Gender Gap in Startup Recruiting: Evidence from Changes in Termination Costs

This paper examines the impact of the expansion of the U.S. Postal Service in the late 19th century on firm creation and performance. Utilizing newly digitized archival data on historic business establishments, post office locations, and road networks in California, our study identifies a positive relationship between the expansion of the Postal Service and the emergence of new firms. To address endogeneity concerns, we leverage an unexpected change in the Postal Service route network. Our findings suggest that the Postal Service played a significant role in facilitating firm entry by acting as a carrier of specialized knowledge rather than as a financial service or mass communication infrastructure. We further reveal that, although increased competition from new entrants generally exerted downward pressure on incumbent firms, those relying on specialized knowledge and public technology inputs significantly benefited from local Postal Service access. Taken together, our study underscores the critical role played by the Postal Service in knowledge diffusion and local economic development by enabling the sourcing of specialized knowledge and technologies from other geographies. Overall, our results contribute to a broader understanding of how communication and knowledge dissemination infrastructure can drive entrepreneurship and firm growth, carrying important implications for contemporary discussions on infrastructure development, its potential to stimulate entrepreneurial activity, innovation, and foster local economic communities. This paper was accepted by Olav Sorenson, organizations. Funding: The authors gratefully acknowledge funding from the Harvard Business School Division of Research and Faculty Development. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.03369 .

This study examines how winning a significant industry award affects the behavior of finance professionals. Focusing on sell-side equity analysts and utilizing a novel data set from Institutional Investor on analyst rankings, we employ a regression discontinuity design that compares the postaward research outputs and behavior of third-place, all-star analysts with those of first runner-up analysts who barely miss the distinction. Our results show that third-place all-star winners are more optimistic in their forecasts and recommendations compared with first runner-up analysts after winning the award, and market reactions to their forecast revisions are stronger. The third-place winners also receive higher priority during earnings conference calls and experience better career outcomes. Our evidence is consistent with award-winning analysts leveraging their increased reputation and market influence to generate more trading commissions and career benefits. The broader inference of our findings is that finance professionals who win a significant award are likely to become more, rather than less, strategic. This paper was accepted by Kay Giesecke, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.04249 .

Using a representative survey of U.S. lawyers, we document a sizeable gender gap in early partnership aspirations, which explains half of the later gender promotion gap. We further document that the correlation between aspirations and effort provides a “mechanical link” between aspirations and promotion. Early workplace experiences, such as harassment and demeaning comments, are linked to promotion aspirations. Moreover, early aspirations provide insight into eventual promotion outcomes that goes beyond what can be drawn only from expectations. Our study highlights that measuring aspirations and adapting the corporate culture that shapes them are key components for firms to improve workplace environments. This paper was accepted by Joshua Gans, business strategy. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.00715 .

We study how working remotely impacts employee job satisfaction and retention using unique data on the remote work arrangements of nearly 165,000 employees. Our findings show that the positive association between working remotely more frequently and job satisfaction diminishes substantially after controlling for employee compensation, occupation, demographics, and workplace characteristics (e.g., feeling appreciated at work). Moreover, remote work is associated with a higher intention to leave the firm after considering these other factors. This suggests that workplace characteristics beyond remote work have a more consequential association with job satisfaction and retention than remote work itself. Using variation in job tasks and worker–manager relationships, we find that working remotely more frequently confers higher job satisfaction for employees in low-coordination roles or those who perceive their direct supervisors unfavorably. The findings suggest that remote work plays a more limited role in shaping job satisfaction and retention relative to broader workplace characteristics, and that its value depends on how well work arrangements are matched to employees’ strengths, coordination requirements, and managerial context. This paper was accepted by Shiva Rajgopal, accounting. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.07017 .

We document a pecking order of transaction costs in the interdealer market for German sovereign bonds, where three trading protocols coexist. Dealers can trade over the counter (OTC), either bilaterally or via brokers, as well as on an exchange. Trading on the exchange is more expensive than OTC, and broker-intermediated trades are more costly than bilateral OTC trades. The existence of an OTC discount is difficult to square with theories centered around search-and-bargaining frictions but is in line with models of hybrid markets based on information frictions. Consistently, we show that dealers’ information impacts their choice of trading protocol and that the pecking order of transaction costs is aligned with the informational content of order flows across protocols. Search and bargaining as well as information proxies explain differences in OTC discount within protocols. A realistic description of hybrid markets thus requires both types of frictions. This paper was accepted by Agostino Capponi, finance. Funding: L. Pelizzon and M. Schneider acknowledge funding by the Deutsche Forschungsgemeinschaft [Grant 329107530]. L. Pelizzon thanks the Leibniz Institute for Financial Research SAFE for financially sponsoring this research. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.00194 .

