2023 Faculty Impact Report

impact fostering

mission

a letter from the dean table of contents

Over the past year as Dean of the David Eccles School of Business, I have been continually impressed by the wide variety of remarkable things happening at the school. We have top-ranked centers and institutes, active and engaged student organizations, and cutting-edge experiential learning opportunities.

The foundation of all of this is the high caliber faculty at the Eccles School. As a professor myself, having joined the accounting faculty here in 2005, am well acquainted with the globally relevant research being conducted by our faculty members, and their innovative e orts to share their expertise in the classroom. This report is a great opportunity for you to become acquainted with this timely and relevant research as well.

Within the pages of this report, you can learn more about hot-button topics such as student loan forgiveness and the real estate impacts of the post-COVID return to work, explore unique insights into the need for accounting transparency, and even get some tips for bringing dignity back to our political and public discourse. I know you will be as impressed by the work of our Eccles School faculty as I am!

The faculty at the Eccles School have the skill, expertise, and recognition to teach just about anywhere, but they choose to be here because of the great opportunities for exploration and innovation both within our school and our state – and our students and our community are better o for having these great leaders and thinkers among us.

Rachel M. Hayes

Dean and George S. and Dolores Doré Eccles Presidential Chair in Ethical Financial Reporting David Eccles School of Business

who we are

The David Eccles School of Business is a community of doers. We focus on the imprint we have on the business world and the in uence for good our students and faculty can have on our community. We forge ethical foundations as students pursue their dreams. We create a world-class business education that is more accessible, more attainable, and more achievable.

The following four principles, in combination, de ne the Eccles School experience for faculty, sta , and students.

our impact

Take a closer look at our skill and talent.

joowon park & sachin banker

Assistant Professors, Marketing

You’ve got a craving for ice cream and add it to your grocery cart, but when it comes time to check out, you may decide not to buy it after all, depending on what currency you are paying with.

New research from Joowon Park and Sachin Banker indicates that when consumers are paying in cash or credit, they are more likely to indulge in so-called “vice goods” versus when paying in cryptocurrency such as bitcoin.

It’s a growing issue as bitcoin becomes more prevalent.

“Digital wallets such as Apple Pay and Google Pay are growing quickly with consumers as they allow people to ditch the credit cards, memberships, and IDs they need to carry around, while also making transactions contactless,” Banker said. “Cryptocurrency payments can have major advantages in cross-border transactions, where traditional fees and settlement times for international transactions can be prohibitive.”

Park and Banker presented various grocery items to study participants and observed that consumers were willing to purchase “virtue” goods — grocery staples such as bread, milk, eggs, etc. — no matter what currency they were using. But they were more likely to splurge on vice goods such as ice cream, soda and potato chips, when paying cash.

It all comes down to the anticipation of regret. Park and Banker say that because many members of the public see bitcoin as an “investment” as opposed to just another currency, they are more cautious about using it. They don’t want to regret overpaying for that item down the road if bitcoin values suddenly skyrocket.

Take the ice cream, for example. It has a xed price in the grocery store that will remain the same if you pay in cash or with credit. But that $7.99 price tag could be signi cantly more if the price of bitcoin goes up tomorrow. Then you’ve overpaid and lost out on your investment.

These patterns raise concerns for merchants. Companies that facilitate bitcoin transactions address such concerns by allowing merchants to settle payments in any currency they want. For example, a consumer could pay $3 for a cup of co ee by sending a fraction of bitcoin that’s equivalent to $3 at the current USD-bitcoin exchange rate. On the receiving end, the co ee shop can either choose to receive the payment in bitcoin or in USD.

Both Park and Banker agree that we are likely to see more cryptocurrency purchases for all goods — staple or splurge — as consumers and merchants discover the bene ts.

