Monthly Archives: April 2025

Recent UNSW Study Uncovers Significantly Greater GDP Decline Due to 4°C Global Temperature Rise

The latest forecasts from the UNSW Institute for Climate Risk & Response (ICRR) indicate that a global temperature increase of 4°C could reduce worldwide GDP by approximately 40% by the year 2100, a figure that starkly contrasts with previous estimates of about 11%.

This newly released study corrects a crucial mistake in the economic model that underpins current global climate strategies, thereby challenging the earlier carbon benchmarks that were considered acceptable. The findings bolster the argument for maintaining global warming within a 1.7°C limit, aligning with the ambitious targets set by international agreements such as the Paris Agreement and significantly below the 2.7°C previously deemed acceptable under older models.

Dr Timothy Neal, a Scientia Senior Lecturer at the School of Economics and affiliated with the ICRR, spearheads this research. He employs traditional economic models that balance the immediate costs of transitioning away from fossil fuels against the prolonged damages caused by climate change, refining critical components of these models. According to Dr Neal, while economists have traditionally relied on historical data to correlate weather events with economic growth to assess climate damage, they have overlooked the broader impacts on the global supply chain, which buffers economic shocks. He anticipates that future scenarios of heightened global temperatures will lead to widespread disruptions in supply chains due to extreme weather events across the globe.

Dr Neal argues convincingly for the necessity of robust actions against climate change. He points out that excluding these broader economic damages in previous models led to a significant underestimation of the economic threats posed by severe climate changes, which has had profound consequences for climate policies. Financial models that only accounted for localised damages have been integral to economic forecasts shaping major world powers’ climate policies and have been pivotal in forming international climate agreements.

Dr Neal also highlights that no country is safeguarded against the detrimental effects of climate change, debunking the myth that colder nations like Russia or Canada might benefit from such changes. The interdependencies within global supply chains ensure that no nation is insulated from the impacts. However, Dr Neal acknowledges that the research is not yet complete. His current models do not consider potential adaptations to climate change, such as human migration, which are both politically and logistically complex and have not been fully integrated into existing models.

As we continue to witness the effects of climate change on our economies—from escalating food prices to rising insurance costs—our responses must remain adaptable to new information to safeguard our collective interests effectively. Dr Neal’s work underscores the urgent need for an updated approach to understanding and mitigating the economic impacts of global climate change, urging all nations to recognise their vulnerability and act swiftly to counteract these changes.

More information: Timothy Neal et al, Reconsidering the macroeconomic damage of severe warming, Environmental Research. DOI: 10.1088/1748-9326/adbd58

Journal information: Environmental Research Provided by University of New South Wales

Recent Research Reveals Over 95% of Sponsored Influencer Tweets Lack Proper Disclosure

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A recent study published in the peer-reviewed journal Marketing Science has uncovered that 95% of influencer posts on Twitter (now known as X), which are sponsored, do not disclose this fact. The research article “How Much Influencer Marketing Is Undisclosed?” is featured in the INFORMS journal Marketing Science. The authors, Daniel Ershov of University College London and the Centre for Economic Policy Research in London, Yanting He from Imperial College London, and Stephan Seiler, also associated with the Centre for Economic Policy Research and Imperial College London, have contributed to this revealing study.

The researchers have noted that posts that do not disclose their sponsorship tend to be linked to relatively young “brands” with large social media followings. Yanting He remarked on the findings, stating, “Our study findings highlight a potential need for further regulatory scrutiny,” emphasizing the importance of transparency in influencer marketing.

Influencer marketing represents a modern strategy to reach consumers, sidestepping traditional advertising media such as broadcast and print. This method employs individuals to endorse brands, products, or services, compensating them for their promotional efforts. Typically, these influencers are chosen based on their substantial social media presence and/or celebrity status. Daniel Ershov highlights a significant issue: “Because consumers might find it difficult to distinguish paid influencer posts from genuinely organic content, regulators in many countries now require any paid content to be disclosed.” He notes, however, that “because of the novelty associated with influencer marketing, the evolving regulatory framework has not caught up.”

To conduct this study, the researchers utilized a novel dataset of over 100 million brand-related posts on Twitter from 268 brands. They developed a new text-based classification approach to identify undisclosed sponsored content. By quantifying the impact of undisclosed influencer posts, they aimed to assess whether consumers could detect when commercial content was not disclosed. They tracked the progression of these undisclosed posts over time and were able to pinpoint the brands involved in these secretive advertising tactics.

