Last week was a special time of celebration for the Notre Dame family. I hope you were able to attend the inauguration events and I appreciate those of you who served in various roles, from picnic setup to serving as marshals.
I was inspired and challenged by Father Bob Dowd’s call to action to Notre Dame, as one of the most trusted universities in the world, to embrace an attitude of “both/and” to build bridges in our polarized times – both faith and reason, research and teaching, local and global, the life of the mind and the matters of the heart, deeply Catholic and welcoming people of all faiths. Father Bob outlined three groundbreaking commitments of his new administration, including that the University will be loan-free and need-blind for all undergraduates, both domestic and international. I encourage you to listen to his address.
Today, I’m also pleased to highlight recent research published in top academic journals:
Ben Golez, Associate Professor of Finance
Holding Period Effects in Dividend Strip Returns (Review of Financial Studies)
The researchers estimate short-term dividend strip prices using 27 years of S&P 500 index options data (1996-2022). Their findings reveal that short-term strips have Sharpe ratios similar to or better than the market, with low market beta and positive alpha. Additionally, term premia and Sharpe ratios vary countercyclically, while alphas trend pro-cyclically.
Andre Martin, Assistant Professor of Marketing
Can Words Speak Louder than Actions? Using Top Management Teams’ Language to Predict Myopic Marketing Spending (Journal of Marketing)
This research introduces a text analysis method to predict myopic marketing spending (cutting your marketing and R&D budget) by analyzing Top Management Teams' language in earnings calls. Using linguistic analysis of nearly 11 million sentences from over 25,000 earnings call transcripts, the model predicts short-term marketing decisions up to a year in advance. The approach outperforms existing models, offering earlier warnings and 1.61% higher annual returns, helping reduce information asymmetry for investors and boards.
Daewon Sun, Professor of IT, Analytics, and Operations
Shawn Qu, Assistant Professor of IT, Analytics, and Operations
Yoonseock Son, Assistant Professor of IT, Analytics, and Operations
Capitalizing on the Moment: The Strategic Role of Information Disclosure in Online Crowdfunding (Production and Operations Management)
Online crowdfunding platforms offer new opportunities for entrepreneurs to secure funding, but the timing of campaign updates remains unclear. Using machine learning-based text analysis and econometric models on a dataset from a leading online crowdfunding platform, this study shows that updates are most effective in early stages and their effectiveness varies with project’s fundraising performance. Timing is crucial for inexperienced creators, whereas experienced creators gain more from the richness and positive sentiment of the update content.
Ann Tenbrunsel, David E. Gallo Professor of Business Ethics
Bridging the Chasm between Intentions and Behaviors: Developing and Testing a Construal Level Theory of Internal Whistle-Blowing (Organization Science)
The study examines how and why elements of the organizational ethical infrastructure – the set of formal (i.e., codes, policies) and informal systems (i.e., unwritten rules) – motivate ethical whistleblowing intentions and convert those intentions into behaviors. The researchers find that top management communication systems cultivate whistleblowing intentions, and ethical surveillance and sanctioning systems help convert those intentions into behaviors; further, construal level explains these findings.
Hal White, Vincent and Rose Lizzadro Professor of Accountancy
Testing the Waters Meetings, Retail Trading, and Capital Market Frictions (Review of Accounting Studies)
Before an IPO, firms can now engage in private (“Test The Waters”) meetings with institutional investors to discuss firm details. While these meetings are argued to be beneficial, they have the potential to undermine the SEC’s objectives of protecting investors and supporting market efficiency by allowing institutional, but not retail, investors privileged access to management. The study suggests that while TTW meetings may harm retail investors, there does not appear to be a negative impact on overall market function.
Thank you to Ben, Andre, Daewon, Shawn, Yoonseock, Ann and Hal for your research contributions.
In Notre Dame,
Martijn