“Bitcoin payment can o er a method of exchange that’s faster, cheaper, and more exible as it involves fewer intermediaries,” said Park. “Compared to a typical credit card payment which takes a few days for a merchant to actually receive the money, bitcoin payment through lightning network technology can be settled within a few seconds. The processing fee merchants pay for bitcoin transactions through lightning network can also be signi cantly lower than that for credit card transactions.”

josh feng Assistant Professor, Entrepreneur & Strategy

It’s no secret that prescription drug prices are skyrocketing. With consumers paying more for medications every month, Josh Feng set out to identify the key actors and forces driving outcomes in prescription drug markets.

“I use data and modeling to understand how actors and regulations interact to determine outcomes that a ect consumers,” Feng said. “A clearer picture of the system can help policymakers craft better policies and regulations.”

A starting point for this line of research was showing that patients taking medication to manage chronic disease stick to the same brand drug at very high rates over time. “If you randomly assign a patient to a drug, they’ll just continue taking it, even if there are cheaper substitutes,” Feng said. “It creates incentives for drug companies to increase prices and to develop slightly modi ed versions of existing drugs to stave o competition from generics.”

His subsequent work analyzed forces including the role of pharmacy bene t managers and how Medicare and Medicaid rules impact the commercial side of the market.

Feng also has a current project that looks at mergers within the pharmaceutical industry. “We often tend to connect mergers to price increases,” he said, “but regulators like the Federal Trade Commission need more information on the types of mergers that lead to increased prices.” Preliminary analysis suggests that regulators play a signi cant role in preventing mergers that lead to price increases.

Feng also has an interest in the broader innovation system. Part of his research looks at the behavior of innovators (inventors and entrepreneurs) and the implications for consumers and economic growth. One particular project studies the relationship between innovators’ backgrounds and the demographics of the consumers they ultimately sell to.

“Innovators tend to create new products that are purchased by people similar to them,” he said. “Given that individuals from low-income backgrounds and women are several times less likely to participate in the innovation system, this likely means fewer new goods and services for individuals from those populations.”

Intellectual property law plays a huge role in the innovation system, and Feng has a particular interest in so-called “patent trolls” — entities whose business model is to buy patents and assert them.

“While we are seeing the incidence of this practice level o a bit, patent trolls took up three-quarters of the cases in U.S. District Courts in the 2010s,” Feng said. His work has found that patent applications that are not scrutinized carefully during examination are more likely to be scooped up by patent trolls, suggesting that trolls are pro ting from legal grey areas rather than helping owners of high quality inventions enforce their patents.

andra ghent

Professor of Finance

When the world shut down in March 2020, everyone went to the same place — home. Whether that home was near or, in a few cases, a relocation to a di erent state or country, it has had a major impact on real estate markets across the country.

The work-from-home shock has a ected residential real estate everywhere, according to expert Andra Ghent. There is huge pressure on suburban home prices, and builders have not had a chance to develop new supply.

The commercial real estate market has also seen a shift as a result of the pandemic, but it’s important not to extrapolate too much from high-cost cities like New York and San Francisco, Ghent cautions. While remote work has not been great for commercial real estate owners, it hasn’t been quite as big of a shock in less expensive cities. Furthermore, excess o ce space tends to get absorbed over time. Cities with longer commute times and a higher share of workers in remote-capable occupations tend to have a higher demand for remote work.

Ghent is currently working on a project studying the return to work and its impact on o ce demand as companies make announcements calling employees back into the o ce. She believes that overall, the percentage of employers who remain 100% remote will be quite small. Even as most workers return to the o ce, that workspace may not look the same, Ghent said. Being apart increased appreciation for the social aspect of working in person. People are craving more opportunities to connect with peers, and even meet potential partners and friends, in a way they took for granted before the pandemic. Older workers, however, are tending to prefer remote work. As a result, we can expect to see a rise in communal o ce designs, Ghent said, with an emphasis on collaborative spaces.

Ghent has immersed herself in the Utah real estate scene since joining the Eccles School in 2021. She currently serves on the Salt Lake City Planning Commission, lending her expertise to solve the unique issues caused by Utah’s exploding population. Topographic supply chain constraints and land use constraints imposed by Utah cities make it di cult to build in the state, especially when it comes to residential real estate inventory.

