Wednesday, December 17, 2014

Morris Holbrook on Marketing Ethics and Social Issues

SMITH N. Craig
Morris Holbrook on Marketing Ethics and Social Issues in
Legends in Consumer Behavior: Morris B. Holbrook (Fifteen-Volume Set), Clifford J. Schultz, II (Eds.), Sage  (2014)

Tuesday, December 16, 2014

Corporate Social Initiatives and Employee Retention

BODE Christiane, SINGH Jasjit, ROGAN Michelle
Read the working paper
INSEAD Working Paper 2014/67/STR/EFE revised version of 2014/40/STR/EFE

Firms are increasingly launching initiatives with explicit societal mandates. Often the business case for these initiatives is justified through one critical aspect of talent management: employee retention. Although prior empirical studies have demonstrated a link between corporate social initiatives and intermediate employee-related outcomes like motivation and identification with the firm, the ultimate relationship between employee participation in these initiatives and actual retention outcomes has not been empirically investigated. Our study fills this gap. While the related theoretical literature has focused on potential treatment effects from employee participation in corporate social initiatives, we also take into account the possibility of sorting effects based on heterogeneity in employee preferences for making a positive social impact. Using individual-level project participation and employee retention data for about 10,000 employees from a global management consulting firm, we present empirical evidence in support of a retention effect associated with participation in an initiative involving projects with an explicit social impact goal. In addition, we offer arguments for moderating conditions that might weaken this relationship, and present evidence consistent with these suggestions. Although we cannot conclusively establish causality, our choice of research context, stringent matching criteria and additional analysis of survey and interview data are most consistent with the finding being driven by a combination of employee sorting and actual treatment effects from participation.

The Seven C’s of Change and Development

Read the working paper
INSEAD Working Paper 2014/66/OBH

This paper describes a framework that I have developed to help people reflect on major changes in their lives. The Seven C’s of Change is useful both as a descriptive and a diagnostic tool. The more an individual has a framework for telling a story, in this case a change story; the greater one’s ability to articulate it clearly and to learn from experience. This also increases the likelihood of being understood by another and creating a genuine dialogue. The 7 C’s framework also affords insight into difficulties encountered in the change cycle, those moments when individuals get stuck and need support or assistance.

Basel III Leverage Ratio Requirement and the Probability of Bank Runs

Basel III Leverage Ratio Requirement and the Probability of Bank Runs Journal of Banking and Finance (forthcoming)

A new argument for the Basel III leverage ratio requirement is proposed: the need to limit the risk of a bank run when there is imperfect information on the value of a bank’s assets. In addition to screening and monitoring borrowers, banks provide liquidity insurance with the supply of short-term deposits withdrawable on demand. The maturity mismatch creates the risk of a disorderly bank run which can be exacerbated by imperfect information about the value of bank assets. It is shown in a stylized Basel III framework that capital regulation should incorporate a liquidity risk component. Credit risk diversification and/or a reduced probability of loan default which lead to a reduction of Basel III regulatory capital will increase the probability of a bank run. The leverage ratio rule puts a floor on the Basel III risk-weighed capital ratio, allowing the limitation of such a risk.

Monday, December 15, 2014

Private Equity Navigator: Private Equity Analysis from Pevara & INSEAD’s Global Private Equity Initiative

PRAHL Michael, PODDAR Siddarth, ZEISBERGER Claudia
Read the report
quarterly publication in conjunction with PEVARA, a unique data set based on deal data from institutional investors.

In Q3 2014, we have seen a continuation of the long-term trend of quarterly realisations significantly outpacing capital calls. The difference between calls and distributions is particularly pronounced in North America (page 2). Compared to diversified public equity indices, private equity has performed strongly (as measured by MIRR) over the long-term (since 2000) as well as over a shorter seven-year horizon (starting in pre-crisis 2007) in each of the three key geographies – Asia, North America and Europe. Post-crisis, over a shorter four-year period (since 2010), public markets have outperformed PE marginally in North America and Europe, while in Asia, PE has fared substantially better (page 3). Following a dip in Q1 2014, private equity performance improved in Q2 2014, producing an uptick in quarterly MIRR (page 4). More than a year after creating our model portfolios, we review the performance and characteristics of our portfolio (page 5). While the performance of our model selection shows the challenge of creating market beating portfolios, we note that our J-curves appear to have reached their inflexion points, indicating a maturing of the portfolio.