Benjamin Kessler

Study: Left-handed CEOs are more innovative

Jennifer Anzaldi — Wed, 30 Apr 2025 02:32:28 +0000

Study: Left-handed CEOs are more innovative Jennifer Anzaldi Tue, 04/29/2025 - 22:32

In This Story

Long Chen

June Woo Park

Q: What do Steve Jobs, Bill Gates and Mark Zuckerberg have in common (besides the obvious)?
A: All three belong to a community comprising about 10% of the population—the community of the left-handed.

And they’re far from the only business luminaries who are members. Steve Forbes, Oprah Winfrey and Lou Gerstner (of IBM fame) are left-handed, as were John D. Rockefeller, Henry Ford and Ratan Tata.

Of course, this could be a mere coincidence—but perhaps not. The popular belief that left-handers think more creatively—and hence may enjoy an innovative edge in business—has been supported by cognitive neuroscience research, which shows that the left hand is controlled by the brain’s right hemisphere, a region closely associated with creative thinking. However, conflicting findings and limited research evidence prevent broad conclusions about the correlation between creativity and handedness, let alone its potential implications for business leadership.

A forthcoming research publication by Long Chen and June Woo Park, two accounting professors at the Costello College of Business at George Mason �鶹��, constitutes the first rigorous scholarly investigation into whether—and how—handedness plays a role in business innovation.

June Woo Park and Long Chen

The paper was co-authored by Albert Tsang of Southern �鶹�� of Science and Technology and Xiaofang Xu of Beijing Technology and Business �鶹��.

The researchers searched Google for photos and videos of S&P 500 CEOs engaged in activities like writing, throwing, drawing, and eating to determine their dominant hand, if wasn’t already disclosed in published sources. “We looked at pictures of them on the golf course to see how they held their clubs,” Park explains. “We also noted which wrist they wore their watch on; left-handed people often wear it on the right.” When in doubt, they followed up with calls or emails to the respective companies. All in all, they were able to identify the handedness of 1,008 CEOs across 472 companies: 91.4 percent were right-handed, 7.9 percent left-handed, and 0.7 percent mixed.

The researchers then looked at the numbers of patents and citations received by the firms from 1992 to 2015. They controlled for firm and industry characteristics, as well as other personal traits known to affect CEO innovativeness (such as age, education, risk preference shaped by experience, birth order, and founder status).

In addition, they performed several follow-up tests, including one focused on a narrow subset of firms that unexpectedly switched from a right-handed CEO to a left-handed one due to unforeseeable circumstances such as death or illness.

Every variation of the study produced essentially the same result: Firms led by left-handed CEOs demonstrate significantly higher innovative output. The differences were qualitative as well as quantitative. Patents under left-handed leadership were more likely to represent something new under the sun, rather than a spin-off from established technology.

The researchers hypothesized that the left-handers’ creative orientation would impact the way they ran their firms, including hiring decisions. Indeed, they found that companies applied for more H-1B and STEM visas when left-handers were at the helm. This emphasis on talent acquisition was not only a key indicator of innovation commitment, but may have also contributed to the firms’ creative advantage.

“We find that left-handed CEOs are more likely to hire immigrant inventors in STEM fields, and are also more likely to be inventors themselves,” Chen says. “These findings strengthen our argument by highlighting specific ways in which left-handed CEOs may directly enhance firm innovation.”

Still, piling up patents doesn’t automatically produce outcomes that will make customers and shareholders happy. Ultimately, firm performance is what matters in evaluating business success. As additional analyses in the study suggest, firms led by left-handers had higher return on assets and stronger buy-and-hold returns than peers with a right-handed leader.

“They outperformed their counterparts,” Park summarizes. “Investors are drawn to innovative firms, and left-handedness is one of the factors investors could use in their stock-picking.”

Yet innovative success is complex and multifaceted. Left-handedness is only one potentially meaningful trait among many—a lot more are yet to be explored.

“�鶹�� results are based on a large sample. But investors should not assume a CEO that is not left-handed lacks innovative potential,” Chen says.

For their ongoing and future research projects, Chen and Park are looking beyond left-handedness to explore other deeply personal CEO traits that may have business implications.

“We find it fascinating to draw on insights from disciplines outside accounting and finance,” Chen says. “CEO decisions may be shaped by factors like family experiences, genetics, academic background, career paths, and more—really, the full range of experiences that makes them who they are. Understanding that can help market participants better interpret and predict CEOs’ decision-making.”

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Nonprofits are in trouble. Could more sensitive chatbots be the answer?

