Tag: Faculty



Chad Ham and his paper on narcissism in CFOs.

Does a CFO with an outsized signature make more questionable choices while keeping the company books? According to Olin professor Chad Ham, the answer is yes.

Researchers connected the dots between the size of a CFO’s signature, the CFO’s level of narcissism, and the quality of their firm’s financial reporting in a recently published paper in the Journal of Accounting Research.

The authors’ research showed a link between large signatures and higher levels of narcissism. From there, they showed that “narcissistic CFOs are less likely to recognize losses in a timely manner…consistent with a willingness to cover up past mistakes.”

That paper, published in December, was part of a one-two punch Ham and his collaborators delivered linking management results from both CFOs and CEOs with their level of narcissism. A second paper focused on CEOs has been accepted for publication in the Review of Accounting Studies.

Unique approach to measuring personality

“Part of what’s unique about our research is how we’re capturing narcissism,” said Ham, an assistant professor of accounting at Olin. Because, of course, they couldn’t ask top corporate executives to submit to a personality test, signature size became a proxy for their level of self-love.

Ham, along with researchers from the University of North Carolina at Chapel Hill and the University of Maryland, College Park, staged a laboratory experiment to confirm previous research linking signature size and narcissism.

The researchers paired student volunteers and asked them to allocate $5 between themselves and their anonymous partners. Each was given a default allocation of $2.50. The students could stay with the default amount or decide to keep a larger or smaller amount for themselves—knowing that their anonymous partner was given the same task. After that assignment, the students had to fill out a personality test and sign their names.

The results confirmed that the students with larger signatures tended to be more narcissistic and, Ham said, “the more narcissistic participants were more likely to keep a larger share of that $5 endowment for themselves—to misreport their default allocation.”

The researchers then expanded their view with a field experiment reviewing data from more than 500 companies whose CFOs’ notarized signatures could be found on public SEC documents.

“We were able to show a relationship between CFO narcissism and aggressive financial reporting choices,” Ham said. The errors or misreporting took the form of overly aggressive accrual choices; a higher-than-expected level of restatements; and real activities (such as slashing advertising expenses near the end of a year to depress expenses and increase earnings).

Confirming results

Ham and the research team also compared the performance of the companies before and after the CFO was appointed. In the case of the narcissistic CFOs, Ham said, “the firms became more aggressive when these CFOs were appointed.”

The researchers found much the same pattern in the CEO study due for publication in the Review of Accounting Studies. Though not directly responsible for the financial reporting in the company, the paper shows that narcissistic CEOs—those with larger signatures—tended to over-invest in riskier projects and received higher compensation in spite of poorer financial performance.

So, should corporate boards just steer clear of CEOs and CFOs who sign their John Hancock like…well, John Hancock?

Ham says no. It’s not that simple.

“The purpose of our work isn’t to advocate for signature size as a measure of narcissism. It’s to study how executive narcissism affects firm behavior.”

A narcissistic CFO might benefit the company in other ways—ways that aren’t measured in this study.

At most, he said, corporate leaders should be aware of their C-suite occupants’ narcissistic tendencies and “you might want to make sure you have appropriate checks and balances in place.”

“If you want to glean anything from signature size,” Ham said, “you need to have a large sample. It’s an ‘on-average’ effect.”

Pictured above: Chad Ham with two sample signatures his research paper referenced from SEC documents, showing the relative different sizes in the signatures.


Ashley Hardin

Originally from Michigan, Ashley Hardin, assistant professor of organizational behavior, earned her undergraduate degree in business from Michigan’s Ross School of Business and later worked in strategy consulting. However, after consulting and observing people at work up close, she realized she wanted to pursue her passion: Understanding how people relate in the workplace.

She returned to Ross for her doctorate and is now dedicated to understanding why people treat one another well, with responsiveness, or treat each other in an undermining fashion.

“When I was deciding where I wanted to join as a faculty member, it was really important for me to find a strong community, since I study the importance of relationships at work,” Hardin said. “I wanted to go somewhere where there were great relationships and I could form those bonds.”

