Originally published in the inaugural edition of Carroll Capital, the print publication of the Carroll School of Management at Boston College. .
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鈥淒oes Tax Enforcement Deter Managers鈥� Self-Dealing?鈥�
More Faculty Research
See a sampling of faculty research, media highlights, and awards from the spring 2023 semester.
IRS audits scare even CEOs. And those audits don鈥檛 have to be personal鈥攅xecutives reduce their personal tax shenanigans when their companies are audited. That鈥檚 according to research by Accounting Professors听Benjamin Yost听and听Susan Shu, published in the听.
The professors examined whether executives change their own gifts of stock when their companies are audited. These gifts often end up benefiting the executives, either because their timing is suspicious鈥攖hey happen right before big stock drops鈥攐r they go to a family foundation the executive controls.
The IRS doesn鈥檛 announce audits, but the professors figured out how to identify them鈥攁nd then match this information with stock gifts, which are reported. Their conclusion: 鈥淗eightened scrutiny from tax enforcement serves as an effective monitoring mechanism and reduces managers鈥� self-dealing behavior.鈥�
Marketing Professors Gergana Nenkov and Linda Salisbury
鈥淐onsumer Financial Vulnerability: Novel Insights for Theory, Practice, and Public Policy鈥�
When you hear 鈥渇inancial vulnerability,鈥� you probably think of poverty. If so, you鈥檙e typical鈥攁nd wrong, according to Marketing Professors Linda Salisbury and Gergana Nenkov. They and their collaborators have reconceived the idea of consumer financial vulnerability in a . They argue this sort of vulnerability entails exposure to potential harm, often rooted in risks beyond just low income or wealth.
A business owner, for example, might鈥檝e been wealthy but exposed as financially vulnerable by the pandemic. The professors鈥� new definition helps marketers identify vulnerable consumers and create products and services that 鈥渕eet their needs while also preventing (or reducing the risk of) realized harm.鈥�
鈥淟aunching with a Parachute: The Gig Economy and New Business Formation鈥�
Ride-hailing companies seem a straightforward proposition鈥攚ith a smartphone, you can hire a car more cheaply and easily than you could an old-fashioned cab. Now, research by Finance Professor Livia Yi shows that gig-economy companies like Lyft and Uber may have less obvious benefits: They may encourage entrepreneurship.
Writing in the Journal of Financial Economics, Yi and colleagues discuss the introduction of Uber and Lyft nationwide, which they found was associated with upticks in business registrations and small business lending. The gig economy, they suggest, may be serving as a form of insurance for entrepreneurs, giving them the financial and schedule flexibility to start businesses.
Finance Professor Nathan Dong
鈥淒eterminants of LGBTQ+ Corporate Policies鈥�
LGBTQ+ policies remain divisive in corporate America. Some companies, like Starbucks, strongly support them; others, like Chick-fil-A, condemn them. Finance Professor Nathan Dong and coauthors say the education level of a firm鈥檚 employees and the political leanings of the county of its headquarters determine whether it will be more like Starbucks than Chick-fil-A. More college-educated employees and liberal neighbors lead to more LGBTQ+ friendly workplaces.
Published in , the researchers also concluded that shareholder pressure induces companies to change their LGBTQ+ policies.
鈥淟earning to Successfully Hire in Online Labor Markets鈥�
Everyone is tempted by a bargain. And everyone knows it鈥檚 sometimes smart to pass on what鈥檚 cheap because it鈥檒l cost you in the long run.
Companies, it turns out, are no different, at least in their online hiring practices. According to Business Analytics Professor Sam Ransbotham and former Carroll School Professor Marios Kokkodis, firms often experiment with their hiring in online labor markets, like Upwork and Freelancer. They start out by hiring the cheapest contractors, even when those folks have so-so reputations. They can鈥檛 resist a bargain.
But then鈥攕urprise!鈥攖hey get burned and opt to change their approach, paying up for better workers and seeing better results. Employers are likely to do this because they鈥檙e overconfident, the researchers write in . They 鈥渢ry to beat the market by hiring cheaper contractors that they consider as good deals.鈥� A few of these hires work out. But most don鈥檛, so they change their approach.