The findings were quite revealing: many participants in an online survey could not identify commercial content that lacked disclosure. Stephan Seiler shared insights from the study, saying, “We found that although regulation did tighten up over our sample period from 2014 to 2021, the share of undisclosed content decreased only slightly.” The research also showed that undisclosed sponsored posts frequently originate from younger brands with significant Twitter followings, underscoring the ongoing challenges and the urgent need for stricter regulatory measures to safeguard consumers and ensure the transparency of influencer marketing practices.

More information: Daniel Ershov et al, How Much Influencer Marketing Is Undisclosed? Evidence from Twitter, Marketing Science. DOI: 10.1287/mksc.2024.0838

Journal information: Marketing Science Provided by Institute for Operations Research and the Management Sciences

Recent Research Indicates that Remaining Neutral on Social Topics May Still Displease Customers

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On February 28th, consumers nationwide participated in what was termed an ‘economic blackout’, refraining from all spending to protest reductions in diversity, equity, and inclusion (DEI) initiatives. This sparked considerable backlash on social media from people across the political spectrum, presenting brands with a challenging question: Should companies remain silent on such divisive issues?

A study published in the Strategic Management Journal suggests that silence on prominent and contentious issues can still lead to backlash. The research, conducted by Marco Shaojun Qin, Xueming Luo, and Todd Schifeling of Temple University, together with independent researcher Yang Wang, focused on the impact of corporate silence during the Blackout Tuesday event on Instagram in 2020. They monitored the Twitter and Instagram accounts of 312 fashion industry companies for four weeks before and after the event. Their findings revealed that companies that did not participate saw a 33% slowdown in follower growth and a 12% decrease in likes.

Marco Shaojun Qin elaborated on the findings, stating that when an issue is highly salient to the public, the space for neutrality vanishes, and stakeholders are likely to interpret silence as a form of disdain. “The effects we discovered are substantial and imply that the classic notion that firms can be protected by staying silent on sociopolitical issues may no longer hold in today’s world,” Qin noted.

The study also highlighted that consumers in niche markets tend to give companies the benefit of the doubt, likely because of the smaller audience size and tighter alignment with the companies. Yang Wang explained, “Liberal stakeholders who support an issue will be more likely to presume that a silent niche firm has a liberal stance. Conversely, conservatives are more likely to presume that the firm has a conservative stance.”

In sectors with high participation, the study found that the downturn in followers and engagement nearly doubled for companies that remained silent. This was particularly pronounced among mass-market businesses, which suffered more significant declines in consumer support than their niche counterparts. Todd Schifeling emphasized the importance of visibility in shaping stakeholder responses. “Visibility is central to stakeholder responses,” he said. “It intensifies the more an industry engages on an issue—making corporate silence more obvious. It’s also key to protecting companies in smaller markets. They attract less attention, and the intention behind inaction by a niche company can be opaque.”

This research provides valuable insights into why many companies and CEOs increasingly engage in corporate activism on issues that may not directly relate to their business strategy, often triggering negative public responses. The case of Blackout Tuesday, organized by BLM leaders, shows how non-participation can be reasonably inferred as opposition. The findings are particularly relevant amid the current sociopolitical discourse in the United States; as polarization grows, consumers are less likely ever to assume corporate neutrality. Although it’s tempting for corporations to avoid engaging in controversial social issues, the research underscores that such silence comes with significant costs.

More information: Marco Shaojun Qin et al, When corporate silence is costly:Negative consumer responses to corporate silence on social issues, Strategic Management Journal. DOI: 10.1002/smj.3683

Journal information: Strategic Management Journal Provided by Strategic Management Society

Agreement May Reduce the Expense of Purchasing a House

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Since the National Association of Realtors (NAR) agreed in March to a $418 million settlement to resolve an antitrust lawsuit, scholars at Texas McCombs believe there’s an opportunity to address the problem of artificially high real estate commissions. The lawsuit alleges that real estate agents have colluded to keep commission rates high. These commissions, typically about 6% of the sale price, are paid by sellers but shared between the agents representing the buyer and the seller. Under the settlement terms, details of commissions must be excluded from the multiple-listing services (MLSs), which are the platforms where properties are listed for sale. This change could lead to reduced commission rates and offer some relief to consumers.