Area of Expertise:

Organizational Behavior, Team Development, Negotiation

Research Interests:

Relationships, Affect, Work-Life Boundaries, Unethical Behavior

Selected Publications:

  • “Cooperation in multicultural negotiations: How the cultures of people with low and high power interact”,Journal of Applied Psychology, Issue 5, 721-730, with S. Kopelman, C. Myers, L. Tost, 2016
  • “Respect as an engine for new ideas: Linking respectful engagement, relational information processing, and creativity among employees and teams”Human Relations, Issue 6, 1021-1047, with A. Carmeli, J. Dutton, 2015
  • “Compassion and work organizations”Review of Organizational Psychology and Organizational Behavior, Issue 1, 277-304, with J. Dutton, K. Workman, 2014



Ling Dong and Durai Sundaramoorthi smile as Dick Mahoney announces that they won the 2018 Olin Award with Dean Mark Taylor.

Ling Dong and Durai Sundaramoorthi have won the 2018 Olin Award for research that creates a framework that can help farmers select the proper seed varieties to maximize their crop yields from one season to the next.

The Olin Award, which includes business school recognition and a $10,000 prize, is intended to promote scholarly research that has timely practical applications for complex management problems.

“Soybean farmers are subjected to dozens and dozens of seed varieties,” said Richard J. Mahoney, former CEO of Monsanto and a Distinguished Executive-in-Residence at Olin, who initiated the $10,000 prize. “If you knew you’d have perfect weather, certain varieties would work better than others. A bad guess can be quite punishing.”

Dong, professor of operations and manufacturing management, and Sundaramoorthi, senior lecturer in management, received notice that they had received this year’s award, competing against a score of other papers and finalists, during a brief ceremony in Dean Mark Taylor’s office on Monday.

“Improving crop yield is a critical and necessary component of achieving food security and protecting natural resources and environmental quality for future generations,” Dong and Sundaramoorthi wrote in their award-winning paper, entitled, “Machine Learning Based Simulation and Optimization of Soybean Variety Selection.”

“We formulate a simulation-based optimization problem to determine the optimal soybean-mix to minimize the risk associated with the yield…to make soybean-mix recommendations to the farmers.”

A panel of judges evaluates each paper submitted for consideration for the Olin Award. After reviewing the entries, one judge wrote, “It is directly applicable to business results and is something that every farmer that raises soybeans can benefit from regardless of their size—scale independent.”

Wrote another: “Within the narrow application this would seem to have great potential to produce meaningful benefits.”

The research pair will be formally recognized at a luncheon yet to be scheduled, where they will have the opportunity to present their research.




Nicholas Dopuch working with a student in 1988.
Nicholas Dopuch, 1929-2018

Nicholas Dopuch, 1929-2018

Olin Emeritus Professor Nicholas Dopuch, a transformational figure in the world of accounting research who past deans credit with profoundly elevating the business school’s profile, died on Sunday. He was 88.

Praise for Dr. Dopuch’s influence as a researcher, mentor, teacher, and friend poured into Mahendra Gupta’s email inbox following the news. Former colleagues and students from the University of Chicago, Stanford University, the University of Illinois, and numerous other institutions expressed their sorrow at Dr. Dopuch’s passing and appreciation for his work and influence.

“I owe my career to him,” said Gupta, Olin’s former dean and Geraldine J. and Robert L. Virgil Professor of Accounting. “He was a mentor, a father-figure and he was a great guide, not just to me, but to every PhD student, faculty member, and others at the school.”

Background

Dr. Dopuch with former dean Bob Virgil.

Dr. Dopuch with former dean Robert L. Virgil.

Dr. Dopuch was born Nov. 15, 1929, in St. Louis, the son of Serbian parents who emigrated to the United States as teenagers. After a lackluster high school career at McKinley High, he worked for Anheuser-Busch and attended classes part-time at Washington University.

“I never anticipated an academic or professional career,” Dr. Dopuch said in a profile by the Accounting Hall of Fame. “In fact, were it not for the Korean War, I might have stayed with Anheuser-Busch because of the various ‘fringe benefits’ that went with the job.”

After his tour of duty with the US Air Force, he was persuaded that an education could benefit his long-term future. He went to college near his parents’ farm at Indiana State University in Terre Haute, Indiana.

He earned a bachelor’s degree in 1957; and his master’s and doctoral degrees from the University of Illinois in 1959 and 1961, respectively. Prior to his tenure at Washington University, Dopuch taught at the universities of Chicago and Illinois and Indiana University.

