scientific community in their late career years. Early career deans, on the contrary, seem to see their deanship more as a transitory role and are able to compensate the reduced resources during deanship, and they also do not suffer from a reduced publication productivity post deanship. |
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Oliver Merz, Raphael Flepp, Egon Franck, Does sentiment harm market efficiency? An empirical analysis using a betting exchange setting, In: UZH Business Working Paper Series, No. 381, 2019. (Working Paper)
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This paper investigates whether the sentimental preferences of investors influence market efficiency. We use a betting exchange market environment to analyze the influence of sentimental bettors on market efficiency in 2,333 soccer matches played between 2006-2014 during the last three hours of the pre-play period. Contrary to bookmaker markets, there is no intermediary in a betting exchange and, thus, the market prices solely reflect the beliefs of person to person betting. We use three different proxy variables to measure the bettor sentiment and find that price changes are more likely to be inefficient for betting events that are more prone to sentiment. Based on that finding, we propose a trading strategy that generates positive returns before considering the transaction costs and commission fees. Although the returns turn negative after considering the transaction costs and commission fees, the proposed trading strategy still outperforms a random betting strategy. |
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Philippe Meier, Raphael Flepp, Maximilian Valentin Rüdisser, Egon Franck, The advantage of scoring just before the halftime break – pure myth? Quasi-experimental evidence from European football, In: UZH Business Working Paper Series, No. 382, 2019. (Working Paper)
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We examine whether the moment just before the halftime break is a particularly good time to score a goal. Using detailed data from the top five European football leagues between the 2013/14 and 2017/18 seasons, we exploit the quasi-random occurrence of goals scored just before and just after the halftime break. In the former situation, the game is exogenously inter-rupted by a break immediately after the goal, whereas in the latter situation, the game continues without interruption. We show that in the case of a goal being scored just before halftime, the scoring team benefits more from the halftime break than the conceding team. |
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Philippe Meier, Raphael Flepp, Maximilian Valentin Rüdisser, Egon Franck, Investigating the conditions for psychological momentum in the field : evidence from men’s professional tennis, In: UZH Business Working Paper Series, No. 383, 2019. (Working Paper)
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We examine how interruptions and personal and contextual factors affect the manifestation of psychological momentum (PM). Using men’s singles tennis point-by-point data from the two Grand Slam tournaments, Wimbledon and Roland Garros, between 2009 and 2014 (N=29,934), we employ realized break points as the potential triggers of PM and rest periods between two sequential games as the exogenous task interruptions. Controlling for player ability and the state of the match, we find that players are more likely to win the next game after realizing a break point only if there is no rest period between games. Thus, our results suggest that interruptions terminate the momentum effect. Further-more, we find that the effect of PM increases for players with a lesser relative ability and at a later stage within a match, showing the importance of personal and contextual factors for PM. |
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David Oesch, Felix Urban, International PCAOB Inspections and Earnings management Transmission within Multinational Business Groups, In: SSRN, No. 3277474, 2019. (Working Paper)
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Does the impact of international Public Company Accounting Oversight Board (PCAOB) inspections extend beyond country borders of inspected auditors? We investigate this question by examining multinational business groups. Following initial PCAOB inspections of accounting firms auditing foreign U.S.-listed global ultimate owners, our findings indicate that their international subsidiaries decrease earnings management. Research design choices such as the comparison of treated observations with same country-industry-year control observations and a fixed effects structure that controls for country, industry, year, and group characteristics mitigate concerns of omitted variables. Our paper provides evidence for benefits of international PCAOB inspections over and above the previously documented effects for firms located in the countries of the inspected auditors. |
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Nicolas Schweizer, Helmut Max Dietl, Brand Management Throughout Professional Athletes' Careers, In: UZH Business Working Paper Series, No. 350, 2015. (Working Paper)
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This paper examines how professional athletes can optimize commercial revenues from endorsement and sponsorship agreements throughout their careers. We use athlete brand management, defined as the balancing of brand building and brand selling activities, to understand the dynamics of commercial revenues optimization. We develop a conceptual framework that consists of two main blocks. First, we investigate four key determinants for the generation of athletes' accumulated commercial revenues. Second, we analyze appropriate brand management strategies at different stages of an athlete's life cycle. We propose a number of contingencies that refer to an athlete's characteristics, situation, and environment and argue that these contingencies determine the appropriate, i.e. revenues-optimizing, brand management strategy of an athlete at any career stage. Examples of professional athletes' brand management strategies support our framework. To our knowledge, this is the first paper to examine athletes' long-term commercial revenues optimization through athlete brand management. |
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Cornel Nesseler, Carlos Gomez Gonzalez, Helmut Max Dietl, Julio del Corral, The role of African Americans in the executive labor market: the case of head coaching in college basketball, In: UZH Business Working Paper Series, No. 371, 2017. (Working Paper)
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In this paper, we examine how the number of African American and White American coaches in college basketball evolved since 1947. Particularly, we focus on 1973 when the league split up. The separation created asymmetric regulatory requirements. This led to a significant difference in the number of African American coaches. The evidence suggests that less regulated institutions employ fewer African American coaches. The results are time consistent, not clustered geographically, and unrelated to specific institutions. Our results have policy implications for college sports as well as other industries which have similar working conditions. |