Jennifer Anzaldi — Tue, 18 Mar 2025 14:48:25 +0000

Nonprofits are in trouble. Could more sensitive chatbots be the answer? Jennifer Anzaldi Tue, 03/18/2025 - 10:48

In today’s attention economy, impact-driven organizations are arguably at a disadvantage. Since they have no tangible product to sell, the core of their appeal is emotional rather than practical—the “warm glow” of contributing to a cause you care about. But emotional appeals call for more delicacy and precision than standardized marketing tools, such as mass email campaigns, can sustain. Emotional states vary from person to person—even from moment to moment within the same person.

Photo by Getty Images

Siddharth Bhattacharya and Pallab Sanyal, professors of information systems and operations management at the Donald G. Costello College of Business at George Mason �鶹��, believe that artificial intelligence (AI) can help solve this problem. A well-designed chatbot could be programmed to calibrate persuasive appeals in real time, delivering messaging more likely to motivate someone to take a desired next step, whether that’s donating money, volunteering time or simply pledging support. Automated solutions, such as chatbots, can be especially rewarding for nonprofits, which tend to be cash-conscious and resource-constrained.

“We completed a project in Minneapolis and are working with other organizations, in Boston, New Jersey and elsewhere, but the focus is always the same,” Sanyal says. “How can we leverage AI to enhance efficiency, reduce costs, and improve service quality in nonprofit organizations?”

Siddarth Bhattacharya. Photo provided

Sanyal and Bhattacharya’s working paper (coauthored by Scott Schanke of �鶹�� of Wisconsin Milwaukee) describes their recent randomized field experiment with a Minneapolis-based women’s health organization. The researchers designed a custom chatbot to interact with prospective patrons through the organization’s Facebook Messenger app. The bot was programmed to adjust, at random, its responses to be more or less emotional, as well as more or less anthropomorphic (human-like).

“For the anthropomorphic condition, we introduced visual cues such as typing bubbles and slightly delayed response to mimic the experience of messaging with another human,” Sanyal says.

The chatbot’s “emotional” mode featured more subjective, generalizing statements with liberal use of provocative words such as “unfair,” “discrimination” and “unjust.” The “informational” modes leaned more heavily on facts and statistics.

Over the course of hundreds of real Facebook interactions, the moderately emotional chatbot achieved deepest user engagement, as defined by a completed conversation. (Completion rate was critical because after the last interaction, users were redirected to a contact/donation form.) But when the emotional level went from moderate to extreme, more users bailed out on the interaction.

The takeaway may be that “there is a sweet spot where some emotion is important, but beyond that emotions can be bad,” as Bhattacharya explains.

Pallab Sanyal. Photo provided

When human-like features were layered on top of emotionalism, that sweet spot got even smaller. Anthropomorphism lowered completion rates and reduced the organization’s ability to use emotional engagement as a motivational tool.

“In the retail space, studies have shown anthropomorphism to be useful,” Bhattacharya says. “But in a nonprofit context, it’s totally empathy-driven and less transactional. If that is the case, maybe these human cues coming from a bot make people feel creepy, and they back off.”

Sanyal and Bhattacharya say that more customized-chatbot experiments with other nonprofits are in the works. They are taking into careful consideration the success metrics and unique needs of each partner organization.

“Most of the time, we researchers sit in our offices and work on these problems,” Sanyal says. “But one aspect of these projects that I really like is that we are learning so much from talking to these people.”

In collaboration with the organizations concerned, they are designing chatbots that can cater their persuasive appeals more closely to each context and individual interlocutor. If successful, this method would prove that chatbots could become more than a second-best substitute for a salaried human being. They could serve as interactive workshops for crafting and refining an organization’s messaging to a much more granular level than previously possible.

And this would improve the effectiveness of organizational outreach across the board—a consummate example of AI enhancing, rather than displacing, human labor. “This AI is augmenting human functions,” says Sanyal. “It’s not replacing. Sometimes it’s complementing, sometimes it’s supplementing. But at the end of the day, it is just augmenting.”

In This Story

Siddharth Bhattacharya

Pallab Sanyal

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Costello College of Business health care research puts “patients at the center”

Jennifer Anzaldi — Tue, 11 Mar 2025 15:55:18 +0000

Costello College of Business health care research puts “patients at the center” Jennifer Anzaldi Tue, 03/11/2025 - 11:55

In This Story

Nirup Menon

Like virtually every other industry, health care is increasingly prioritizing digital transformation. The sector is unique, however, in that its results are measured not only in business terms but also tangible outcomes for people—often, literal life and death. So are newly acquired technologies actually paying off for patients?

Nirup Menon, a professor of information systems at the Donald G. Costello College of Business at George Mason �鶹��, says that the answer is “not always.”