Dr. Dopuch came to Olin in 1983 after a long tenure at the University of Chicago, where he was editor of the influential Journal of Accounting Research. Robert L. Virgil, who hired Dr. Dopuch when he was dean of WashU’s business school, said his stamp on accounting research resounded around the globe as he insisted on rigorous research to advance the field.

Introducing rigor into accounting research

Dr. Dopuch and former dean Mahendra Gupta.

With former dean Mahendra Gupta.

“Up to that point, it was armchair theorizing,” Virgil said on Monday. He said the impetus began in the 1960s with data on magnetic tapes the University of Chicago received recording price and volume information on securities trading. Research on that data spawned a revolution in empirical, data-driven accounting research that transformed the field.

“Frankly, he was just amazing,” Virgil said. “He read every paper. He made comments and suggestions. Those that were accepted, he made comments on. In that way, he really had influence on all of the accounting faculty around the country and around the globe.”

Both Virgil and Gupta credited Dr. Dopuch with bringing that intellectual rigor and influence to Olin when he came to the faculty. “When Dean Virgil hired him, he needed someone who could change the culture and set Olin on a different research trajectory,” Gupta said. “Nick did that for the business school.”

When he was hired, Dr. Dopuch became the first to assume the chair as Hubert C. and Dorothy R. Moog Professor of Finance. He directed Olin’s PhD program from 1986 through 2003, and continued as editor or co-editor of the Journal of Accounting Research while he was on Olin’s faculty until 2001, retiring from that post after 34 years.

Since 2008, Dr. Dopuch’s name has been attached to an annual accounting research conference Olin has hosted for 30 years, designed to create an environment where accounting research is the focal point, and drawing faculty participants from renowned business research institutions across the country.

Influence on students

Beyond his influence on accounting research, former colleagues and students recall Dr. Dopuch as a tough but caring professor who challenged students to challenge themselves.

Emails sent to Gupta on Sunday night hailed Dr. Dopuch for the “substantial effect” and the inspiration he had on the lives of students and fellow researchers, noting that his “contributions to the accounting profession and the academy, in particular, are unmatched.”

That influence was evident in the string of awards he received over his long career, including his 2001 induction into the Accounting Hall of Fame; two-time winner of the Outstanding Contribution to Accounting Literature Award from the American Institute of Certified Public Accountants; and the Olin Business School Dean’s Medal in April 1995.

Dr. Dopuch was also one of four Washington University faculty members to receive a Distinguished Faculty Award on Founders Day in 2004.

Arrangements

A Service of Witness to the Resurrection for Dr. Dopuch will be February 12, 2018, at 11 a.m. at Glendale Presbyterian Church, 500 N. Sappington Road, Glendale MO.

As an expression of sympathy, memorial contributions may be sent to Glendale Presbyterian Church, the Shriners, or Washington University (in support of the Dopuch Accounting Research Conference at Olin Business School), Campus Box 1202, One Brookings Drive, St. Louis, MO 63130.

He was preceded in death by his wife Barbara Scholl Dopuch and two sons, Nicholas E. Dopuch Sr. and Michael Dopuch; He is survived by a grandson, Nicholas E. Dopuch Jr. and several nephews and nieces.




If Americans fulfilled their java urges the same way they carefully shopped for groceries, they would visit five to seven various chain coffee shops regularly—for a blend of different categories.

In fact, it turns out that grocery categories such as dessert toppings, motor oil, candles and refrigerated ethnic foods were some of the leading products that lure customers to separate stores.

In the first test of detailed consumer-buying habits by categories at more than one chain store selling groceries, a team of business school researchers led by Washington University in St. Louis found that shoppers weren’t monogamist or bigamist but rather polygamist in their choice of outlets.

The vast majority—a whopping 83 percent—regularly visited between four and nine chain stores within a year’s time to purchase groceries. Of 1,321 households studied among this rich dataset, only 12 stayed loyal to just one store. More than half, at 51.1 percent, went to the average of five to seven different stores. Eighty-eight households, or six of every 100, went to 10 or more.

So much for store loyalty.

