2024 Fostering Impact
2024 Fostering Impact
a letter from the dean
I am so pleased to be here as the new dean of the David Eccles School of Business. I have been extremely impressed by what I have seen of the Eccles School so far. The sense of pride and passion for the U and the Eccles School is amazing! I am looking forward to building on the many strengths we have to achieve the ambitious goals in our future.
As we work to develop a new strategic plan and vision for the school, three areas of priority come to the forefront: student success, academic and business impact, and reputation. Faculty research is critical to each of these.
Students enjoy a better education when our faculty are high-quality researchers and teachers, bringing new knowledge and ideas into the classroom. The impact of the Eccles School on our social and business community here in Utah and beyond deepens as our faculty conducts research that is relevant and addresses the most pressing questions and challenges facing us. And, as the profile of our faculty and their research is elevated, the reputation of our school improves – attracting even more high-caliber faculty and students to join us. Indeed, every leading university in the country has top faculty.
In this report, you will learn more about research happening at the Eccles School that checks all these boxes. From how AI can improve the delivery of critical services, to the economic impact of paid family leave and how business leaders can more accurately determine the potential benefits and risks of a merger or acquisition – and more! – the research being conducted by our faculty here is truly impressive. I hope you will spend a few minutes with this report and learn more about it.
The Eccles School is positioned to be the premier business school in the Mountain West, and one of the best in the country, and I am grateful to our faculty for being a critical part of a new stage of growth and progress for the school.
Kurt Dirks Dean, David Eccles School of Business
David Eccles
Take a closer look at our skill and talent.
David Eccles School of Business
Mishra PROFESSOR, MARKETING
Himanshu
Researchers have long been interested in how consumers make decisions in the marketplace. Why does someone buy one brand of peanut butter over another, for example, or choose a specific source for news?
In the age of artificial intelligence (AI), however, these questions become even more complicated, says Himanshu Mishra. Now when considering consumer behavior, companies and organizations also need to think about how biased AI models might limit what content certain groups of people see – and how AI can be deployed responsibly to give more people better access to information.
In a recent project, funded by an interdisciplinary grant, Mishra took his research about AI and consumer decision-making, and applied it to the judicial system.
When it comes to the justice system, people with more resources are almost always better off, Mishra said, and people with limited resources don’t always take advantage of free assistance that is available to help them navigate the legal system. So, he had two questions to answer: why don’t people access available help, and how do you get information about court proceedings to the people who need it most?
For example, between 2014 and 2019, there were 380,000 debt collection cases filed in the Utah court system. Seventy percent of those received a default judgement, Mishra said, which means the defendant didn’t dispute the charges, even though every defendant had the right to tell their side of the story.
Any one of those defendants could have gone to a free legal assistance center to ask questions about their options for defense and get more
information about what was required and expected of them by the court but, Mishra said, “there is a big hesitation for people going to other humans to get help.”
Sometimes it is inconvenient to get to an in-person help center, and sometimes it is impossible or even dangerous. Someone looking for help to file a restraining order, for example, risks revealing their plans to an abuser by making an in-person visit. Other people fear judgment, Mishra said, or have the misconception that seeking help with one legal matter could open up legal problems in another area. And for many people, language is a barrier to seeking help.
Mishra’s solution was to design a simple AI-enabled web tool that asks a series of questions and then directs users to the most relevant resources. The tool can translate into many languages; it also open source, and available to any court to adapt and use. Its impact is more than just simplifying the legal process – it also alleviates the stress and emotional pain that can come from complicated and confusing court proceedings, while giving users a better chance at a fair judgement.
“The stories I heard from people and the pain they are going through when legal recourse is available, it’s astounding. It should be available to them,” Mishra said. “I am glad to be able to do my part in doing research that helps people.”
ASSISTANT PROFESSOR, MANAGEMENT
Kylie Rochford
The COVID-19 pandemic shifted the power dynamics of the workplace, with employees voicing stronger opinions about the way they want their workplaces to be. For example, following such a large disruption in the way work was traditionally done, many employees across a variety of companies and industries pushed back against proposed “return to work” policies, demanding more flexibility and the freedom that comes with remote work.
So, what do companies and organizations do with this information? How can they better leverage the voice and experiences of all their employees to build workplaces that more closely reflect people’s needs? Is there a way that organizations can embrace cultures that lead to high performance while also meeting employees’ needs? These questions are at the heart of research recently conducted by Kylie Rochford and her collaborators. The key, Rochford says, is to understand that for many employees, their relationship to work has fundamentally changed and what they expect from their employers is different than it used to be.
