Latest Research Publications - HKU Business School

Short Interest and Corporate Investment: Evidence from Supply Chain Partners

We investigate whether short interest affects supply chain partners' investments. This investigation is important for understanding the real effect of short sellers in facilitating stakeholders' investment decisions. Prior research suggests that short interest conveys negative news in a timely manner, which predicts future deterioration in firm fundamentals. We predict and find that a supplier's future investments decrease with its major customers' short interest. Consistent with predictions, this result is more pronounced when customers' short interest is more informative about their future performance, when customers have a more opaque information environment, and when suppliers incur lower customer switching costs. The results are robust when we use various approaches to address endogeneity concerns and establish causality…

Summer 2022

Contemporary Accounting Research

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The Role of Communication Style in Adaptation to Interorganizational Project Disruptions

Prof. Fabrice LUMINEAU

Interorganizational projects often suffer disruptions that require participating organizations to adapt in order to restore project operations. We study the role of communication style in facilitating adaptation to such disruptions. Whereas the literature on interorganizational communication has emphasized communication mode and frequency, we study the content and features of written communication in seven U.K. construction projects. Communication style mattered for adaptation quality in these projects, and we found that several properties of communication style were particularly important for adaptation: cost and information orientation, as well as informality, precision and authenticity. Moreover, managerial slack and organizational reputation were important precursors of communication style. These results…

June 2022

Journal of Operations Management

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Morale and Debt Dynamics

Prof. Jin LI

This paper shows that debt undermines relational incentives and harms worker morale. We build a dynamic model of a manager who uses limited financial resources to simultaneously repay a creditor and motivate a worker. If the manager can divert or misuse revenue, then debt makes the manager less willing to follow through on promised rewards, leading to low worker effort. In profit-maximizing equilibria, the firm prioritizes repaying its debts, leading to gradual increases in effort and wages. These dynamics can persist even after debts have been fully repaid. Consistent with this analysis, we document that a firm’s financial leverage is negatively related to measures of employee morale, wages, and productivity.

June 2022

Management Science

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Performance Feedback and Export Intensity of Chinese Private Firms: Moderating Roles of Institution-related Factors

Prof. Kevin Zheng ZHOU

Building on the behavioral theory of the firm and institutional view, we examine how performance feedback (i.e., a focal firm’s performance relative to its industry peers) affects export intensity and how institution-related factors moderate this relationship. Using a sample of Chinese private manufacturing firms, we find that positive performance feedback lowers export intensity while the relationship between negative performance feedback and export intensity is insignificant. Moreover, outperforming firms are likely to decrease their export intensity even more when they are located in regions of better institutional development or have political connections. Underperforming firms with political connections tend to increase their export intensity. These findings enrich our understanding of the export behavior of emerging market firms.

June 2022

International Business Review

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Investment Strategies for Sourcing a New Technology in the Presence of a Mature Technology

Prof. Wei ZHANG

To stay competitive, high-technology manufacturers not only frequently source new technologies from their suppliers, but also financially support the development of these new technologies into component products or production tools. We consider a manufacturer that can either source a new but immature technology from a financially constrained supplier, or source a mature technology from an existing supplier if and only if the development of the new technology fails. To support the new technology, the manufacturer can choose to inject capital in the form of an equity or loan. The investment strategy not only affects the new supplier’s development effort and the probability of technical success (PTS), but also affects the existing supplier’s effort to improve the mature technology, which presents the manufacturer with a trade-off…

June 2022

Management Science

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Attaining Individual Creativity and Performance in Multi-Disciplinary and Geographically-Distributed IT Project Teams: The Role of Transactive Memory Systems

Prof. Yulin FANG

Contemporary IT project teams demand that individual members generate and implement novel ideas in response to the dynamic changes in IT and business requirements. Firms rely on multidisciplinary, geographically distributed IT project teams to gather the necessary talent, regardless of their locations, for developing novel IT artifacts. In this team context, individuals are expected to leverage dissimilar others’ expertise for creating ideas during idea generation (IG) and then implement their ideas during idea implementation (II), known as the IGII process. Although much has been done to explain individual creativity, the extant literature offers little theoretical understanding on how to address the double-edged effects of dispersions in both functional expertise (ExpDisp) and geographical locations (GeoDiss)—the two…

June 2022

MIS Quarterly

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Real-Time Delivery Time Forecasting and Promising in Online Retailing: When Will Your Package Arrive?

Prof. Z. Max Shen

Problem definition: Providing fast and reliable delivery services is key to running a successful online retail business. To achieve a better delivery time guarantee policy, we study how to estimate and promise delivery time for new customer orders in real time. Academic/practical relevance: Delivery time promising is critical to managing customer expectations and improving customer satisfaction. Simply overpromising or underpromising is undesirable because of the negative impacts on short-/long-term sales. To the best of our knowledge, we are the first to develop a data-driven framework to predict the distribution of order delivery time and set promised delivery time to customers in a cost-effective way. Methodology: We apply and extend tree-based models to generate distributional forecasts by exploiting the complicated…

May-June 2022

Manufacturing & Service Operations Management

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Coping with Spatial Mismatch: Subsidy Design for Electric Vehicle and Charging Markets

Prof. Wei ZHANG

Problem definition: We study how the government should design the subsidy policy to promote electric vehicle (EV) adoptions effectively and efficiently when there might be a spatial mismatch between the supply and demand of charging piles. Academic/practical relevance: EV charging infrastructures are often built by third-party service providers (SPs). However, profit-maximizing SPs might prefer to locate the charging piles in the suburbs versus downtown because of lower costs although most EV drivers prefer to charge their EVs downtown given their commuting patterns and the convenience of charging in downtown areas. This conflict of spatial preferences between SPs and EV drivers results in high overall costs for EV charging and weak EV adoptions. Methodology: We use a stylized game-theoretic model and…

May-June 2022

Manufacturing & Service Operations Management

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Signaling under Double-Crossing Preferences

Prof. Wing SUEN

This paper provides a general analysis of signaling under double-crossing preferences with a continuum of types. There are natural economic environments where the indifference curves of two types cross twice, such that the celebrated single-crossing property fails to hold. Equilibrium exhibits a threshold type below which types choose actions that are fully revealing and above which they pool in a pairwise fashion, with a gap separating the actions chosen by these two sets of types. The resulting signaling action is quasi-concave in type. We also provide an algorithm to establish equilibrium existence by construction.

May 2022

Econometrica

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