Shattering conventional wisdom on grocery loyalty

Using tracked data from a vendor utilizing a swipe card akin to a loyalty card, the researchers parsed more than $1 million worth of shopping transactions over 53 weeks involving 248 types of products sold at 14 retail chain stores in a large metropolitan market. The study, “Polygamous Store Loyalties: An Empirical Investigation,” was published last month in the Journal of Retailing.

“Store loyalty was pretty much a given in grocery retail,” said senior author Seethu Seetharaman, director of the Center of Customer Analytics and Big Data and the W. Patrick McGinnis Professor of Marketing at Olin Business School. “When people do their shopping, it’s the store close to where they live—location, location, location, like the real-estate mantra.

“Then there is a group of choosy consumers who stop at many stores, shopping for bargains or certain brands or products,” he said. “They’ve been called ‘cherry pickers.’” Often, those folks were associated with coupon shoppers.

“That made us do a deeper dive, and we found that people aren’t as store loyal as we thought,” Seetharaman said. “Clearly, people are polygamous. The majority of people are shopping at six grocery stores.”

Consumers tend to shop multiple stores for multiple reasons. In fact, the data showed little loyalty to a single store or handful of stores, but more so to types of products found in a store. Consumers shopped various stories for specific product categories: frozen treats at one grocer, meat and poultry at another, and so on. The researchers called this “intrinsic store-category attractiveness.”

Seetharaman was joined in this study by one of his former graduate students, Qin Zhang, assistant professor of business at Pacific Lutheran University, and one of Zhang’s former graduate students, Manish Gangwar, assistant professor of marketing at the Indian School of Business. They specified and estimated a statistical model of how consumers fractured their shopping basket and shared their wallet across stores.

Shoppers aren't as loyal to their grocery stores as conventional wisdom would have you believe, according to new research by Olin's Seethu Seetharaman.

Shoppers aren’t as loyal to their grocery stores as conventional wisdom would have you believe, according to new research by Olin’s Seethu Seetharaman.

‘Favorite’ stores account for 40 percent of the basket

The dataset comprised chains that were either traditional supermarkets (Albertsons, Bashas’, Food 4 Less, Food City, Fry’s Food Store, IGA, Safeway, Trader Joe’s and Wild Oats Market), supercenters (Kmart and Walmart) and warehouse clubs (Costco, Sam’s Club and Smart & Final). Further evidence of an ever-changing economy in which to purchase grocery, household and health and beauty products: Some of the studied chains have dwindled since the study and no longer service several of their previous states.

“It’s very diffuse,” Seetharaman said of consumers’ purchases from a larger-than-expected list of stores. “Only 40 percent of their basket is coming from their ‘favorite’ store.”

Some other findings from the research:

  • In the market surveyed in particular, Fry’s Food Stores emerged as the market favorite by a sizable margin, with Albertson’s, Safeway and Walmart next behind it.
  • In a large set of categories, a handful of stores competed intensely: Albertson’s, Bashas’, Safeway and Fry’s.
  • Warehouse clubs attract loyalty in categories different from the traditional supermarkets and supercenters.
  • Family size predicted store loyalty—the larger families tended toward Fry’s or a Walmart Supercenter.
  • Income was a somewhat surprising predictor, in that households with higher incomes were more likely to “budget shop” at a Costco, which could be explained by the fact that large houses with large basements are usually needed to store products bought in bulk.

Companies in the grocery, household item and healthy/beauty realm could learn from such a category-intensive study, Seetharaman said. “This gives you a good sense of what you are winning, and how you are winning. But there’s no silver bullet.”

“Will it be a surprise?” Seetharaman asked. “Yes, it will be a surprise,” he said. “The traditional wisdom is: Walmart is an aggressive, everyday-low-price price retailer and Target is the assortment retailer. So let’s say both mass merchandisers … each of them has a certain strategic positioning and therefore thought they attract a certain type of consumer.

“We are upending that wisdom a little bit here: No matter what kind of strategic positioning you have carved out, consumers have a mind of their own. They are choosing to do different things in different categories. And businesses should wise up to this. Even your core customer is buying categories at other shops.”




Cynthia Cryder
Michal Grinstein-Weiss

Michal Grinstein-Weiss

The W-2s are arriving and taxpayers are preparing to file their 2017 federal income taxes. For low- and moderate-income taxpayers, the possibility of a modest windfall looms: Will they receive a refund?