John Hatfield, a professor of finance, and Richard Lowery, an associate professor of finance, have investigated the prevalent commission-sharing arrangement in their latest research. Their findings support the claims made in the lawsuit, indicating that such arrangements facilitate high commissions by enabling collusion among agents. The established norms of sharing commissions among agents can act as a barrier to reducing costs, as it promotes a pricing agreement that keeps fees uniformly high across transactions.

In the United States, real estate commissions are notably higher than in many other countries and have remained consistent for the last thirty years despite the decreasing costs of comparable transactions. “The 6% commission fee does not accurately reflect the true costs of carrying out a real estate transaction,” states Hatfield. This discrepancy poses a significant question from an economic perspective, mainly because a few players do not dominate the real estate brokerage market. Theoretically, this should drive down fees through competition, which would be particularly beneficial for home buyers in a market where prices are at record highs.

However, this reduction in fees has not materialized. In a model developed by Hatfield and Lowery, along with Scott Kominers from Harvard Business School, they propose that widespread knowledge of commission rates can lead to collusion. If a broker attempts to lower their rates below the standard, other brokers might ostracise them. This can extend the time needed to sell a property and reduce the likelihood of its sale within 180 days. This model demonstrates how the transparency of commission rates, rather than fostering competition, may enable brokers to maintain high fees by agreeing tacitly not to undercut each other.

Hatfield has also conducted studies that show real-world instances of such ‘steering’. He discovered that properties with lower offered commissions were 5% less likely to be sold and took 12% longer. This suggests that the commission structure affects not only the costs but also the efficiency and speed of real estate transactions. It highlights the need for changes in how commissions are discussed and set within the industry.

While the settlement does not directly cap commissions, it forbids the inclusion of buyer agent commission details on MLS listings. However, seller agents can still discuss and share these commissions with buyer agents outside of the MLS context. “This type of communication could potentially reduce commissions,” suggests Lowery. “Our analysis indicates that allowing buyers and their agents to negotiate fees directly, rather than having them handled by the seller, could indeed lower the costs associated with real estate transactions. However, the effectiveness of this will depend significantly on the specific details of the settlement and its interpretation.” Hatfield recommends that buyers actively negotiate commissions with their agents, which could lead to more competitive pricing and reduced overall costs in real estate transactions.

More information: John Hatfield et al, Collusion in Brokered Markets, Journal of Finance. DOI: 10.1111/jofi.13432

Journal information: Journal of Finance Provided by University of Texas at Austin

Blockchain Enterprises Are Struggling – But It’s Not Due to the Technology

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A recent study from the University of Surrey has illuminated significant challenges within the blockchain startup ecosystem, revealing that up to 90% of blockchain initiatives are likely to fail. Interestingly, this high failure rate is not primarily due to shortcomings in the technology itself. Instead, the study points to a lack of strong leadership and clear strategic vision as the primary culprits. Blockchain, often heralded as a revolutionary business technology, demands more than technological adeptness; it requires robust management and clear objectives to thrive. Startups loaded with ambition but deficient in these critical areas tend to succumb to the weight of their aspirations.

The research, published in Operations Management, underscores a crucial yet often overlooked element of technological adoption: the importance of effective leadership. The findings suggest that many founders of blockchain companies lack the necessary authority and influence to guide their ventures to success. This leadership deficit critically impacts decision-making processes and the pursuit of innovative ideas, causing companies to stagnate. This challenges the assumption that the primary hurdles in adopting blockchain technology are merely technical, highlighting the pivotal role of founders’ managerial capabilities instead.

Professor Yu Xiong, a co-author of the study, emphasized the necessity of a “founder mode” moment. At this turning point, the influence and management style of the founders could decisively impact the company’s future. He pointed out that strong leadership can transform an embryonic idea into a successful enterprise, whereas weak governance is likely to doom even the most innovative projects. The professor noted specific problems in how decisions are made within these companies, with some founders adopting an overly democratic approach that, while inclusive, can lead to confusion and delays. For instance, if a team cannot reach a consensus on implementing a new feature for their blockchain service, the resultant indecision can lead to significant delays.