In a project she calls the “meaningful moments paper,” Rochford interviewed employees about the moments that have mattered most in their workplace experience. One thing Rochford’s interviews uncovered is that employees rarely share or talk about their meaningful moments. That means the people who influenced those moments – the manager who praised an employee in a meeting, the co-worker who stepped up to help with a project, or the teammate who offered support during a personal crisis – don’t know the impact of their actions. Without understanding the positive impact, Rochford says, they might be less likely to repeat that behavior in the future.
Creating opportunities to share – and hopefully repeat – those meaningful moments is one step companies can take towards creating the type of environment employees want, Rochford says. And managers should ensure that the employees are part of creating workplace culture.
“My observation is we often overlook the voice of one of the most important stakeholders, which is the people doing the work,” Rochford says.
In a second project, Rochford directly addresses how organizations can balance performance demands with employee needs for care. Many organizations are overly focused on performance, to the detriment of employee well-being. Following COVID-19, employees are more tuned into the toll work takes on their physical and mental health. Importantly, it does not have to be an either-or.
“Performance and care go hand-in-hand, but they each need to be managed and nurtured intentionally,” Rochford says.
This can be a particular challenge for larger organizations, Rochford says, and part of her research deals with how organizations can scale employee wellness efforts. Now is a great time for companies to experiment with different programs and ideas and find ways to address employee needs, and – when they do this successfully – they can also expect a healthier and more committed workforce.
Rochford’s research in this area also influences what she teaches her students and how she teaches them. They will have a big potential impact on their own workplaces, she says, and they should start learning now how to make that impact a positive one.
“What happens at work ripples through our homes, our families, and society at large,” Rochford says. “You have so much impact beyond the workplace.”
Atif
ASSOCIATE PROFESSOR, ACCOUNTING
Ellahie
After a decade spent in investment banking, providing corporate finance advice to companies like Accenture, Dell, IBM, Motorola, and Xerox, Atif Ellahie brought his expertise to academia. He completed his PhD at the London Business School before joining the University of Utah in 2015 and embarking on a research agenda that focuses on bridging practice and academia. Ellahie recently published research in Management Science, a leading business journal, exploring how accounting information can facilitate the financial analysis of mergers and acquisitions (M&As) and help companies identify high-quality M&A deals.
Companies considering an acquisition must decide on the price to pay for the target company without knowing for certain which future synergies they can expect to gain. Therefore, they announce a price based on their expected level of synergies and then infer whether the M&A deal is perceived as “good” or “bad” from the stock market’s reaction to the announcement. However, the market reaction is not available until the deal is announced, by which time it is usually too late to pull out if the reaction is negative. Additionally, M&A deals with positive stock market reactions are not necessarily the higher-quality ones that have better future financial performance. To give companies clearer insight sooner, Ellahie and his co-authors developed an accounting-based measure to evaluate the quality of a contemplated M&A deal before it is announced. This “pre-announcement” approach is a novel contribution to the M&A academic literature.
The goal of the measure is to determine the improvement in the return on equity (ROE) the target needs to justify the price the acquirer is contemplating paying (i.e., the breakeven point for the deal). For each transaction, Ellahie and his co-authors build a unique measure that factors in the current price of the target, the contemplated acquisition premium, the target’s financial information, and the estimated required return of the acquirer (i.e., the discount rate) over a five-year investment horizon. They call this measure the implied ROE improvement (IRI) of the M&A deal. Then they assess whether the deal’s IRI corresponds to the actual future performance of the acquirer over the three to five years after the deal is completed.
Across the 2,300 announced M&A deals between public companies in the U.S. over the past 35 years, Ellahie’s research finds that the average
improvement in the target’s ROE, or IRI, required to justify the price paid is a whopping 38%. Furthermore, across 1,800 completed deals, the larger the IRI, the more likely that the future ROE of the acquirer will be negatively affected. In fact, the ROE of the average acquirer over the three years after deal completion is worse than before the acquisition, “suggesting that many M&A deals are of low quality because, on average, acquirers tend to either overpay for deals or overestimate the synergies,” Ellahie says.
“Our research suggests that IRI should be part of the decision toolkit that company managers, boards of directors, and M&A practitioners use to decide among potential contemplated deals. IRI is easy to compute and can be used in combination with an analysis of the earnings per share (EPS) effects and quantification of achievable synergies,” Ellahie continues. He has created a simple Excel model that can be used to calculate IRI and is available to download from his website.