For these taxpayers, 80 percent of the time, the answer will be yes. So what happens next is key. Will taxpayers immediately absorb their tax refund into short-term expenses? Or can they be persuaded to save it for more long-term needs or as a rainy-day fund?

A research paper set for publication in the journal Behavioral Science & Policy demonstrates that by structuring the right messaging in the right way, those taxpayers can be encouraged to save their returns for long-term needs or unforeseen emergencies.

The research team—including professors from Olin Business School, the Brown School of Social Work, the University of North Carolina at Chapel Hill, and Duke University—worked with a collection of nearly 650,000 online tax filers to determine what interventions might effectively guide taxpayers to save their returns. The study was part of the Refund to Savings Initiative, a collaboration between Washington University, Duke University, and Intuit, Inc., the makers of TurboTax.

“Low income individuals usually have pressing financial needs for whatever refund they can get,” said Cynthia Cryder, associate professor of marketing at Olin. “That means it is quite a challenge to design interventions that move the needle on savings outcomes.”

Tax Time and Tax Reform

The research is particularly topical now, as taxpayers gear up to file their 2017 taxes. It also comes in the shadow of tax reform legislation recently passed in Congress and signed by President Donald Trump.

“High-income households really benefit greatly from the current tax code, where they get large subsidies for mortgage interest deductions, retirement accounts, and other benefits,” said Michal Grinstein-Weiss, a professor and associate dean for policy initiatives at the Brown School. Meanwhile, “lower-income households received very modest subsidies in the tax code.”

Through the Refund to Savings Initiative, the team partnered with Intuit over the past five years to target millions of qualified users of Intuit’s free online income tax filing program, TurboTax Freedom Edition, as they filed their taxes. In their 2015 experiment, the researchers used behavioral economics techniques and varied the messaging almost 650,000 taxpayers received when asked how their tax returns should be handled.

In some cases, the researchers varied the choice layout that taxpayers viewed for handling a tax return—the “architecture” of the choices. For some taxpayers, the “choice architecture” might have been very basic: Send a paper check, direct deposit to a bank account (which could include a savings account), or split the refund into multiple accounts.

For other taxpayers, however, the architecture mentioned savings more directly, specifically asking whether the refund should go to a savings account, or offering help to create a savings account.

In other treatments within the field experiment, researchers varied the nature of the messages taxpayers received, suggesting future uses for their returns such as retirement, emergency funds, car purchases, or education.

Positive Results

As it turns out, every intervention the researchers tested resulted in more savings versus the control group, which received no interventions. In one intervention, for example, where savings was made salient both via choice layout and messaging, taxpayers saved nearly $84 per person more on average than the control group.

“What is important about this study is that an intervention of a few seconds can lead to a large impact,” Grinstein-Weiss said.

In a second experiment, a small number of consumers considered a hypothetical $1,000 refund and offered different options, including a recommendation to save for an emergency “rainy-day” fund. The results showed taxpayers would have saved an average of $486 per person—about $307 more than the control group.

A third experiment also addressed a smaller subset of consumers with another hypothetical $1,000 tax return, testing a variety of strategies for emphasizing “saving” as an option. “Heavily emphasizing ‘saving’ or making ‘saving’ a simple one-click decision both increased savings,”the researchers wrote. “Simply making ‘saving’ explicit among (the choices) was not sufficient to increase savings deposits.”

Cryder said their research is continuing with data from 2016 tax filers and will again with people who file their 2017 taxes.

The current research “is suggestive, but not conclusive of the benefits of highlighting savings,” Cryder said. “We know that people not having short-term savings is incredibly stressful, and these interventions increased short-term savings. What we don’t know for sure is whether it actually decreased financial stress.”

The next steps in the research will look at what outside forces might influence decisions low- to moderate-income taxpayers make when dealing with their returns. “What is the best use of money for people using their tax income in terms of financial well-being and overall stress?” Cryder said. “How can we encourage them to do that with their money?”

Grinstein-Weiss agreed, noting that clearing debt may, in some cases, be the best use of tax savings—and that’s likely the key question researchers will tackle in the next tax season’s research.

“It was encouraging that you can get so many people to save at tax time,” Grinstein-Weiss said. “It makes me feel like more of these companies should do things like this and encourage people to save.”


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