ECO Faculty Research

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    Impact of open-mindedness on information avoidance: Tailored vs. generic communication
    (Elsevier Inc., 2024-02) Meng, Delong; Wang, Siyu
    This study explores the impact of open-mindedness on tailored versus generic information communication. We develop a preference formation model and formulate the following hypotheses: (1) in the case of generic information, open-minded individuals tend to avoid information less, resulting in them being better-informed; (2) with tailored information, close-minded individuals display stronger resistance, necessitating the sender to provide additional information for effective persuasion. Our experiments validate the core theoretical predictions, with a few observed behavioral deviations: individuals tend to avoid more information than predicted, particularly when it is tailored. Our structural model attributes this reluctance to resistance in altering one's worldview. This study makes a significant contribution to the application and testing of preference formation theory while also raising questions about the practical effectiveness of commonly used tailored communication strategies.
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    Financial Development and Innovation: The Role of Market Structure
    (John Wiley and Sons Inc., 2023-12) Zhu, Xiaoyang; Kim, Jaebeom
    We assess how financial development affects innovation. For this purpose, we employ a unique Research Quotient data set from 1980 to 2018, and observe significant inverted-U effects of financial development on innovation for equity and credit markets. Specifically, the effects of the markets are sector-specific, implying that the inverted-U effect of the equity market on innovation is mainly driven by its diminishing effect on innovation in high-technology industries, while credit markets mostly affect innovation in non-high-technology industries. Regarding the mechanism, we posit that the inverted-U shape between finance and innovation may be explained by the disproportionate funds allocation-induced market concentration.
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    Reinvigorating engineered noise controls: A systems approach
    (Nofer Institute of Occupational Medicine, 2023-09) Slagley, Jeremy; Dudarewicz, Adam; Pawlaczyk-Łuszczyńska, Małgorzata; Slagley, Francis
    Objectives: Hearing loss is a major worldwide health issue affecting an estimated 1.5 billion people. Causes of hearing loss include genetics, chemicals, medications, lifestyle habits such as smoking, and noise. Noise is probably the largest contributing factor for hearing loss. Noise arises from the workplace, ambient environment, and leisure activities. The easiest noise sources to control are workplace and environmental. Workplace noise is unique in that the employer is responsible for the noise and the worker. Also, workers may be exposed to much higher levels of noise than they would accept elsewhere. Employers follow the traditional hierarchy of controls (substitution/engineering, administrative, personal protective equipment [PPE]). Substituting or engineering a lower noise level actually reduces the hazard present to the worker but demand more capital investment. Administrative and PPE controls can be effective, but enforcement and motivation are essential to reducing risk and there is still some hearing loss for a portion of the workers. The challenge is to estimate the costs more clearly for managers. A systems engineering approach can help visualize factors affecting hearing health. Material and Methods: In this study, a systems engineering causal loop diagram (CLD) was developed to aid in understanding factors and their interrelationships. The CLD was then modeled in VenSim. The model was informed from the authors' expertise in hearing health and exposure science. Also, a case study was used to test the model. The model can be used to inform decision-makers of holistic costs for noise control options, with potentially better hearing health outcomes for workers. Results: The CLD and cost model demonstrated a 4.3 year payback period for the engineered noise control in the case study. Conclusions: Systems thinking using a CLD and cost model for occupational hearing health controls can aid organizational managers in applying resources to control risk.
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    Economic policy uncertainty and heterogeneous institutional investor horizons
    (Springer, 2023-08) Wang, Xiaoqiong; Wei, Siqi; Zhu, Xiaoyang
    Existing literature has extensively discussed the impact of economic policy uncertainty (EPU) on firm-related activities, but there is sparse evidence of its impact on the behavior of institutional investors. Using quarterly U.S firm-level data for 1980Q1-2020Q4, we find heterogeneous responses of institutional investors to EPU shocks to different horizons. Specifically, long-term institutional investors respond positively to EPU shocks, while short-term institutional investors reduce their holdings during periods of uncertainty. We posit that different expectations about the future of firms between long- and short-term investors may account for the heterogeneous responses. We test this hypothesis by investigating how firm growth opportunities, volatility, and investment activity influence the relationship between EPU and institutional investor horizons. The results show that the positive (negative) effect of EPU on long-term (short-term) institutional investors becomes stronger for firms with higher growth opportunities, higher volatility, and more investment. Our paper has important economic implications that the countercyclical behavior of long-term institutional investors improves firm value and liquidity during uncertain periods.
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    The effect of fiscal decentralization on municipal fiscal condition: An empirical study of large American cities
    (SAGE Publications Inc., 2023-06-29) Wang, Xiaoheng; Cheng, Jen-Chi
    Local governments' ability to sustain a healthy fiscal structure and meet service obligations is critical in avoiding financial hardship. This study empirically tests the effects of intrastate fiscal decentralization on municipal fiscal health that is measured by cash solvency, budget solvency, and long-run solvency. The two key variables, revenue decentralization and expenditure decentralization, are constructed to represent intrastate fiscal decentralization. The panel dataset includes 100 large U.S. cities and covers fiscal years 2007 through 2016, which encompasses periods before, during, and after the Great Recession started in 2008. The model estimation is based on a two-way fixed-effect panel regression. The results show that an increased degree of state-local revenue decentralization is significantly associated with higher long-term solvency, while an increased degree of state-local expenditure decentralization leads to higher levels of cash solvency and lower levels of long-term solvency. Copyright The Author(s) 2023.