Thursday, July 16, 2015

Expiration Dates and Social Trust

I'm just back from a visit to Shanghai (more to blog about this later).

While I was there I spent some time at the super market buying groceries. Something that struck me: instead of printing an expiration date on foods - as is usually done in the U.S. - the packages have the date of production printed instead.

Seems like a pretty trivial difference, but it got my armchair economist going. What would explain this?

I think it has to do with differential levels of trust in strangers across societies. Americans are generally more trusting of their food suppliers and the freshness of their food. But suppose you thought that the grocery store might be run by scoundrels?

One advantage to printing the production date is that it's harder for the store to hide expired food. If you see a package with a "production" date that is later than today, you can easily tell that something is up. To know when the food expires, just add the appropriate number of months to the production date. Shoppers have to expend a little more mental energy but also get slightly more assurance that their food will be fresh.

This may sound a bit paranoid on the part of Chinese consumers, but given the recent scandal of frozen meat from the 1970s being seized, a cautious attitude seems well justified.

Thursday, June 18, 2015

Dissertation finished! Back to the blog

Awhile ago, I made a personal resolution to not do any serious writing until my dissertation was done. As of a week ago, it's now finished! I'm now job-searching as well as writing for a second edition of my social media marketing textbook, but I think I have enough time now to do some blogging on the side.

Anyway, here is the abstract to my dissertation (I plan to post more of the substance of it soon):

Corporate Networks and Social Scandals: Private and Regulatory Influences on Executive Behavior


Decisions by corporate executives are entangled in public regulation, private torts, and social influence. This dissertation takes an example of each to trace the effects of formal and informal policy changes on the behavior of corporate board members, integrating the study of corporate governance, law and economics, and social ties between businesses as they relate to regulatory policy. In my first chapter, I examine private lawsuits against directors and officers following the passage of the Sarbanes Oxley Act (2002). Sarbanes-Oxley created new responsibilities for corporate boards and expanded tort liability for corporate directors. I find that while the number of lawsuits increased after Sarbanes-Oxley, the probability of success and amount of payment decreased. This change influenced the deterrent effect of private torts. In the second chapter, using social network analysis I track changes in the structure of interlocking board networks following Sarbanes-Oxley. This Act required more outside directors to serve on corporate boards, hoping to increase accountability to shareholders. After Sarbanes-Oxley, I find that outside directors are relatively marginalized within the overall network of interlocking directorates, and that companies with less influential outside directors are less likely to have successful shareholder proposals which challenge management decisions. In the third chapter, I study the after-effects of a 2009 insider trading scandal which forced the resignation of several prominent corporate insiders. I find that firms associated with the scandal lose network connections, as do other companies with ties to the affected firms. These results suggest that companies make strategic decisions as to which interlocking directorates to maintain or dissolve. Further, I examine the effects of these network changes on market outcomes.