Nirup Menon

His recently published paper in Decision Support Systems tackles the so-called “HIT paradox,” or the widespread perception that health information technologies (HIT) have not yet moved the needle on important outcomes such as productivity, quality of care, and patient safety.

Menon co-authored the paper with Costello colleagues Amitava Dutta and Sidhartha Das.

Based on comprehensive survey data from approximately 6,000 U.S. hospitals, the research team looked into whether those that adopted Clinical Decision Support Systems (CDSS) saw lower mortality rates for cardiac patients.

“CDSS is not only for cardiologists,” Menon explains. “It is hospital-based—a system that helps with clinical decision-making. But we know that many cardiac patients may not necessarily have cardiac as their only problem. There are probably decisions being made about them using all kinds of ailments and medications, and so on.”

The basic idea behind CDSS is to use technology to mine actionable insights from a wealth of patient data, giving clinicians key tools to make informed decisions at the point of care. Theoretically, a hospital with CDSS solutions should be much better equipped to handle complex cases—such as a heart-attack sufferer with diabetes or another comorbidity—in real time than one without.

However, Menon and his co-authors discovered that when it came to preventing deaths from cardiac emergencies, the impact of CDSS was context-specific. Their paper finds a number of complementary effects suggesting that health care technologies need help from their environment in order to be most effective. For example, the presence of cardiac medical services (CMS), e.g. diagnostic catheterization and electrophysiology, was unsurprisingly associated with lower mortality rates—but CMS combined with CDSS was more impactful than either on its own.

“The labor force—by which I mean the physician and the entire team of nurses and technicians—should be trained to use this technology appropriately,” Menon summarizes. “You also need real-time integration between CDSS and other IT systems, because if it’s not well-integrated, the provider will not have all the data at their fingertips. If you don’t provide the right inputs into a CDSS, it’s not going to give you the right outputs.”

Menon points out that the “HIT paradox” isn’t limited to CDSS or any single technology. President Obama’s 2009 economic stimulus package, after all, included tens of billions in financial incentives for health care providers to digitize their patient records. By 2017, 95 percent of U.S. hospitals had adopted electronic patient records. Yet, as Menon tells it, “hospitals are just chugging along. The quality remains the same and the costs are just increasing. Or you might see improvements in one small department. So we are trying to find the variables that create complementarities within large samples.”

Menon knows, however, that the applications of health care tech can be closely targeted to relatively tiny patient populations, too. Another recent paper of his, published in JMIR Medical Informatics, uses causal survival forests, a machine-learning algorithmic technique, to determine which of two chemotherapy drugs promoted the most longevity for terminal prostate cancer patients. Taking into account age, race and comorbidity symptoms, their analysis produced an easy-to-use prescription policy tree that, by itself, could extend patients’ lives by almost two months—if the test sample, comprised of 2,886 veterans treated at VA health centers, was representative of the wider patient population.

“If you go down every branch of the policy tree, the numbers become very small,” Menon says. “It almost becomes like personalized medicine, because you can factor in age, race, gender—although gender didn’t matter in our study—PSA numbers, bilirubin numbers, etc.”

Menon has ongoing research projects aimed at improving health care through technology, at both the patient level (a la the prostate cancer study) and the ecosystem level (a la the CDSS study). One paper in progress focuses on Covid-19 and how the data-sets research scientists selected for their studies influenced their findings. Another looks at telemedicine’s effects on quality of care.

“My foray into health care began with my PhD dissertation, which was on IT in hospitals,” Menon says. “At that time, I was working primarily from a hospital administration point of view. As a business school researcher, it seemed logical to stay there. But as you come across more problems, and you read more, you realize that the patient is the center of everything, not the hospital.”

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Would you rather buy from a cuddly chatbot, or the “Lipstick King”?

Jennifer Anzaldi — Tue, 04 Mar 2025 18:03:48 +0000

Would you rather buy from a cuddly chatbot, or the “Lipstick King”? Jennifer Anzaldi Tue, 03/04/2025 - 13:03

In This Story

Si Xie

Historically, entertainment and advertising have worked as a tag team, taking turns soliciting attention from audiences. But our social-media age is blending the two into new, hybrid forms.

Witness livestream shopping, a seamless amalgam of e-commerce and entertainment. In place of one-way messaging delivered by polished pitchpeople, this model employs relatable influencers presenting products for online sale—and chatting with consumers—in real-time sessions that often last several hours.

Famously popular in China, livestream shopping is picking up steam in the United States. In June 2024, as an example, U.S. TikTok netted its first million-dollar livestream, courtesy of Texas-based brand Canvas Beauty. By 2026, live shopping may be responsible for as much as five percent of all e-commerce sales in the U.S., according to industry projections.