Based on this research, Ellahie has also developed an elective course on mergers and acquisitions, now offered to graduate-level students at the David Eccles School of Business. He describes it as a practitioner’s guide to M&As informed by recent insights from academic research. As the course progresses, students are given an opportunity to put themselves in the shoes of a manager contemplating an M&A deal. They learn how to assess the pros and cons of the deal, including the accounting, financial, tax, and regulatory implications.
“I think the students walk away with some really valuable hands-on tools to assess mergers and acquisitions, and seem to really enjoy the blend of theory and practice,” Ellahie concludes.
David
Mike Cooper
CHAIR, FINANCE DEPARTMENT
Imagine you are shopping for a new car. A basic sedan won’t have the same price as a luxury SUV and it is safe to assume the more you pay the better car you’ll get. This is true of lots of other consumer products as well. But, according to research by Mike Cooper, the same does not always apply to investment products.
Fees across investment products are highly variable, Cooper says, for relatively similar products. To use the car analogy, it would be like a Honda Accord selling for $20,000, $40,000 or $50,000 depending on what dealership you visited. And while car shoppers would never pay $50,000 for something they could get for $20,000, consumers often don’t pay attention to the fees associated with their investment products – or they assume that higher fees mean a higher return.
In a recent paper comparing active and index funds, however, Cooper finds that while active funds have higher fees, they actually underperform index funds – and that those fees themselves could be the reason. It should be a wake-up call for consumers, he says.
“The chance to mess up and accidentally invest in a high-cost fund that underperforms in the long-run, that chance is high,” Cooper says.
Those consumers are not just losing the money they are paying in higher fees, Cooper adds. The value of their investment over time is also decreased because of the compounding effect of the fees coming out. An extra 1% in fees per year compounds to a 50% to 70% effect over the course of the investment – depending on the length of savings horizon, Cooper says. Put another way, a person invested in a low-cost fund may have 60-70%
more money when they retire than someone invested in a product with higher fees.
The bottom line, Cooper says: when it comes to investment products, paying more doesn’t necessarily get you something better.
In a second paper, Cooper looks at all mutual funds – actively managed funds that are much more often trading stocks compared to index funds, such as the S&P 500 – to determine, of all the performance measures consumers can access, which ones matter the most. His research determined that while long-term performance measures are most important when making investment decisions, short-term performance measures are reported more often and can disagree with the longterm results.
This is important for consumers to understand, Cooper says, because most investments, such as retirement savings, are long-term investments. So, instead of making investment decisions – for example, selling or buying stocks – based on short-term market movement, consumers should take the long view and ride out the fluctuations without panicking.
Nitin Bakshi
PROFESSOR, OPERATIONS & INFORMATION SYSTEMS
Waiting is an often inevitable part of the delivery of goods and services but, Nitin Bakshi says, not all waiting is equal. For example, waiting for a delivery from Amazon doesn’t have the same impact on a customer as waiting to see a medical specialist. A late package is frustrating; a late medical appointment could be life-threatening.
Another place where waiting can have a negative impact on people’s quality of life is in the judicial system. In a recent paper, Bakshi explores that issue using publicly-available data from the Supreme Court of India.
Unlike the Supreme Court of the United States, which hears a limited number of cases with extreme legal importance each year, the Supreme Court of India acts as the country’s final court of appeal, and hears around 40,000 cases a year. Even with 34 justices split into panels of two for each case, the court is congested, and some plaintiffs and defendants wait months or even years for their case just to be heard, let alone for a verdict to be rendered.
Using queuing theory, a mathematical discipline that studies congestion, Bakshi set out to do three things: first, create a model and calibrate it to the data, with the goal of the model mimicking reality; next, identify the sources of congestion; and finally, propose interventions or solutions.
One source of congestion in the court system, Bakshi found, is what is known as forced idleness. Cases are scheduled in advance because the litigants need to plan and sometimes travel to attend the hearing. But there is some randomness in the system. Some cases take longer than scheduled, while others wrap up early, and yet others get adjourned. But, because of the existing schedule, judges can’t add a new case to the schedule, for example, to fill their unexpected free time.
“Even though you have extra time, you can’t use it,” Bakshi said. “This is a big source of inefficiency.”
The cases being heard by the justices are also all in different stages in their lifecycle. Some are in the initial hearing stage, where the merit of a case
(e.g., an appeal) is determined, and cases deemed to be without merit are dismissed. Others have been “admitted” and are in an advanced phase. Judges need to dedicate some of their time to each category, Bakshi said, but the balance of time impacts efficiency in the court system. If a justice hears too many pre-admission cases, their post-admission cases get delayed, and vice versa.
