Firm Performance in the Face of Fear: How CEO Moods Affect Firm Performance. Ali Akansu et al. Journal of Behavioral Finance, http://www.tandfonline.com/doi/abs/10.1080/15427560.2017.1338704?journalCode=hbhf20
Abstract: The authors use facial emotion recognition software to quantify CEO mood. Anger or disgust motivates a CEO to work harder to improve his or her situation; thus firm profitability improves in the subsequent quarter. Happy CEOs are less likely to work on hard or unpleasant tasks; thus profitability decreases in the subsequent quarter. In the short term, fear explains the firm's announcement period market performance. However, fear is transient and performance improvement is short term.
KEYWORDS: Corporate governance, CEO, Firm performance, Moods, Affect, Emotions, Nonverbal information, Facial recognition, Emotion recognition, Soft information
Tuesday, August 1, 2017
Getting the Rich and Powerful to Give
Getting the Rich and Powerful to Give. Judd Kessler, Katherine Milkman & Yiwei Zhang. University of Pennsylvania Working Paper, June 2017, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2994367
Abstract: What motivates the rich and powerful to exhibit generosity? We explore this important question in a large field experiment. We solicit donations from 32,174 alumni of an Ivy League university, including thousands of rich and powerful alumni. Consistent with past psychology research, we find that the rich and powerful respond dramatically, and differently than others, to being given a sense of agency over the use of donated funds. Gifts from rich and powerful alumni increase by 200-300 percent when they are given a sense of agency. Results suggest that motivating the rich and powerful to act may require tailored interventions.
Keywords: charitable giving, agency, natural field experiment, wealth
Abstract: What motivates the rich and powerful to exhibit generosity? We explore this important question in a large field experiment. We solicit donations from 32,174 alumni of an Ivy League university, including thousands of rich and powerful alumni. Consistent with past psychology research, we find that the rich and powerful respond dramatically, and differently than others, to being given a sense of agency over the use of donated funds. Gifts from rich and powerful alumni increase by 200-300 percent when they are given a sense of agency. Results suggest that motivating the rich and powerful to act may require tailored interventions.
Keywords: charitable giving, agency, natural field experiment, wealth
The world looks better together: How close others enhance our visual experiences
The world looks better together: How close others enhance our visual experiences. Erica Boothby et al. Personal Relationships, http://onlinelibrary.wiley.com/doi/10.1111/pere.12201/abstract
Abstract: People derive a number of benefits from sharing experiences with close others. However, most research on this topic has been restricted to forms of sharing involving explicit socializing, including verbal communication, emotion expression, and behavioral interaction. In two studies, these complexities were eliminated to find out whether merely experiencing visual stimuli (photographs) simultaneously with a close other - without communicating - enhances people's evaluations of those stimuli relative to coexperiencing the same stimuli with a stranger or alone. Compared to when viewers were alone, visual scenes were enhanced (better liked and seen as more real) when coexperienced with a close other and were liked less when coexperienced with a stranger. Implications for close relationships are discussed.
Abstract: People derive a number of benefits from sharing experiences with close others. However, most research on this topic has been restricted to forms of sharing involving explicit socializing, including verbal communication, emotion expression, and behavioral interaction. In two studies, these complexities were eliminated to find out whether merely experiencing visual stimuli (photographs) simultaneously with a close other - without communicating - enhances people's evaluations of those stimuli relative to coexperiencing the same stimuli with a stranger or alone. Compared to when viewers were alone, visual scenes were enhanced (better liked and seen as more real) when coexperienced with a close other and were liked less when coexperienced with a stranger. Implications for close relationships are discussed.
Shareholder Protection and Agency Costs: An Experimental Analysis
Shareholder Protection and Agency Costs: An Experimental Analysis. Jacob LaRiviere, Matthew McMahon & William Neilson. Management Science, http://onlinelibrary.wiley.com/doi/10.1002/bdm.2023/abstract
Abstract: Two competing principal-agent models explain why firms pay dividends. The substitute model proposes that corporate insiders pay dividends to signal and build trust with outside shareholders who lack legal protection. The outcome model, in contrast, surmises that when shareholders have legal protection, they demand dividends from insiders to prevent them from expropriating corporate funds. Either way, dividends represent an agency cost paid to align the interests of shareholders and insiders. Expropriations by insiders and reduced investment by shareholders are also agency costs, but they are difficult to identify with archival data. Using a laboratory experiment, we identify the impact of strengthened shareholder protection on all three types of agency costs. Dividend payout ratios are five times larger with stronger investor protection, insider expropriation ratios are twice as high, and outsider investment falls by 45%. Thus, we find evidence that strengthening shareholder protection introduces previously unidentified agency costs into the insider-investor relationship.