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Jose Parra Moyano, Karl Schmedders, Gregor Philipp Reich, Urns filled with bitcoins: new perspectives on proof-of-work mining, In: SSRN, No. 3399742, 2019. (Working Paper)
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The probability of a miner finding a valid block in the bitcoin blockchain is assumed to follow the Poisson distribution. However, simple, descriptive, statistical analysis reveals that blocks requiring a lot of time to find — long blocks — are won only by miners with a relatively higher hash power per second. This suggests that relatively bigger miners might have an advantage with regard to winning long blocks, which can be understood as a sort of “within block learning”. Modelling the bitcoin mining problem as a race, and by means of a multinomial logit model, we can reject that the time spent mining a particular block does not affect the probability of a miner finding a valid version of this block in a manner that is proportional to her size. Further, we postulate that the probability of a miner finding a valid block is governed by the negative hypergeometric distribution. This would explain the descriptive statistics that emerge from the data and be aligned with the technical aspects of bitcoin mining. We draw an analogy between bitcoin mining and the classical “urn problem” in statistics to sustain our theory. This result can have important consequences for the miners of proof-of-work cryptocurrencies in general, and for the bitcoin mining community in particular. |
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Nicolas Ettlin, Erich Walter Farkas, Andreas Kull, Alexander Smirnow, Optimal risk-sharing across a network of insurance companies, In: Swiss Finance Institute Research Paper, No. 20-52, 2020. (Working Paper)
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Risk transfer is a key risk and capital management tool for insurance companies. Transferring risk between insurers is used to mitigate risk and manage capital requirements. We investigate risk transfer in the context of a network environment of insurers and consider capital costs and capital constraints at the level of individual insurance companies. We demonstrate that the optimisation of profitability across the network can be achieved through risk transfer. Considering only individual insurance companies, there is no unique optimal solution and, a priori, it is not clear which solutions are fair. However, from a network perspective, we derive a unique fair solution in the sense of cooperative game theory. Implications for systemic risk are briefly discussed. |
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Christoph Basten, Steven Ongena, The geography of mortgage lending in times of FinTech, In: Swiss Finance Institute Research Paper, No. 19-39, 2019. (Working Paper)
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We analyze how banks’ allocations of mortgage credit across regions change when an online platform enables them to offer to regions where they have no branches, staff or legacy. Unique data from an online platform with offers from different banks to each mortgage application yield three novel findings. First, banks offer more and cheaper credit to borrowers in less competitive offline markets. Second, banks offer more credit to more distant locations, where house prices appear less over-heated, and past price growth is less correlated with that in their existing portfolio. Third, over time offers become more automated, lowering operational costs. |
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Hart E Posen, Thomas Keil, Sangyun Kim, Felix Meissner, Renewing research on problemistic search – A review and research agenda, In: SSRN, No. 3061285, 2017. (Working Paper)
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Problemistic search theory, with its roots in the Carnegie School tradition, describes a behaviorally plausible process by which firms learn from performance feedback. A firm’s recognition of performance below aspirations leads to search for a solution to the problem, resulting in change intended to restore performance to the aspired level. The concept of problemistic search has diffused broadly in the management literature - it is a central theoretical concept in a broad variety of organizational theories, and an important explanation of a wide variety of organizational behaviors and outcomes. We review the literature and argue that the development of the theory has not kept pace with the breadth of the unfolding literature. We identify six critical issues with extant research that can be traced back to a continued (over) reliance on the initial conceptualization of problemistic search. To address these issues and to revitalize research, we propose a research agenda premised on a more central role for cognition in the theory and the need for greater emphasis on a process perspective of problemistic search. |
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Hui Chen, Bjorn N Jorgensen, Insider Trading, Disclosure, and Product Market Competition, In: SSRN, No. 2358668, 2016. (Working Paper)
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Corporate insiders, particularly managers, not only have access to their firms' private information, but also control over their firms' operational decisions. In this paper, we consider a setting where managers manipulate the firms' real activities in anticipation of subsequent insider trading opportunities. We find these managers choose production quantities that are strictly higher than the quantities absent insider trading. The overproduction leads to lower firm profits but higher consumer surplus. When we allow the managers to trade both in their own firms' and their rival firms' stocks, we find that the competition among insiders in the financial market drives down the expected insider trading profits and their incentives to distort production decisions. We then discuss the scenario of "substitute trading" when the managers only trade in their rival firms' shares, and show that the managers can earn some insider benefits without sacrificing their firms' profitability. We also explore the possibility of endogenizing the managers' ownership through compensation contracts. |
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Hui Chen, Wei Luo, Noemi S Soderstrom, Career Concerns and 'Unpaid' Executives, In: SSRN, No. 2822979, 2018. (Working Paper)