Housing a ordability is a huge issue both in Utah and across the country. While the pandemic had an impact, it is not the root cause, Ghent said. The long-term issue is that median renter wages have not increased in 40 years. Renters tend to come from the lower half of the income distribution, and while the costs of construction have gone up, families have not seen wages rising at the same rate. Ghent believes smaller homes could be a big part of the solution. In addition to legalizing missing middle housing, she advocates for allowing accessory dwelling units such as guest houses or mother-in-law apartments as a potential solution. “Accessory dwelling units are a great solution for aging adults or adult children with disabilities,” Ghent said. “Allowing them without restrictions like requiring owner-occupancy is a very family-friendly policy.”

jesse graham

Professor, Management

Family disagreements around the anksgiving

table. Vitriolic comments on social media. A conversation with a neighbor about vaccination. These interactions may be a fraught with social peril for most of us, but Jesse Graham is unafraid to wade right in. Graham has dedicated his career to studying the moral, political, and religious convictions that cause con ict — both between individuals and organizations — and yet provide so much meaning to people’s lives.

His latest project takes on a behemoth — the hate and negativity in U.S. political and public discourse. Graham and a team of fellow researchers and community members have launched the Dignity Index (www.dignityindex.us) — a tool designed to show us how we treat each other when we disagree, and how our responses can either ease the divisions in our country or worsen them. The index is based on the Social Emotional Learning movement, led by Tim Shriver, Chair of Special Olympics. The Index brings together a diverse group of people to form UNITE, an organization dedicated to easing divisions, solving problems, and preventing violence.

The Index scores political rhetoric on an eight-point scale that ranges from digni ed to contemptuous. A level one statement “escalates from violent words to violent actions. It is feeling the other side is less than human,” according to the Index. At the other end of the spectrum, a level eight states: “I can see myself as part of every group, I refuse to hate anyone, and I o er dignity to everyone.” The goal is to focus on the speech, not the speaker, and draw attention away from partisan politics and the inherent biases we all carry.

Voters can then use the scores of speeches, debates, advertisements, and more, to evaluate candidates and organizations. UNITE is putting the Index into practice, with Utah acting as the test site. The Dignity Index Utah Demonstration Project is the rst public e ort to re ne and test the Index.

It can be hard to get people to give up contempt, Graham said, because it feels good in the moment.

“There’s something really addictive about it,” Graham said. “It feels good in the moment to see somebody strike a contemptuous blow against the other side. But it’s like empty calories for the soul. It feels good in the moment, but it’s really bad for your long-term well-being. Whereas dignity, in the moment, at least at rst, it feels like work. It’s hard to do, but it’s nourishing.”

The team from the Demonstration Project has analyzed hundreds of political debates, speeches, advertisements, and other pieces of rhetoric, and given them all scores. Reviewers work in teams — never alone — and include members from across the political spectrum. Despite their di erences, they manage to come to a consensus on rankings more than 90 percent of the time.

Graham is hopeful that if we can bring dignity to discourse, it will eventually lead to more cooperation and healing of the huge political divide in this country. And if it makes Thanksgiving dinner a bit more enjoyable for everyone along the way, that’s just gravy.

adam looney

Professor, Finance Business Economics Division

Student loan policy has been a heated topic of debate, particularly following the Biden administration’s recent announcement that it will forgive up to $20,000 in debt for Pell Grant recipients and $10,000 for other borrowers, as well as encourage future borrowers to enroll in generous income-driven plans. While some support these policies as much-needed relief, others argue that borrowers who are able to repay their loans should be responsible for paying o their debt.

The challenge for policymakers is that there are elements of truth on both sides. Many of the problems struggling borrowers face were caused by harmful government practices, which encouraged borrowing at low-quality programs and in exorbitant amounts which led young students into persistent nancial hardship. But for other borrowers, their loans nanced valuable educational investments and helped them achieve economic success.