Abstract: Two competing principal-agent models explain why firms pay dividends. The substitute model proposes that corporate insiders pay dividends to signal and build trust with outside shareholders who lack legal protection. The outcome model, in contrast, surmises that when shareholders have legal protection, they demand dividends from insiders to prevent them from expropriating corporate funds. Either way, dividends represent an agency cost paid to align the interests of shareholders and insiders. Expropriations by insiders and reduced investment by shareholders are also agency costs, but they are difficult to identify with archival data. Using a laboratory experiment, we identify the impact of strengthened shareholder protection on all three types of agency costs. Dividend payout ratios are five times larger with stronger investor protection, insider expropriation ratios are twice as high, and outsider investment falls by 45%. Thus, we find evidence that strengthening shareholder protection introduces previously unidentified agency costs into the insider-investor relationship.
Retirement, Consumption of Political Information, and Political Knowledge
Retirement, Consumption of Political Information, and Political Knowledge. Marcel Garz. European Journal of Political Economy, https://doi.org/10.1016/j.ejpoleco.2017.07.004
Abstract: Democratic societies depend on citizens being informed about candidates and representatives, to allow for optimal voting and political accountability. As the Fourth Estate, news media have a crucial role in this context. However, due to selective exposure, media bias, and endogeneity it is not a priori clear if news consumption increases voter information. Focusing on the increase in leisure time that is associated with retirement, this study investigates whether changes in the consumption of political information affect campaign-related knowledge. For that purpose, I use survey data pertaining to the 2000, 2004, and 2008 US presidential elections. Instrumenting with eligibility for old age benefits, the results show that retirement improves respondents' performance in answering knowledge questions. The effect is mostly driven by additional exposure to newscasts and newspapers. There is also evidence of increasing polarization due to retirement.
JEL classification: D12; D83; J14; J26
Keywords: Learning; Media effects; News consumption; Political knowledge; Retirement
Abstract: Democratic societies depend on citizens being informed about candidates and representatives, to allow for optimal voting and political accountability. As the Fourth Estate, news media have a crucial role in this context. However, due to selective exposure, media bias, and endogeneity it is not a priori clear if news consumption increases voter information. Focusing on the increase in leisure time that is associated with retirement, this study investigates whether changes in the consumption of political information affect campaign-related knowledge. For that purpose, I use survey data pertaining to the 2000, 2004, and 2008 US presidential elections. Instrumenting with eligibility for old age benefits, the results show that retirement improves respondents' performance in answering knowledge questions. The effect is mostly driven by additional exposure to newscasts and newspapers. There is also evidence of increasing polarization due to retirement.
JEL classification: D12; D83; J14; J26
Keywords: Learning; Media effects; News consumption; Political knowledge; Retirement
The dark side of the sublime: Distinguishing a threat-based variant of awe
Gordon, A. M., Stellar, J. E., Anderson, C. L., McNeil, G. D., Loew, D., & Keltner, D. (2017). The dark side of the sublime: Distinguishing a threat-based variant of awe. Journal of Personality and Social Psychology, 113(2), 310-328. http://dx.doi.org/10.1037/pspp0000120
Abstract: Theoretical conceptualizations of awe suggest this emotion can be more positive or negative depending on specific appraisal processes. However, the emergent scientific study of awe rarely emphasizes its negative side, classifying it instead as a positive emotion. In the present research we tested whether there is a more negative variant of awe that arises in response to vast, complex stimuli that are threatening (e.g., tornadoes, terrorist attack, wrathful god). We discovered people do experience this type of awe with regularity (Studies 1 & 4) and that it differs from other variants of awe in terms of its underlying appraisals, subjective experience, physiological correlates, and consequences for well-being. Specifically, threat-based awe experiences were appraised as lower in self-control and certainty and higher in situational control than other awe experiences, and were characterized by greater feelings of fear (Studies 2a & 2b). Threat-based awe was associated with physiological indicators of increased sympathetic autonomic arousal, whereas positive awe was associated with indicators of increased parasympathetic arousal (Study 3). Positive awe experiences in daily life (Study 4) and in the lab (Study 5) led to greater momentary well-being (compared with no awe experience), whereas threat-based awe experiences did not. This effect was partially mediated by increased feelings of powerlessness during threat-based awe experiences. Together, these findings highlight a darker side of awe.
Abstract: Theoretical conceptualizations of awe suggest this emotion can be more positive or negative depending on specific appraisal processes. However, the emergent scientific study of awe rarely emphasizes its negative side, classifying it instead as a positive emotion. In the present research we tested whether there is a more negative variant of awe that arises in response to vast, complex stimuli that are threatening (e.g., tornadoes, terrorist attack, wrathful god). We discovered people do experience this type of awe with regularity (Studies 1 & 4) and that it differs from other variants of awe in terms of its underlying appraisals, subjective experience, physiological correlates, and consequences for well-being. Specifically, threat-based awe experiences were appraised as lower in self-control and certainty and higher in situational control than other awe experiences, and were characterized by greater feelings of fear (Studies 2a & 2b). Threat-based awe was associated with physiological indicators of increased sympathetic autonomic arousal, whereas positive awe was associated with indicators of increased parasympathetic arousal (Study 3). Positive awe experiences in daily life (Study 4) and in the lab (Study 5) led to greater momentary well-being (compared with no awe experience), whereas threat-based awe experiences did not. This effect was partially mediated by increased feelings of powerlessness during threat-based awe experiences. Together, these findings highlight a darker side of awe.