For global brands, this means a possible revenue explosion. But for information-systems scholars like Si Xie, assistant professor at Costello College of Business, the global rise of livestream shopping represents an unprecedented research opportunity.

Si Xie

“One of the most important elements of livestream shopping is the interaction,” Xie says. “Livestreams bring all potential buyers into the same virtual room, together with the influencer. People can see which products have been put in the online shopping cart, and which have been purchased.”

Her recently published paper in Production & Operations Management finds that the longer an individual product is showcased in a livestream featuring several different brands, the more revenue it will generate. Yet as product showcase duration goes up, overall revenue from the livestream goes down.

To reach their conclusions, the research team—including co-authors Siddhartha Sharma of Indiana �鶹�� and Amit Mehra of �鶹�� of Texas at Dallas—analyzed data from nearly 75,000 livestreams conducted in China during 2021.

For Xie, the findings point to a fundamental conflict between the incentives of livestreamers and the brands they promote. It is in the best interest of third-party influencers to move fairly rapidly between different types of products, but brands will want more airtime devoted to each one.

“People like variety,” Xie explains. “If I watch a livestream and all I see are shirts in different fabrics, I might feel there are not too many choices I can make. However, if you show me a shirt and then a pair of pants, I can make an outfit. There’s a higher probability of my making more purchases, and that’s in line with the third-party livestreamers’ incentives.”

One way to correct these misaligned incentives would be for brands to use the power of the purse to influence the influencers. In China, even the suggestion of such corrupting relationships has caused public scandal. In 2023, for example, top livestreamer Li Jiaqi (nicknamed “The Lipstick King” for his ability to sell beauty products) lost one million followers on social media after lashing out at an online commenter who complained about the high price of an eyebrow pencil made by Chinese cosmetics company Florasis. Li, Florasis’s most prominent brand ambassador, was excoriated for ostensibly putting his relationship with the brand above empathy for financially struggling consumers.

“People were saying, ‘you are trying to be defensive of the product because you get so much interest from selling that pencil’”, Xie says. “Therefore, Li’s credibility was really impaired.”

If Xie’s paper describes how human imperfections can jeopardize livestream shopping, could AI be the answer? Indeed, AI-powered animated chatbots — both paired with human influencers, and serving customers solo during off-peak sales hours — have become commonplace on China’s livestreams. For her PhD dissertation, Xie probed data from more than 70,000 livestreams in China and found that introducing an AI assistant boosted livestream sales by about 18%. But the effect steadily declined over time — and not because the novelty wore off. The rapidly improving algorithmic responses had the unintended consequence of shorter watch durations, which may have reduced impulse buying. Xie’s suggested remedy? “The owner of the gen-AI tools could modify the interaction between the virtual livestreamer and the audience to encourage more engagement, perhaps by adjusting the learning speed to ensure that the audience remains engaged for a longer period."

Xie also suggests that brands and channels replace humanoid avatars with cute, cuddly “mascots” that users just can’t bring themselves to click away from.

Xie says she’s working on future papers that tease insights out of livestream data. “One good thing about this new technology is that it promotes the user to buy using methods we can observe. Livestreamers sell general items like grocery items and clothing, as well as expensive stuff like cars and houses, and you can really see how people behave.”

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George Mason professor furthers impact of telemedicine in Ukraine

Jennifer Anzaldi — Tue, 14 Jan 2025 22:39:16 +0000

George Mason professor furthers impact of telemedicine in Ukraine Jennifer Anzaldi Tue, 01/14/2025 - 17:39

Ukraine’s health care system has been hit hard amid the ongoing war. Power outages, staffing shortages, and the destruction of hospitals have added up to a drastic reduction in available care for the already-vulnerable population. In a desperate attempt to bridge the gap, Ukraine’s Ministry of Health opened the country to telehealth solutions from overseas. But will these prove to be a successful substitute for at least some necessary services, or turn out to be no better than a tech Band-Aid?

Answering that question is where Mariia Petryk, assistant professor of information systems and operations management at the Costello College of Business at George Mason �鶹��, comes in. In her spare time, she works as volunteer director of analytics for TeleHelp Ukraine (THU).

Mariia Petryk

Founded by a cross-disciplinary group of Stanford students shortly after the war’s inception, THU was designed to succeed where other telemedicine initiatives in crisis-affected areas have failed. The founders worked tirelessly to assemble an international volunteer network comprising medical professionals, translators, interpreters and administrative “health navigators.” Aware that medical consultations were only part of the patient journey, THU’s founders sought to address the entire continuum of care.