We exploit within-firm variations in plant-level toxic releases to examine the effect of managerial hometown preference on corporate environmental policies. We find that pollution levels are about 30% lower for plants located near chief executive officers’ (CEOs’) hometowns. This reduction is achieved through resource-intensive pollution control efforts, including source reduction and waste management activities. Analyses using CEO turnover provide causal inferences. Local residents benefit from CEO hometown pollution reduction as localities hosting more hometown plants experience improved environmental conditions and better residential health outcomes. On the other hand, some evidence suggests that CEOs’ hometown preference is related to agency frictions. Overall, our findings reveal the impact of CEOs’ personal motivations on corporate pollution dynamics and their consequential effects on the well-being of local communities. This paper was accepted by Ranjani Krishnan, accounting. Funding: Q. Xu gratefully acknowledges research support from the University of Illinois Urbana-Champaign. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.02560 .

We examine how access to debt markets affects firms’ incentives to provide trade credit. Using hand-collected trade credit data between customer-supplier pairs and two exogenous shocks to firms’ debt capacity, we show that better access to debt reduces firms’ provision of trade credit per dollar of sales. The decline in trade credit is concentrated on ex ante powerful customers, but absent for weak ones, suggesting that better access to debt improves firms’ bargaining position relative to powerful customers. The decline in trade credit leads customers to cut investment, increase leverage, and scale back trade credit provision to firms further downstream. This paper was accepted by Camelia Kuhnen, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.04090 .

Do individuals anticipate time inconsistency in others? This paper jointly investigates beliefs about one’s own and others’ present bias. In an online laboratory experiment, participants engaged in a real-effort task display little awareness of their own present bias but anticipate present bias in others. Structurally, I estimate a present bias parameter [Formula: see text] of 0.82. Participants perceive others’ [Formula: see text] to be 0.87, indicating substantial sophistication, contrasted with 1.03 for themselves, indicating full naïveté. At the individual level, asymmetric naïveté correlates with overoptimism regarding one’s own versus others’ task enjoyment and time availability. The wedge in beliefs about present bias can inform equilibrium outcomes in a number of collaborative, competitive, and hierarchical settings, including teams in the workplace, management practices such as deadlines and tournament incentive schemes, and household consumption decisions. This paper was accepted by Yan Chen, behavioral economics and decision analysis. Funding: Financial support from the Laboratory for Economic Applications and Policy (Harvard University); Pershing Square Venture Fund for Research on the Foundations of Human Behavior (Harvard University); Harvard Business School (PhD Research Budget); and the Russell Sage Foundation (Small Research Grant) is gratefully acknowledged. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.01780 .

Efficiently managing inventories requires an accurate estimation of stockout costs. This estimation is complicated by challenges in determining how to compensate consumers monetarily to ensure they will maintain the same level of utility they would have obtained had stockouts not occurred. This paper presents an analysis of these compensation costs as applied to the design of optimal stockout rates by an online retailer marketing to consumers aesthetically substandard fruits and vegetables rejected by mainstream grocery chains. Because growers face high uncertainty in their harvesting conditions and in the aesthetic quality of their crops and there are little data on hand to predict the value consumers attach to the availability of subpar produce, it is difficult to optimally match the supply of these products with consumers’ demand. Our analysis draws from a multiple discrete-continuous extreme value (MDCEV) choice model to calculate consumer compensations that the retailer can use to estimate the opportunity costs of stockouts to manage its inventory. We show that not taking into account these compensation costs could unduly inflate the optimal stockout rates for these products. Armed with these compensation cost estimates, we show how these costs can serve as incentives for retailers to source greater inventory amounts of imperfect produce from growers and how this will ultimately translate into less waste in the supply chain. This paper was accepted by Charles Corbett, operations management. Funding: Funding from Agriculture and Food Research Initiative (National Institute for Food and Agriculture, USDA) [Grant 2016-09900] is gratefully acknowledged. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2021.03174 .

When launching a new product, historical sales data are often not available, leaving price as a crucial experimental instrument for sellers to gauge market response. When designing pricing experiments, there are three fundamental objectives: estimating the causal effect of price (i.e., price elasticity), maximizing the expected revenue through the experiment, and controlling the tail risk that, if not controlled, may lead to significant financial losses. In this paper, we reveal the relationship among such three objectives. Under a linear structural model, we investigate the trade-offs between causal effect estimation and expected revenue maximization, as well as between expected revenue maximization and tail risk control. Furthermore, we propose an optimal pricing experimental design, which can flexibly adapt to different desired levels of trade-offs. Through the optimal design, we also explore the relationship between causal effect estimation and tail risk control. Moreover, we establish an always-valid confidence sequence and a central limit theorem for the inference of the causal effect. Finally, we extend our results and the design to a misspecified setting, where the structural model is not necessarily linear but the seller still runs our design for linear structural models. The results demonstrate the robustness of our design and the wide existence of the relationships among the three objectives. This paper was accepted by George Shanthikumar, data science. Funding: The authors thank the Massachusetts Institute of Technology (MIT)-IBM partnership in Artificial Intelligence and the MIT Data Science Laboratory for support. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.03209 .