The Limits of Partisan Prejudice
The Limits of Partisan Prejudice. Yphtach Lelkes and Sean Westwood. Journal of Politics, April 2017, Pages 485-501, http://www.journals.uchicago.edu/doi/abs/10.1086/688223
Abstract: Partisanship increasingly factors into the behavior of Americans in both political and nonpolitical situations, yet the bounds of partisan prejudice are largely unknown. In this paper, we systematically evaluate the limits of partisan prejudice using a series of five studies situated within a typology of prejudice. We find that partisan prejudice predicts suppression of hostile rhetoric toward one's own party, avoidance of members of the opposition, and a desire for preferential treatment for one's own party. While these behaviors may cause incidental or indirect harm to the opposition, we find that even the most affectively polarized - those with the strongest disdain for the opposition - are no more likely to intentionally harm the opposition than those with minimal levels of affective polarization.
Abstract: Partisanship increasingly factors into the behavior of Americans in both political and nonpolitical situations, yet the bounds of partisan prejudice are largely unknown. In this paper, we systematically evaluate the limits of partisan prejudice using a series of five studies situated within a typology of prejudice. We find that partisan prejudice predicts suppression of hostile rhetoric toward one's own party, avoidance of members of the opposition, and a desire for preferential treatment for one's own party. While these behaviors may cause incidental or indirect harm to the opposition, we find that even the most affectively polarized - those with the strongest disdain for the opposition - are no more likely to intentionally harm the opposition than those with minimal levels of affective polarization.
Genetic and environmental sources of individual differences in views on aging
Kornadt, A. E., & Kandler, C. (2017). Genetic and environmental sources of individual differences in views on aging. Psychology and Aging, 32(4), 388-399. http://dx.doi.org/10.1037/pag0000174
Abstract: Views on aging are central psychosocial variables in the aging process, but knowledge about their determinants is still fragmental. Thus, the authors investigated the degree to which genetic and environmental factors contribute to individual differences in various domains of views on aging (wisdom, work, fitness, and family), and whether these variance components vary across ages. They analyzed data from 350 monozygotic and 322 dizygotic twin pairs from the Midlife Development in the U.S. (MIDUS) study, aged 25–74. Individual differences in views on aging were mainly due to individual-specific environmental and genetic effects. However, depending on the domain, genetic and environmental contributions to the variance differed. Furthermore, for some domains, variability was larger for older participants; this was attributable to increases in environmental components. This study extends research on genetic and environmental sources of psychosocial variables and stimulates future studies investigating the etiology of views on aging across the life span.
Abstract: Views on aging are central psychosocial variables in the aging process, but knowledge about their determinants is still fragmental. Thus, the authors investigated the degree to which genetic and environmental factors contribute to individual differences in various domains of views on aging (wisdom, work, fitness, and family), and whether these variance components vary across ages. They analyzed data from 350 monozygotic and 322 dizygotic twin pairs from the Midlife Development in the U.S. (MIDUS) study, aged 25–74. Individual differences in views on aging were mainly due to individual-specific environmental and genetic effects. However, depending on the domain, genetic and environmental contributions to the variance differed. Furthermore, for some domains, variability was larger for older participants; this was attributable to increases in environmental components. This study extends research on genetic and environmental sources of psychosocial variables and stimulates future studies investigating the etiology of views on aging across the life span.
Photographic Memory: The Effects of Volitional Photo Taking on Memory for Visual and Auditory Aspects of an Experience
Photographic Memory: The Effects of Volitional Photo Taking on Memory for Visual and Auditory Aspects of an Experience. Alixandra Barasch et al. Psychological Science, https://www.ncbi.nlm.nih.gov/pubmed/28650721
Abstract: How does volitional photo taking affect unaided memory for visual and auditory aspects of experiences? Across one field and three lab studies, we found that, even without revisiting any photos, participants who could freely take photographs during an experience recognized more of what they saw and less of what they heard, compared with those who could not take any photographs. Further, merely taking mental photos had similar effects on memory. These results provide support for the idea that photo taking induces a shift in attention toward visual aspects and away from auditory aspects of an experience. Additional findings were in line with this mechanism: Participants with a camera had better recognition of aspects of the scene that they photographed than of aspects they did not photograph. Furthermore, participants who used a camera during their experience recognized even nonphotographed aspects better than participants without a camera did. Meta-analyses including all reported studies support these findings.
Abstract: How does volitional photo taking affect unaided memory for visual and auditory aspects of experiences? Across one field and three lab studies, we found that, even without revisiting any photos, participants who could freely take photographs during an experience recognized more of what they saw and less of what they heard, compared with those who could not take any photographs. Further, merely taking mental photos had similar effects on memory. These results provide support for the idea that photo taking induces a shift in attention toward visual aspects and away from auditory aspects of an experience. Additional findings were in line with this mechanism: Participants with a camera had better recognition of aspects of the scene that they photographed than of aspects they did not photograph. Furthermore, participants who used a camera during their experience recognized even nonphotographed aspects better than participants without a camera did. Meta-analyses including all reported studies support these findings.
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