Unless otherwise noted, seminars are scheduled for either Tuesday or Friday, 11:00 to 12:00 in room B2165 and they are “brown bag” seminars.  It is optional for presenters to make copies of their papers available prior to the seminar.  PhD students are invited to attend, but the Associate Dean for Research and Graduate Studies does not require them to do so.

Tuesday, November 10

Haeran Jae

Seductive Detail Effects among Low-Literate Consumers: The Case of Product Warning Statements

The previous research finds that low-literate consumers tend to heavily rely on pictures to process marketplace information thus they often are affected by unwanted consequences when pictures are distracting or misleading.  The current research extends previous research by investigating the conditions in which pictures in an advertisement become detrimental or beneficial for low-literate consumers’ information processing. The findings suggest that relative to high-literate consumers, low-literate consumers display lower levels of comprehension and experience more errors caused by pictures while reading product warning statements when incongruent pictures are presented. The result also shows that by eliminating incongruent pictures, low-literate consumers benefit significantly more in comprehension and in fewer errors relative to high-literate consumers.

Friday, November 13

Brent Smith

 Euphoria in the Initial Purchase: Decision Making in a Market with Limited Information and the Ultimate Decision to Default

This paper considers the nature of the empirical link between house price volatility at the point of loan origination and mortgage defaults. We rely on a sample of individual mortgage loans for twenty counties in Florida, over the period 2001 through 2007 with housing price performance obtained from repeat sales analysis of individual transactions. The analysis includes price appreciation rates throughout the observation period in an effort to test the role of price volatility in the lending decision and probability of default.  The model includes proxies for higher risk lending, controlling for spatial and borrower characteristics in an attempt to represent what we refer to as market euphoria. The results from the analysis provide convincing evidence that the experience in Florida is in part driven by lenders and purchasers exhibiting euphoric behavior such that in markets with higher price appreciation there is a willingness to accept a higher level of risk. This connection illustrates a moral hazard in the housing market due to the limited information about future prices. 

Friday, November 20

Jeffrey Krug

Top Management Turmoil in M&As:  Identifying the Root Causes of Leadership Instability in Target Firms

In an article recently published in Journal of Business Strategy, I outlined preliminary findings of a ten-year research initiative to examine turnover patterns in mergers & acquisitions (M&As). This initiative involved an analysis of turnover patterns among more than 23,000 executives in 1,019 firms over a 17-year period.  It showed that M&As lead to abnormally high turnover rates among target company executives for ten or more years after an acquisition (see Figure 1).  Firms normally lose around ten percent of their executives each year through normal attrition.  Following acquisition, however, firms can expect to lose three times that number – about 32 percent – in the first year alone.  During the next nine years, they will lose an average of 19 percent of their top management team each year.  In essence, M&As usually destroy any leadership continuity that target companies may have enjoyed prior to their acquisition.

Leading consulting firms involved in merger integration engagements now recognize that reestablishing an effective top management team after an acquisition is a critical component of effective integration.  However, few firms yet understand either the underlying causes of this long-term turnover or how to manage it.  Academic researchers have examined a number of factors associated with short-term executive turnover after an acquisition but no research to date has attempted to understand the long-term effects.  In this article, I examine a range of factors that may explain the root causes of long-term executive turnover in target company top management teams.  A deeper understanding of these causes may help firms more effectively deal with these issues early in the merger integration process and lead to the development of more effective top management teams.

Coming in Spring 2010: Etti Baranoff, Alisa Brink, Ken Daniels, Jodie Ferguson, Manu Gupta, Haeran Jae, Oleg Korenok, Jayaraman Vijayakumar, Weiyong Zhang