Many platforms host user-generated content (UGC) and content developed by professionals side by side. However, thus far, their impact on platform ecosystems has been mostly studied in isolation. In this paper, we use data from a network of 122 local news outlets hosted by an online news platform to study the spillover effects from UGC developed by citizen journalists to the content developed by professional journalists. We use the removal of a status index associated with citizen journalists as an exogenous shock to their supply of UGC to identify these spillover effects. We find that experienced citizen journalists reduce their production of content when this status index is removed. We then find that inexperienced professional journalists increase their output in response to this behavior. However, as a result of these changes, we find a reduction in the overall content hosted by the platform, especially in the case of local news and in more isolated regions. We further show that this is likely to have detrimental effects for the platform. In particular, there is a decline in overall viewership, and the platform may need to hire and pay salaries to more professional journalists to produce enough articles to close the gap left by the departing citizen journalists. Our work contributes to the literature on UGC and online platforms and to the literature on local news. This paper was accepted by D. J. Wu, information systems division. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.4962 .

We examine how investors’ investment judgments are jointly affected by two important linguistic features that vary considerably across firms’ risk factor disclosures: namely, causal focus—the extent to which managers’ disclosures focus on the causes versus consequences of risk events—and specificity, which refers to specific references to names of objects and quantitative values. Results of controlled experiments show that, when the disclosure focus is on risk causes, greater specificity increases investment willingness because of enhanced feelings of knowable uncertainty in a risk event. In contrast, when the focus is on risk consequences, greater specificity reduces investment willingness because of diminished feelings of knowable uncertainty. Contrary to the Securities and Exchange Commission’s positive view of specific risk factor disclosures, our results suggest that specificity can have an opposite effects on investors’ judgments depending on the causal focus of risk factor disclosures. This paper was accepted by Ranjani Krishnan, accounting. Funding: This work was supported by Korea University Business School and the United Overseas Bank Professorship Endowment Fund. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.00445 .

Many jurisdictions have launched antitrust enforcement and brought in regulation of large tech platforms. The swift and strict implementation of China’s Anti-Monopoly Guidelines for the Platform Economy (Platform Guidelines) provides a quasi-natural experiment to evaluate the impact of antitrust regulation on platform competition. We adopt a difference-in-differences approach to empirically explore the impact of China’s Platform Guidelines on the number of investments and the entry of startups in platform markets. The results show that the Platform Guidelines did not increase entrepreneurship in these affected markets. Rather, entrepreneurship weakened in these markets, with less venture capital investment flowing into them and fewer startups entering these markets. Our study suggests that governments should consider more carefully the potential unintended consequences of antitrust platform regulation. This paper was accepted by D. J. Wu, information systems. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.04397 .

We examine traders’ order submission strategies during the Euronext preopen, which uses price-time priorities to arrange opening trades via a call auction. Preopening order submissions follow a J-shape pattern. Sophisticated proprietary traders arrive late, consistent with information leakage concerns. Slow clients arrive early and place aggressive orders to advertise their trading needs and strategically gain time priority. Their early order submissions often occur in stocks with an increase in the tick size and on days with expected liquidity shocks. They also contribute to daily price discovery. Using a preopening outage as a natural experiment, we show that the Euronext preopen improves price discovery on a rival venue. These benefits hold even in the absence of an opening auction taking place. This paper was accepted by Lin William Cong, finance. Funding: Financial support from the Agence Nationale de la Recherche [Grants ANR-16-CE26-0008, ANR-17-EURE-0010 (Investissements d’Avenir program)]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.03998 .

Consumers disclose personal information when they interact with connected technologies. The advent of voice technology has enabled consumers to interact with connected technologies not only through typing but also through speaking. The present research investigates whether consumers expect different levels of privacy for information they disclose via different communication modalities. The results of three studies suggest that consumers have more restrictive privacy expectations for information disclosed via speech as compared with text. The studies probe the viability of several mechanisms that may drive this effect and test practically relevant moderators. The results suggest that the effect is driven, at least in part, by increased feelings of ownership over content disclosed via speech as compared with text. Of relevance to multiple stakeholders, the article discusses implications for privacy regulation, privacy-preserving application design, targeted advertising, and the “privacy paradox.” This paper has been This paper was accepted by Catherine Tucker for the Special Issue on the Human-Algorithm Connection. Funding: This work was supported by Marketing Science Institute [4001309], NYU Stern Center for Global Economy and Business. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.03954 .