Petryk stresses that while the project originated at Stanford, the technical team included “people from Chicago, Boston, other California schools…some very active volunteers were in Australia, South Korea, Canada and other countries.”

Petryk, herself of Ukrainian descent, was honored to lend her data science expertise to this worthy project. As analytics director, she manages a dozen or so number-crunching volunteers who measured and documented THU’s impact upon Ukraine’s displaced population during the initiative’s first full year.

As Petryk explains, “The Russian invasion created a humanitarian crisis where a lot of people were internally displaced. And when people relocate to a new place, they don’t know where to go for health care. They also are at higher risk for many issues, including mental health problems. And they don’t know where to turn to treat chronic diseases they may have.”

THU’s primary focus during its first year was delivering much-needed services to this population of war-ravaged internal exiles.

Petryk’s analytical work gave rise to a recent case study of THU published in Journal of Global Health. The paper’s other lead author was Aditya Narayan, a Stanford medical student and THU’s director of implementation and evaluation.

Their findings describe some impressive early successes. THU facilitated more than 1,200 virtual patient appointments from May 2022 to May 2023 alone. Despite often-chaotic conditions, patient attendance rates were above 70 percent for nine of the 13 months studied. As the first year wore on, the THU team found ways to prevent no-shows—for example, employing the popular texting platform Viber to communicate with patients and assigning an individual health navigator to each patient.

Even more impressively, 96 percent of patients reported that their health complaints were at least partially resolved during their visit.

The paper argues that aspects of THU’s model could be adapted for use in other humanitarian contexts. In its initial growth phase, THU had access to advanced technological infrastructure and a wide network of medical providers, by dint of its academic origins. This implies that partnerships with academia could be critical to replicating THU’s success outside Ukraine.

Petryk remains proud of THU’s impact and her role in helping define it. “Based on actual appointments and how much that amount of care would cost at a hospital, THU delivered an estimated $1 million worth of services in its first 13 months,” she says.

Looking ahead to THU’s future, she says, “I can only wish to see this ‘start-up,’ as it were, go for the IPO.”

For more information and to explore volunteering opportunities, visit THU’s website.

In This Story

Mariia Petryk

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Does the world need a ‘universal language’ of accounting?

Jennifer Anzaldi — Tue, 07 Jan 2025 15:40:40 +0000

Does the world need a ‘universal language’ of accounting? Jennifer Anzaldi Tue, 01/07/2025 - 10:40

In This Story

David S. Koo

In the early years of the 21st century, investors had good reason to hope that a single, globally accepted accounting framework would soon emerge to unite the world’s financial markets. It seemed inevitable that the Securities and Exchange Commission (SEC) would abandon its devotion to U.S. Generally Accepted Accounting Principles (GAAP) and adopt the Esperanto-like International Financial Reporting Standards (IFRS).

Then came the financial crisis, which punctured optimism around globalization. In 2012, an SEC staff report confirmed the shift in sentiment, pointedly withholding an anticipated timeline for IFRS adoption.

David Koo

However, the dream of convergence continues, and may be slowly coming true, albeit in a low-key way. According to David Koo, assistant professor of accounting at Costello College of Business at George Mason �鶹��, having two competing frameworks may even be a net benefit for cross-market comparability.

Koo's latest paper, forthcoming in The International Journal of Accounting and co-authored with John X. Jiang and Isabel Wang of Michigan State �鶹��, plumbs accounting research, industry analyses and corporate data to draw high-level conclusions about the “competition” between U.S.-GAAP and IFRS.

After 2012, some experts were concerned that the apparent snub from the SEC would dissuade undecided countries from signing onto IFRS, thereby increasing fragmentation. Yet Koo and his co-authors show that the opposite happened: Between 2011 and 2022, IFRS adoption surged from 53.3% to 76.7% among non-North American firms.

“People were concerned that IFRS’ influence would diminish if the U.S. did not adopt, but it didn’t happen,” Koo summarizes. “According to our survey, IFRS is thriving and has become the most widely used accounting standard.”

Another fear was that U.S.-GAAP and IFRS would become more distinct over time, which would hamper comparability. However, the researchers note that the SEC maintains a position on the IFRS Foundation Monitoring Board. Also, several Americans sit on the 14-member International Accounting Standards Board, the oversight body for IFRS.

Indeed, the researchers found that the discrepancies between the two frameworks peaked before 2012, according to comparisons performed over time by KPMG and PricewaterhouseCoopers.

“The accounting boards work tightly together; they have corresponded in an active way for the past 10 to 15 years,” Koo says. “It seems that they are learning from each other. They are separate—however, when they introduce new standards, they collaborate.”

