Selected Publications
Information Externalities and Voluntary Disclosure: Evidence from a Major Customer's Earnings Announcement
( Cho, Young Jun | Kim, Yongtae | Zang, Yoonseok )ACCOUNTING REVIEW2020-11
Abstract
We examine the relation between information externalities along the supply chain and voluntary disclosure. Information transfers from a major customer's earnings announcement (EA) can substitute for its supplier's disclosure. Conversely, if the customer's EA increases uncertainties regarding the supplier's future prospects, it can increase the demand for disclosure. After controlling for information incorporated in supplier returns, we find that the supplier is more likely to issue earnings guidance after the customer's EA when the EA news deviates more from the market's expectation. The positive effect of the customer's news on earnings guidance is weaker when common investors, supply-chain analysts, or a common industry allow investors to better understand the value implications of the news, while the effect increases with the importance of the customer to the supplier. The effect is also stronger when EA news is negative rather than positive. Collectively, the results suggest that supply-chain relationships influence voluntary disclosure.
When Loyalty Goes Mobile: Effects of Mobile Loyalty Apps on Purchase, Redemption, and Competition
( Son, Yoonseock | Oh, Wonseok | Han, Sang Pil | Park, Sungho )INFORMATION SYSTEMS RESEARCH2020-09
Abstract
Avenues for the delivery of loyalty programs have rapidly shifted from plastic card schemes to mobile app-based initiatives, yet our understanding of the economic value presented by the latter (i.e., loyalty apps) has not kept pace with this development. We examine the effects of loyalty app adoption on customers' offline purchase patterns, reward redemption, and deal-prone behaviors as well as store-level competition in a multivendor loyalty program (MVLP) context, where multiple offline brands collaborate in the operation of point-sharing initiatives. Mobile-driven loyalty apps substantially lower consumer search costs, thereby enhancing on-demand information accessibility and facilitating the monitoring of reward points. Based on a unique data set that comprises information on customers' loyalty app adoption status, loyalty point redemption patterns, and purchase behaviors in MVLP environments, we investigate how the transition from plastic-based programs to loyalty apps influences the out-of-pocket spending and point redemption patterns of consumers. Our findings reveal that the adoption of loyalty apps is associated with an increase in purchases and the predilection for point redemption. Despite these positive outcomes, however, potential adverse consequences may arise in the form of deal-susceptible behaviors and reduced store-specific loyalty. Loyalty app adopters tend to be more vulnerable to deals, with these customers selectively buying highly discounted products of low margin. Additionally, loyalty app consumers visit more stores but spend less in a focal store, thereby diminishing loyalty to this specific store. These results have managerial implications on optimal mobile-based loyalty program designs and implementation, reward-driven platform strategies, and risk management initiatives in an MVLP setting.
Different but Equal? A Field Experiment on the Impact of Recommendation Systems on Mobile and Personal Computer Channels in Retail
( Lee, Dongwon | Gopal, Anandasivam | Park, Sung-Hyuk )INFORMATION SYSTEMS RESEARCH2020-09
Abstract
The benefits of recommendation systems in online retail contexts have received much attention in prior work. Much of this work has been conducted in personal computer (PC)-based settings, although mobile devices are becoming increasingly central to the online shopping experience. It remains to be examined if the effects of recommendation systems in retail differ across these two channels, in terms of customer-level decision outcomes. In this paper, we examine these differences in some detail, studying how product views and sales attributed to a recommendation system are different across mobile and PC-based channels. Further, we examine how the effect of a recommendation system across channels influences sales diversity, an important outcome in the retail industry. We conduct our analysis using a randomized field experiment, conducted in partnership with an online retailing firm in South Korea, where the experimental treatment is access to a recommendation system. Our results show that the use of recommendation systems enhances customer-level outcomes, such as views and sales of recommended products, clickthrough rate, and conversion. More importantly, the marginal impacts of the recommendation system are significantly higher for mobile users, indicating that the higher search costs imposed through mobile devices are more effectively reduced through recommendation systems. With respect to sales diversity, we observe that although the mobile channel leads to more diverse sales, we see no interaction effects of the recommendation system and mobile use on sales diversity. These results provide boundary conditions for the efficacy of recommendation systems in retail contexts where online sales occur across both PC-based and mobile channels. We discuss the managerial implications of these results for online retailers and conclude with opportunities for further research.
PCAOB international inspections and Merger and Acquisition outcomes
( Kim, Yongtae | Su, Lixin | Zhou, Gaoguang | Zhu, Xindong )JOURNAL OF ACCOUNTING & ECONOMICS2020-08
Abstract
This study examines how PCAOB international inspections of non-U.S. auditors affect international Merger and Acquisition (M&A) outcomes. We find that clients of inspected auditors are more likely to become acquisition targets after the public disclosure of auditor's inspection report. We also find that deal completion is more likely and deal announcement returns are higher if deals involve targets with auditors for which inspection reports are available. Engagement deficiencies and unremediated quality control deficiencies identified in inspection reports weaken the positive effect of PCAOB oversight on M&A outcomes. Collectively, our results suggest that PCAOB oversight reduces information uncertainty in M&A deals.
Strategic decompositions of normal form games: Zero-sum games and potential games
( Hwang, Sung-Ha | Rey-Bellet, Luc )GAMES AND ECONOMIC BEHAVIOR2020-07
Abstract
We introduce new classes of games, called zero-sum equivalent games and zero-sum equivalent potential games, and prove decomposition theorems involving these classes of games. Two games are "strategically equivalent" if, for every player, the payoff differences between two strategies (holding other players' strategies fixed) are identical. A zero-sum equivalent game is a game that is strategically equivalent to a zero-sum game; a zero-sum equivalent potential game is a potential game that is strategically equivalent to a zero-sum game. We also call a game "normalized" if the sum of one player's payoffs, given the other players' strategies, is zero. One of our main decomposition results shows that any normal form game, whether the strategy set is finite or continuous, can be uniquely decomposed into a zero-sum normalized game, a zero-sum equivalent potential game, and an identical interest normalized game, each with distinctive equilibrium properties.