One-size- ts-all loan forgiveness policies aren’t appropriate to the complex problem of student lending, argues Adam Looney. While these policies aim to target low- and middle-income borrowers, particularly Black borrowers, those without a degree, and those who have defaulted on their loans, these policies aren't well-designed to address the speci c problems these borrowers face. While these borrowers struggle the most with their loans, “recent executive and regulatory actions are costly, poorly targeted to help Americans who struggle nancially, provide substantial bene ts to highly educated and well-o borrowers, and exacerbate negative incentives in the market for institutions of higher education,” Looney recently wrote in Congressional testimony.

The cumulative cost of recent executive actions to forgive student loans or reduce repayments are expected to be close to $1 trillion, making student loan subsidies among the largest transfer programs in the U.S. In contrast to bene ciaries of other federal programs, however, “student borrowers are better educated, earn higher incomes, and grew up in more a uent families than other Americans, particularly those served by means-tested programs. Next year, for example, 70 percent of debt will be owed by graduate students, and 39 percent by graduate students who will earn more than $100,000 per year,” Looney wrote.

Looney's insights on this topic have made him a national thought leader. He meets regularly with stakeholders and policymakers in Washington, continues to write publicly on the issue, and has testi ed three times on this issue before Congress, including at the opening hearing of the new House Subcommittee on Higher Education and Workforce Investment, chaired by Utah Representative Burgess Owens.

Looney recently turned his attention to a proposal in the Utah Legislature to eliminate the sales tax on food. While the proposal is laudable in its aims to reduce the burden on lower-income households, he argues that the policy is based on a misinterpretation of economic data on the consumption patterns of households. In reality, most of the bene t from eliminating the tax would go to higher-income households.

“A better approach is to provide low-income families an income tax credit proportionate to what they pay in sales taxes,” Looney argues. “A credit targets relief directly to low-income families, allows families to decide which necessities to spend the savings on, and more directly addresses a broader budget problem of having ‘too much’ income tax revenue and ‘too little’ sales tax revenue.”

sara malik

Assistant Professor, Accounting

Accounting researchers have known for a long time that the quality of a public rm’s nancial reporting is important to rm’s cost of capital.

When rm nancial information is opaque, investors tend to demand a higher risk premium for a given investment amount; investors are trying to protect themselves from the rm’s uncertain condition.

But investors aren’t the only group that interacts with rms. In fact, nancial reporting quality plausibly could matter to anyone who has a stake in a rm. In new research, Sara Malik asks how employees respond to their employers’ nancial reporting quality. The answer to this question isn’t obvious. Investors know to distinguish between a rm’s fundamental performance and the quality of its information. Do employees do the same?

Malik nds that, in fact, they do. Employees demand a wage premium for their employers’ poor nancial reporting quality. They appear to do so for two reasons. First, poor nancial reporting quality is linked to cycles of over and under investment, which are associated with painful

layo s and corporate reorganizations. Second, poor nancial reporting quality suggests that the rm does a bad job of tracking internal metrics, which are relevant to employee compensation. These results are among the rst to establish that nancial reporting quality engenders a cost of labor, a corollary to the cost of capital.

Why does this matter? Regulators are perennially debating if they should mandate improvements to nancial reporting quality of public rms. All recommendations are evaluated using a cost-bene t calculus. Until now, almost all of that assessment was based on the costs and bene ts borne by investors. Malik’s research suggests that there are heretofore unstudied costs of bad nancial reporting quality. If regulators keep these costs in mind, we might see some di erent recommendation in the coming years.

Malik is also interested in the role earnings announcements play in guiding job seekers. It turns out that job-search activity is often initiated in response to earnings announcements. Those looking for work tend to be more interested in companies with media coverage and earnings growth. Unsurprisingly, workers are drawn to companies that are shown to be successful. An experiment for a recent paper found that job seekers are more willing to apply to rms that show evidence of positive performance.

Not only that, but workers are actively searching for nancial information, both when applying and throughout the interview process. They rightly see nancial information as a good indicator of future job prospects, including internal job openings and career growth. Malik nds that earnings announcements are one of several sources that lead job seekers to actively seek out and apply at speci c companies.