Koo surmises that this sort of “managed divergence” might be preferable in some ways to universal adoption of IFRS. Because the two frameworks are seen as roughly equivalent in terms of quality, the informational benefit of switching from one to the other might not justify the transition cost.

Additionally, competing frameworks create a balance of power that might prove more sustainable over the long term than a global monopoly. “If we adopt IFRS universally, most companies would follow the same standard,” Koo says. “This widespread influence would be so huge in that case that it might cause conflict or tension about the standard-setting process. Having Independent processes can allow countries to have some autonomy, which can be beneficial.”

The researchers suggest that the same principle could apply to current efforts to develop global standards for mandatory sustainability reporting. The European Union, Asia, and North America differ greatly from one another in economic development, cultural values, etc. As a result, multinational companies doing business across these regions face a frustrating patchwork of expectations when it comes to climate and other impact-based disclosures. Here, too, some form of “managed divergence” might be the best way forward, with jurisdictions remaining separate while engaging in close collaboration.

“Companies want to have standardized expectations in terms of sustainability, but it is not easy,” Koo says. “Similar to financial reporting, the two main pillars will likely be the U.S. and EU, which both have advanced standards. Other countries will choose depending on their comfort.”

“Having two good standards in the world may be better than one.”

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Are U.S. ‘news deserts’ hothouses of corruption?

Jennifer Anzaldi — Tue, 19 Nov 2024 16:35:27 +0000

Are U.S. ‘news deserts’ hothouses of corruption? Jennifer Anzaldi Tue, 11/19/2024 - 11:35

The March 24, 2021 edition of neighborhood newspaper Northeast News, out of Kansas City, Missouri, contained a surprise for its 9,000 subscribers. Where the front-page news should have been, there was a big, blank white space. This was no printer’s error, but a last-ditch cry for help. After 89 years in operation, Northeast News had found itself on the brink of insolvency due to the loss of key advertisers amid the COVID pandemic. The empty front page was designed to remind the community of what it would lose if its only local paper went under.

The gambit went viral, prompting a flood of online donations that is keeping the paper afloat, for now. Ironically, Northeast News owes its existence to the very force that has fueled the more general decline of local journalism in America—the internet.

Brad Greenwood

As advertiser dollars migrated to Facebook and Google, the business model that supported local newspapers for generations came to the edge of collapse. Since 2004, more than 2,500 American newspapers have ceased publication—around one-quarter of the total. Overall newspaper circulation has declined by more than half since 1990.

To be sure, digital alternatives have rushed in to fill the gap, such as citizen-journalist websites, nonprofit news organs, partisan blogs, etc. So, the question represented by the blank front page of Northeast News resonates: What do communities lose when newspapers fold that online journalism startups haven’t (so far, at least) been able to replace?

In the past, industry observers and researchers have linked community newspaper closure to diminished civic trust and political participation, among other negative effects. New research from Brad Greenwood, the Maximus Corporate Partner Professor of Business at the Costello College of Business at George Mason �鶹��, builds on this discourse, finding evidence that when local papers topple, political corruption springs up in their wake.

Greenwood’s paper, coauthored by Ted Matherly of Tulane �鶹��, was published in MIS Quarterly.

The researchers focused on U.S. federal districts that lost a major daily newspaper during the years 1996 to 2019. They compared the number of corruption charges (bribery, embezzlement, fraud, etc.), defendants, and cases filed in district court before and after the newspaper closure. The results were striking: Overall, the disappearance of a newspaper delivered a 6.9% increase in charges, a 6.8% increase in the number of indicted defendants and a 7.4% increase in cases filed.

“We looked at federal charges for three reasons. First, the overwhelming amount of statutory enforcement occurs federally. Second, it gives us a uniform definition of what constitutes corruption across every domestic jurisdiction. Finally, and most importantly, federal conviction rates are over 90%,” Greenwood says. “They don’t charge people unless they have a good-faith belief they will prevail at trial.”

Moreover, post-newspaper corruption cases were more likely to go to trial as opposed to resolving in a plea deal, thus incurring greater public costs.

“In an age of misinformation, the solution is not rejecting the professional press, it is embracing it, and ensuring that well-trained and hard-working men and women have both the ability and venue to hold those in power to account."

Greenwood and Matherly also examined whether digital-era upstarts were adequate substitutes for newspapers, in terms of curtailing corruption. They tracked 352 such websites, and found they had no impact on the number of charges, defendants or cases in the districts concerned.

