Using a large hand-collected database of 605 privatized firms from 48 countries, we examine the relationship between the collectivism measure of culture and residual state ownership in privatized firms. We find that the continued role of government in privatized firms is positively related to collectivism. This result is robust to using alternative measures of collectivism and government control, as well as when we address the endogeneity of collectivism. Finally, we examine the economic outcomes of culture at the firm level, focusing primarily on performance, efficiency, risk-taking, and valuation measures. We report that privatized firms with high residual state ownership exhibit lower performance, valuation, efficiency, and risk-taking in collectivist societies. Our results suggest that formal institutions are not, as sustained by previous studies, the main/exclusive constraints on the privatization reform.

We investigate the impact of family control on corporate social responsibility (CSR) performance. Using newly collected data on the ultimate ownership structure of publicly traded firms in nine East Asian economies, we find that family-controlled firms exhibit lower CSR performance, consistent with the expropriation hypothesis of family control. The negative relationship between family control and CSR is robust to alternative measures of family control, different components of CSR, as well as to endogeneity tests, subsample tests, and alternative estimation methods. We further find that CSR underperformance concentrates in family firms with greater agency problems and in countries with weaker institutions. Moreover, the underperformance of East Asian family firms holds when controlling for the effects of other large shareholders and when comparing with family firms from other countries. These findings contribute to understanding the determinants of CSR and highlight the importance of corporate governance and the institutional environment in improving CSR performance of family-controlled firms.

While US companies mainly list their board of directors alphabetically, this is not the case for Chinese companies, most of which list their independent directors last. We interpret the listing order of Chinese directors as board hierarchy, reflecting power allocation within the board. Based on extant evidence that independent directors contribute to firm value and that empowered individuals have more influence in group decision making, we expect independent-director rankings to be positively associated with firm value and find evidence consistent with this prediction. In our supplementary analyses we explore the mechanisms through which empowered independent directors enhance firm value. We find that independent directors who are ranked higher are more likely to vote against the management, especially on financial reporting issues. Further, higher independent-director rankings are associated with less earnings management. Our study suggests that empowering independent directors increases firm value.

Selecting among alternative projects is a core management task in all innovating organizations. In this paper, we focus on the evaluation of frontier scientific research projects. We argue that the "intellectual distance" between the knowledge embodied in research proposals and an evaluator's own expertise systematically relates to the evaluations given. To estimate relationships, we designed and executed a grant proposal process at a leading research university in which we randomized the assignment of evaluators and proposals to generate 2,130 evaluator-proposal pairs. We find that evaluators systematically give lower scores to research proposals that are closer to their own areas of expertise and to those that are highly novel. The patterns are consistent with biases associated with boundedly rational evaluation of new ideas. The patterns are inconsistent with intellectual distance simply contributing "noise" or being associated with private interests of evaluators. We discuss implications for policy, managerial intervention, and allocation of resources in the ongoing accumulation of scientific knowledge.

In this study, we examine the following question: What do executives gain from serving on boards? We propose that board service benefits non-CEO-level executives in the executive labor market by acting as a certification mechanism and by providing access to unique knowledge, skills, and connections. We argue that non-CEO executives who gain directorships will be more likely to be promoted to CEO both inside and outside their home firm, will be more likely to be promoted internally, and will receive higher pay from their home firms. To test our ideas, we employ propensity score matching to construct a longitudinal sample of 2,104 top executives of large, publicly traded companies in the United States over the period 1996 to 2012. The results provide consistent support for our theory.

Abstract Projects seeking to define, measure, and evaluate audit quality are on the agendas of auditing standards setters as well as audit firms. The Public Company Accounting Oversight Board ( PCAOB ) currently provides information regarding audit quality through the release of inspection reports, and the Board intends to establish and report audit quality indicators. To provide additional perspective on audit quality, we obtain auditors' and investors' views, definitions, and indicators of audit quality. We find that investors' definitions of audit quality focus more on inputs to the audit process than do auditors', and that investors view the number of PCAOB deficiencies as an indicator of overall firm quality. We find a consensus that auditor characteristics may be the most important determinants of audit quality, and that restatements may be the most readily available signal of low audit quality. We relate responses to a general audit quality framework, provide support for archival audit research, and identify additional disclosures that participants suggest could signal audit quality. Taken together, we provide evidence regarding the construct of audit quality in the post‐ SOX environment, evaluate many of the audit quality indicators proposed by the PCAOB , and suggest avenues for future research.

ABSTRACT This study examines the tax avoidance behavior of firms prior to the issuance, and following the resolution, of SEC tax comment letters. We find that firms that appear to engage in greater tax avoidance are more likely to receive a tax-related SEC comment letter. We also find that firms receiving a tax-related SEC comment letter, relative to firms receiving a non-tax comment letter, subsequently decrease their tax avoidance behavior consistent with an increase in expected tax costs. Additionally, we document evidence consistent with other firms that do not receive a comment letter reacting to multiple publicly disclosed tax-related comment letters within their industry by increasing their reported GAAP ETR, consistent with an indirect effect of regulatory scrutiny on certain types of tax avoidance.

One key factor contributing to emergency department (ED) overcrowding is prolonged waiting time for admission to inpatient wards, also known as ED boarding time. To gain insights into reducing this waiting time, we study operations in the inpatient wards and their interface with the ED. We focus on understanding the effect of inpatient discharge policies and other operational policies on the time-of-day waiting time performance, such as the fraction of patients waiting longer than six hours in the ED before being admitted. Based on an empirical study at a Singaporean hospital, we propose a novel stochastic processing network with the following characteristics to model inpatient operations: (1) A patient’s service time in the inpatient wards depends on that patient’s admission and discharge times and length of stay. The service times capture a two-time-scale phenomenon and are not independent and identically distributed. (2) Pre- and post-allocation delays model the extra amount of waiting caused by secondary bottlenecks other than bed unavailability, such as nurse shortage. (3) Patients waiting for a bed can overflow to a nonprimary ward when the waiting time reaches a threshold, where the threshold is time dependent. We show, via simulation studies, that our model is able to capture the inpatient flow dynamics at hourly resolution and can evaluate the impact of operational policies on both the daily and time-of-day waiting time performance. In particular, our model predicts that implementing a hypothetical policy can eliminate excessive waiting for those patients who request beds in mornings. This policy incorporates the following components: a discharge distribution with the first discharge peak between 8 a.m. and 9 a.m. and 26% of patients discharging before noon, and constant-mean allocation delays throughout the day. The insights gained from our model can help hospital managers to choose among different policies to implement depending on the choice of objective, such as to reduce the peak waiting in the morning or to reduce daily waiting time statistics. This paper was accepted by Assaf Zeevi, stochastic models and simulation.