Faculty Research Papers

Deal or No Deal: Are People Hard-Wired to Agree?

Faculty Research Are people hard-wired to reach agreement, even when a deal is less than optimal or below a bottom line? According to new research by Management Professor Robin Pinkley and co-authors, as if force of habit, when faced with an offer people are reaching agreements and sealing deals when not agreeing might be a more rational choice. This phenomenon is based on the tendency of people being averse to impasse and attracted to agreement.

August 31, 2015

Rational Investment Decisions: Shale Gas Not Over-Drilled

Faculty Research The oil and gas industry has received a bad wrap about drilling for shale gas. Since late 2008, when prices collapsed owing to demand destruction from the economic crisis and an abundance of supply, prices of natural gas have remained low. From an all-time high of $14 per mcf (thousand cubic foot) they have fallen to under $3 today. Critics have charged that too many gas wells have been drilled given the low prices, and that the gas boom is unsustainable. 51�� Cox Finance Professor James Smith's new research says the facts do not support that claim.

August 17, 2015

Outdated Convention Distorts Oil and Gas Firms' Bottom Lines: Valuing Barrels Better

Faculty Research The conventional method used by the oil and gas industry to report on upstream operations and results distorts profitability and valuations. Industry practice is to use "barrels of oil equivalent" or BOE— a measure that combines oil and gas volumes based on thermal parity, or the energy content of the source. Research by Finance Professor James Smith, the Maguire Chair of Oil and Gas Management, shows why and how the BOE convention has overstated the cost of adding reserves, the principal asset held by these firms. This comes at a time when the industry can scarcely afford miscalculations to their detriment.

July 31, 2015

Why Do Some Firms Announce Stock Buybacks But Not Follow Through?

Faculty Research Companies buy back stocks for a variety of reasons. One rationale is a key motive for a new study: Managers of undervalued firms use stock repurchases as a mechanism to signal firm value. Curiously, Finance Professor Stacey Jacobsen of 51�� Cox and co-author Utpal Bhattacharya find a large number of firms announce share repurchases but do not actually follow through with the buyback. The stock market tends to view repurchase announcements as good news, according to its reaction.

July 01, 2015

Shareholder Voting and Activism Influences Foreign Firms' Governance

Faculty Research In the U.S., shareholder voting and activism is increasingly used to influence firm policy. New research by 51�� Cox Finance Chair Darius Miller and co-authors suggests that shareholder voting can be an effective governance mechanism in countries outside the U.S. "This is important," says Miller, "since in many countries outside the U.S., the need for governance is greatest." The authors set out to test shareholder activism in global markets in a first-of-its-kind, large-scale study. Prior to this paper, there was not any evidence on whether shareholder voting in other countries was effective or not.

October 02, 2014

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