“While it’s hard to say precisely why we don’t see an effect from online news, there are several candidate explanations. Not only do citizen journalists lack the standing and training to tackle questions of public corruption and elevate discourse in the public square, but many of these sites aren’t even legitimate news vendors,” says Greenwood, referencing what are commonly referred to as “pink slime websites.”

Greenwood goes on to suggest that the corruption-preventing power of the defunct papers came not necessarily from journalistic acumen, but rather from the ability to elevate the actions bad actors had taken in public discourse, a process journalism researchers refer to as agenda setting.

Whatever the cause, the ramifications for society are very real. In the Northern District of Illinois alone, corruption-related cases involving more than 1,700 officials cost taxpayers a staggering $550 million per year from 1976 to 2012. The coffers of communities that lose newspapers may suffer more than most, since these cases tend to end up in expensive courtroom proceedings rather than plea deals.

Further, the study only looks at corrupt officials who got caught. Presumably, there are many more whose corruption went unpunished.

All told, these findings suggest that community newspapers should not be regarded as just another business model ill-adapted to digital disruption that should be allowed to fail. Their demise comes at significant public cost, financial and otherwise. “In an age of misinformation, the solution is not rejecting the professional press, it is embracing it, and ensuring that well-trained and hard-working men and women have both the ability and venue to hold those in power to account,” Greenwood says.

In This Story

Brad Greenwood

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When CEOs are haunted by memories of past recessions

Jennifer Anzaldi — Tue, 12 Nov 2024 19:43:41 +0000

When CEOs are haunted by memories of past recessions Jennifer Anzaldi Tue, 11/12/2024 - 14:43

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David S. Koo

The economy, we’re often reminded, is cyclical. But we all hope our careers won’t be. That means those of us who make it to the very top—CEOs, for instance—may be unduly influenced by memories of prior economic go-rounds. David Koo, assistant professor of accounting in the Donald G. Costello College of Business at George Mason �鶹��, has found that memories of past recessions, triggered by recent ones, can weigh on chief executives’ decisions, literally for years.

Koo’s paper, co-authored by Isabel Wang of Michigan State �鶹�� and Shuting Wu of Cal State Fullerton, is forthcoming in Management Science.

David Koo

The paper was inspired by trends in research outside the accounting field. “In the economics area, they have started looking at how executives’ memories of recessions can affect important decision-making right now,” Koo says. “We are trying to connect these emerging trends to the accounting area by focusing on pessimistic bias in their outlook of the company’s performance.”

The researchers adopted the 2008 financial crisis as a key moment for triggering veteran CEOs’ memories of prior financial downturns. They analyzed annual management earnings forecasts for U.S. public companies for the period 2002-2018, alongside the characteristics and career histories of the CEOs who issued them. “We used the first forecast of the year for each year, because on average these are more optimistic,” Koo explains. “Usually, nobody wants to say anything negative at the beginning of a year.” The final data-set comprised 3,678 earnings forecasts from 466 CEOs.

Koo and his co-authors discovered that CEOs who had previously led companies through at least one past recession issued significantly more pessimistic forecasts post-2008 than they had before the crisis. As a general rule, the more recessions a CEO had undergone in their tenure at the top, the more pessimistic their post-crisis forecasts tended to be.

The same pessimistic pattern was not evident for CEOs who had not experienced a recession before 2008. Translating their findings into economic terms, the researchers concluded that one standard deviation of the memory-triggered pessimism effect was equivalent to 0.23-0.29 percent of share price.

Further, the post-crisis pessimism did not make the forecasts more accurate. It’s safe to say, then, that the memory-triggered CEOs were, knowingly or not, displaying excessive caution and conservatism in their earnings forecasts. To be sure, anyone’s outlook can darken with age, independent of their real-world experience. So the researchers performed subsequent checks to determine whether the increased pessimism was more closely related to growing older, or to specific memories of past recessions.

“�鶹�� takeaway is, if we have two same-age CEOs, one who has experience navigating recessions as a CEO and one who does not, the first one will become more pessimistic after the crisis,” Koo says.

The more highly skilled CEOs (as measured by a widely accepted scale for managerial ability) exhibited less memory-induced pessimism, while CEOs who led more complex firms with a lot of moving parts were more prone to pessimism. “We expected that the manager-specific effect would be more significant when managers were under more demanding pressure or had more discretion,” Koo explains.

As the 2008 financial crisis itself faded into memory, seasoned CEOs gradually let go of their pessimistic bias. But it took three years, on average, for their forecasts to fully recover. We normally think of past experience as an aid to learning, but here it seems that the opposite was the case: Memories of past experiences with recessions slowed down CEOs’ post-crisis learning process.