The study’s methodology included an in-depth analysis of five blockchain startups over five years, employing interviews, internal document reviews, and direct observations to gain insights into decision-making and management behaviour dynamics. The results indicate that the most successful founders seek inspiration beyond the blockchain sphere and adopt centralized decision-making styles that enable swift adaptation and innovation. This contrasts sharply with less successful startups, which often get caught in a cycle of internal exploration focused solely on blockchain, leading to slow progress and limited scalability.

Professor Xiong also highlighted the benefits of fostering a culture of creativity and encouraging cross-departmental collaboration, which can help startups better align their blockchain solutions with market demands. This approach enhances operational efficiency and helps avoid the pitfalls associated with adopting new technologies. Such strategies have proven critical in overcoming the barriers that have plagued many firms in the blockchain industry.

In conclusion, the study advocates for a paradigm shift in how blockchain technology is perceived and implemented. It calls on entrepreneurs and investors to acknowledge the critical role of founder influence in the success of blockchain initiatives. Shifting focus from a purely technical perspective to a more holistic view that includes leadership dynamics and strategic management could be the key to resolving many of the issues that have hindered the success of blockchain startups. This broader approach is essential for those in the blockchain industry who aspire to survive and thrive in this complex and rapidly evolving market.

More information: Yu Xiong et al, Success and Failure of Blockchain Technology Providers: Founders’ Power, Beyond-Blockchain Exploration and Centralized Decision-Making, Journal of Operations Management. DOI: 10.1002/joom.1364

Journal information: Journal of Operations Management Provided by University of Surrey

Language’s Impact: The Influence of CEO’s Written Statements on Investor Sentiment

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A recent study presents a crucial insight for CEOs and corporate leaders aiming to establish trust with their investors: the language used to outline the company’s future strategies and the medium through which these are communicated can significantly influence investor decisions. Published in the journal Behavioral Research in Accounting, the study was co-authored by Scott C. Jackson, a professor of accounting at UNLV Lee Business School, and colleagues from the University of Massachusetts Amherst.

The research explored how different communication methods affect investor decisions by observing the reactions of 250 past and prospective MBA student investors to the same message from a CEO. The variations included written messages, videos, and audio recordings. The findings revealed that when CEOs and managers employ specific language styles—such as the present tense or active voice—to discuss future events, these events are perceived by investors as more tangible and probable. However, this effect is primarily observed in written communications.

For messages conveyed through video or audio, the impact is lessened as viewers and listeners focus more on the speaker’s vocal and facial expressions rather than the content of the words spoken. According to Jackson, “Written communication carries greater significance in this context. When individuals read about plans described using immediate language, it makes the future seem nearer and more plausible. Conversely, with video or audio, aspects such as tone or body language become more prominent, weakening the message’s effectiveness.”

This study is particularly relevant when regulatory bodies such as the U.S. Securities and Exchange Commission (SEC) and the Federal Trade Commission are intensifying their efforts to enhance transparency in financial and corporate communications. This includes initiatives to eliminate hidden fees and provide more transparent disclosures of risks. The findings also coincide with the SEC’s increasing focus on the language and tone used in public disclosures. As companies progressively use platforms like YouTube, LinkedIn, and earnings calls to share their visions, these messages’ manner and auditory quality are becoming increasingly critical.

Jackson notes, “We tend to believe that video adds a layer of professionalism and credibility. However, in terms of setting expectations for the future, written communication may in fact be more influential.” The implications of this study extend beyond Wall Street and are significant across various sectors and cities.

Take Las Vegas, a city known for its grand announcements regarding new casinos, sports arenas, and tech hubs. Each significant development is backed by a presentation to investors, city planners, and other key stakeholders. This research suggests that the mode and venue of communication could influence perceptions of feasibility or risk associated with these plans. Jackson also draws on historical examples to highlight the broader implications of media on human perception. He references the 1960 Kennedy-Nixon presidential debates, where television viewers preferred the poised, confident appearance of JFK. In contrast, radio listeners, who focused solely on the content of the discourse, felt Nixon was more convincing. This underscores the significant influence of the communication medium, suggesting that written communications hold more sway than previously considered.

More information: Scott C. Jackson et al, Does Temporal Immediacy Impact Investors’ Judgments? It Depends on Communication Mode, Behavioral Research in Accounting. DOI: 10.2308/BRIA-2023-017

Journal information: Behavioral Research in Accounting Provided by University of Nevada, Las Vegas