“This is unique to judicial operations,” Bakshi said.
With all of this in mind, Bakshi developed a mathematical formula for partitioning judge’s time that reduced case waiting time by 65%. Judges had been hearing 15 post-admission cases for every 45 pre-admission cases; Bakshi and his team recommended tipping the balance slightly, to 17 post-admission cases for every 43 pre-admission cases.
“That small change leads to many hundreds of hours over a year,” Bakshi said.
There are many benefits to these improvements, Bakshi said, outside of just making the court system more efficient. For example, property rights in India are enforced by contracts, and any contract disputes are heard in court. An inefficient court system and the prospect of years spent in contract litigation could dissuade companies from doing business in India. On a more individual level, 70% of the prison population in India are pre-trial detainees. An inefficient court system means more time spent in avoidable incarceration.
Next up for Bakshi: exploring applications of this project to the United States court system, perhaps at the appellate level.
David Eccles
Elena Patel
SORENSON ASSISTANT PROFESSOR, DIVISION OF QUANTITATIVE ANALYSIS OF MARKETS AND ORGANIZATIONS
Proponents of paid family leave mandates often tout them as a way to address the wage and workforce participation inequalities between women and men. According to research recently published by Elena Patel, however, there is “no evidence that access to leave boosts workforce participation or wages.” But, that doesn’t mean there are no benefits to paid family leave mandates – those benefits just might not be what people expect.
The United States is the only member of the Organisation for Economic Co-operation and Development without federally mandated family leave, Patel says, which leaves family leave policies in the hands of the states. In 2004, California became the first state to mandate access to paid family leave; since then, twelve more states and the District of Columbia have established similar mandates.
To conduct her research about the impact of family leave on the working lives of women, Patel used econometric techniques to study differences between two groups of otherwise similar California women based on the timing of when they gave birth. For this design, she identified a control group of mothers who gave birth just before the policy went into effect, and a treated group who gave birth just after. This comparison allowed Patel to attribute any subsequent labor market differences to the paid family leave policy. Using tax data, Patel followed these women for 15 years, until 2018.
Her findings challenge the conventional wisdom that paid leave improves women’s career outcomes. In particular, her results show employment and earnings fell for treated mothers who gave birth for the first time after paid family leave became available, and that these negative effects persisted for over a decade. Her estimates suggest a loss in lifetime earnings of more than $80,000 as a result of these differences. Moreover, her research finds that the lowest-earning women that took up paid family leave bore the brunt of these negative effects. By contrast, Patel and co-authors do not find any evidence of negative employment or earnings effects for women who have second or more births after the policy’s implementation. Taken together, her research suggests that California’s paid family leave mandate did not narrow the gender gap in pay. Instead, this policy may have exacerbated this gap, especially among low-wage mothers.
She adds that while there is no evidence that family leave policies improve workforce participation or wages for mothers, there is strong evidence that those policies lead to healthier pregnancies, healthier moms, healthier families, and healthier kids.
“You have to think about the family unit and what’s happening across the family,” Patel says.
In addition, Patel highlights that family leave policies provide benefits that are broader than caring for a new child. These policies also allow leave for broader caregiving needs, such as caring for a seriously ill family member like a child, spouse, or parent.
The current patchwork system that provides paid leave to workers, whether voluntarily provided by an employer or mandated by a local or state government, excludes the lowest rung of workers in the U.S. economy, Patel says, and she is a proponent of a federal family leave mandate that would benefit everyone. This policy can be modeled following the success of state design, where everyone pays into a fund, much like Social Security or unemployment insurance, that is used to pay paid leave benefits. These claims can be managed federally, following the model for the Social Security Trust Fund. In separate work, Patel proposed a design for a federal paid family leave mandate that included elements of similar successful programs around the world, such as a “use it or lose it” clause and leave allocated specifically for fathers after the birth of a child.
Many workplace inequalities are rooted in social, cultural, and gender norms, Patel says, and those are not within the purview of any government – state, federal, or otherwise – to change. But, she says, the government does have the chance to create innovative policy that makes leave, and its related benefits, available to more workers. And that, Patel says, has a positive impact on the economic health and opportunity of individuals, communities, and the country.
“This is a policy innovation I hope people embrace,” she says. “Everyone should have the same opportunities to make choices about how best to accommodate the health care needs of their family; how those choices are made, however, are up to the individual.”
David Eccles School of Business