“Prior research has found that past experiences can help people more rationally and then more wisely handle an ongoing crisis,” Koo says. “But at the same time, executives are also human beings. They may be scarred by their experiences and that can induce them to be excessively negative or pessimistic when they go through a financial crisis.”

Of course, that doesn’t mean that the veteran CEOs were less effective at guiding their firms through post-crisis recovery. Koo emphasizes that his findings do not capture whether, and how quickly, companies bounced back from the 2008 recession.

“Memory may not be the most dominant factor in our decision-making, but it still can influence executives even in their managerial decision-making,” Koo advises.

The lesson, then, is one for investors and other market players to store in their own memories for the next economic downturn: Take CEOs’ post-crisis predictions with at least a grain of salt.

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MS in Finance students answer burning investment questions

Jennifer Anzaldi — Tue, 22 Oct 2024 17:08:48 +0000

MS in Finance students answer burning investment questions Jennifer Anzaldi Tue, 10/22/2024 - 13:08

In This Story

Derek Horstmeyer

George Mason �鶹�� Master of Science in Finance students have the rare opportunity to use their budding analytical skills to solve some of the mysteries of today’s financial markets. Moreover, their faculty-supervised research projects can land their names in the pages of The Wall Street Journal.

To date, these projects have spawned nearly 40 WSJ articles, not to mention dozens of write-ups in outlets such as MarketWatch, The Conversation, and the CFA Institute blog. They have also received television coverage on CNN and NewsNation.

SMIF officers Yashkaran Sidhu, Jonathan Pino, Matthew Rickard, Raheeg Joari, and Reema Hammad at the Chicago SMIFC conference.

As Costello College of Business finance professor Derek Horstmeyer tells it, the process started taking shape organically. “I had started writing for the CFA and The Wall Street Journal. In my talks with my students, some of them revealed they had research interests. It just kind of took off from there—I would bring it up in class and offer to supervise a research project that would last about a week.”

Student researchers are mainly recruited from Horstmeyer’s Montano Student Managed Investment Fund (SMIF) class, a hands-on exercise in security analysis and portfolio construction that serves as a capstone to the MS in finance degree.

While many student research projects originate with questions suggested by the students themselves, Horstmeyer helps the student teams devise their scope and direction.

“They might say, for example, that they’re interested in crypto. So I’ll show them previous articles on crypto and we kind of develop a new idea from there,” Horstmeyer says.

By the time they get to SMIF, students are usually comfortable getting their hands dirty with data. Finding the appropriate data-set for the question they’ve posed, however, can be a challenge. That’s another area where Horstmeyer’s support becomes critical. “The big bottleneck is they just don’t know where the data is,” he says. “We as faculty have access to these private databases. So I’ll guide them or set up the data.”

Horstmeyer also introduces the student teams to the best methods for parsing the data, while leaving students enough leeway to conduct independent follow-up analyses if needed.

Of the dozens of projects completed thus far, there are a few that, for Horstmeyer, typify the process at its best. For example, finance students Matthew Rickard and Camila Marín Builes investigated how stock-market trends fare once they have been familiarized enough to warrant a nickname. Among the eight named trends included in the study were FAANG (Facebook, Amazon, Apple, Netflix and Google), and “The Magnificent Seven” (Nvidia, Tesla, Meta, Apple, Alphabet, Amazon, and Microsoft).

“We did an extensive Google search to find the biggest named trends. Then we used the Wayback Machine to figure out when the trend was first coined, like the exact date. We did all sorts of tests to determine what kind of abnormal returns you can expect if you stick with that trend,” Horstmeyer explains.

The students found that newly christened trends experience an extended honeymoon period of about 12 months, amounting to an average of 13 percentage points in excess returns. But in their second year, trends start to go stale, underperforming the S&P 500 by an average of two points.

The Wall Street Journal published Horstmeyer’s article “Once a Hot Stock-Market Trend Has a Name, Its Best Days Are Likely Past”—published under his byline with the student researchers mentioned by name early on—in March 2024.

Horstmeyer says that participating in these projects helps students hone skills and techniques that enhance their careers and give them a competitive edge in the job market. “I get employers reaching out and saying, ‘I saw this line item on a candidate’s resume saying they did some pretty high-level data analysis for you. Is it true?’ They’re kind of surprised the student contributed to the CFA or a Wall Street Journal article.”

Melvin Jonathan Reyes Echeverria, who completed his MS in finance degree in May 2024, says, “I assisted Professor Horstmeyer with data analysis for the WSJ and the experience was amazing…I was able to leverage everything that I was taught in my MS in finance classes. It was a privilege to be published and something that was unexpected to receive at George Mason.”

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Master's in Finance Program