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A significant portion of CEOs in publicly-listed Chinese state-owned enterprises receive zero pay from the companies for which they work. Instead, they are paid directly by their controlling shareholder who can be the Chinese government or parent firms controlled by the Chinese government. While their actual pay is unobservable, it is known to be low and contain few performance-based incentives. We explore how these parent-paid executives are motivated and whether the outcomes of this unusual incentive differ from conventional compensation. Consistent with career concerns as their main incentive, we find that these CEOs have a significantly higher probability of future promotion than other CEOs. We also conduct an event study using the Split Share Structure Reform in 2005. The reform liberalized the Chinese stock market and enhanced the role of the market mechanisms that potentially replaced promotion incentives in executive compensation contracts. Our evidence is generally consistent with a reduction in the strength of promotion incentives following the reform. Further analyses indicate that, compared to peers that directly pay their CEOs, firms with parent-paid CEOs have higher return on assets and asset growth, and they experience less tunneling by their shareholders. |
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Hui Chen, Wei Luo, Naomi Soderstrom, Career concerns and 'unpaid' executives, In: SSRN, No. 2822622, 2016. (Working Paper)
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A significant portion of CEOs in publicly-listed Chinese state-owned enterprises
receive zero pay from the companies for which they work. Instead, they are paid directly by their controlling shareholder, which can be the Chinese government or parent firms that are controlled by the Chinese government. We explore how these “unpaid” executives are motivated and whether the outcomes of this unusual incentive mechanism differ from the conventional approach. Consistent with career concerns as their main incentive mechanism, we find that these CEOs have a significantly higher probability of future promotion than other CEOs. This result holds when we look at subsamples in which individual CEOs switch payment regimes. We also find that compared to their peers with paid CEOs, firms with unpaid CEOs in general have higher return on assets, higher asset turnover, higher asset growth, and engage in less tunneling.
To mitigate concerns of that our results are driven by CEO selection and to further investigate the use of implicit incentives, we conduct an event study using the Split Share Structure Reform in 2006. The Reform liberalized the Chinese stock market, thus strengthening the role of the market as an incentive mechanism. This mechanism provides a potential replacement for promotion incentives. Our evidence is generally consistent with a reduction in the strength of promotion incentives following the reform. |
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Raphael Flepp, Egon Franck, The role of boards' misperceptions in the relation between managerial turnover and performance: Evidence from European football, In: UZH Business Working Paper Series, No. 380, 2019. (Working Paper)
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In this paper, we account for boards' misperceptions when replacing a top manager by differentiating between managerial turnovers following actual poor performance and managerial turnovers following seemingly poor performance due to bad luck in order to investigate their subsequent effects on performance. We focus on managerial changes within football organizations and analyze dismissals from the top European leagues. To account for the mean reversion of performance, we create a control group of non-dismissals using the nearest neighbor approach. To account for boards' misperceptions, we differentiate between dismissals and non-dismissals that occur either due to poor playing performance on the pitch or due to a sequence of bad luck, which is measured using "expected goals". We find that dismissals after poor playing performance on the pitch increase subsequent performance, while dismissals after a series of bad luck do not. Our results have important implications regarding the design of future turnover studies and the costs of boards' ineffective turnover decisions. |
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Julia Meyer, Annette Krauss, Kremena Bachmann, Drivers of Investor Motivations for Impact Investments: The Case of Microfinance, In: SSRN, No. 3395275, 2019. (Working Paper)
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Recent empirical research shows that both financial and value-related considerations prevail for an individual’s decision to invest in companies or products deemed sustainable or socially responsible. This paper investigates how different investor motivations vary across forms of sustainable investment strategies, in particular between broad sustainable investments and targeted impact investments. We use a unique dataset of retail investors engaged in a development oriented microfinance investment vehicle to analyze how different motives affect the demand for distinct sustainable investments. Our results show that different motives trigger different types of sustainable investments. While decisions to engage in general sustainable investments are mainly linked to return and risk expectations, the investment decision for the impact investment vehicle is connected more strongly to value attributes. In line with previous findings on general sustainable investments, we find that the decision to invest is driven more by value-related criteria while the amount invested is driven by financial motivations. Our analysis furthermore shows that distrust in the financial markets is a major driver for the share invested in general sustainable investments, but not in impact investments. |
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Fabienne Kiener, Ann-Sophie Gnehm, Simon Clematide, Uschi Backes-Gellner, Different Types of IT Skills in Occupational Training Curricula and Labor Market Outcomes, In: Swiss Leading House Economics of Education Working Paper, No. 159, 2019. (Working Paper)
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Christian Eggenberger, Simon Janssen, Uschi Backes-Gellner, The value of specific skills under shock: High risks and high returns, In: Swiss Leading House Economics of Education Working Paper, No. 158, 2019. (Working Paper)
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We study the causal effects of negative and positive demand shocks on the returns to specific skills by using variation from international trade shocks. To measure specific skills, we use task information from an o cial data set for career guidance and merge this information with a large register data set. Our results show that negative demand shocks result in larger earnings losses for workers with specific skills than for those with general skills, but workers with specific skills also profit much more from positive demand shocks. Thus, demand shocks lead to risk-return trade-offs for workers with specific skills. |
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