Monthly Archives: August 2026

AI-Enabled Shopping Trolleys Increase Shopper Spending by 32%, Study Finds

Shoppers who use supermarket trolleys equipped with digital screens spend nearly a third more than those using traditional trolleys, according to new research from Bayes Business School at City St George’s, University of London. The findings suggest that digital technology designed to make supermarket trips easier may also influence how much consumers buy and spend.

AI-powered “smart trolleys”, currently being trialled in major supermarkets, feature tablets attached to their handlebars. The devices allow shoppers to digitalise shopping lists, receive personalised product recommendations, navigate stores and make checkout-free payments. By providing information and prompts throughout a shopping trip, the technology aims to create a more convenient and personalised experience.

Researchers analysed 12,418 unique shopping sessions over one month at a major German supermarket chain, including 9,422 sessions involving smart trolleys. They collected information on basket value, number of items purchased and time spent in store, while also examining differences according to time of day, weekdays and weekends, and the ways shoppers interacted with the technology.

The study found that smart-trolley users spent 32% more on average (€30.18 compared with €22.89) than shoppers who did not use the technology. They also purchased 25% more items, averaging 12.02 products compared with 9.61 among non-users. Differences in spending were particularly noticeable during afternoons and weekends, while smart-trolley users tended to purchase more items during afternoons and evenings.

Smart-trolley users also spent considerably longer in stores. Their shopping trips averaged 40.40 minutes, compared with 32.75 minutes for non-users, representing a 23% increase. The longest trips occurred during the evening. Researchers also found that higher temperatures were associated with shorter shopping trips across all customers, regardless of the type of trolley used.

The researchers separately examined “superusers” who recorded more than 20 interactions with the trolley screen during a shopping session. These highly engaged shoppers bought significantly more items and remained in stores longer, but did not spend more overall. At particularly high levels of screen interaction, both spending and basket size began to decline, suggesting that excessive engagement with the technology may not necessarily translate into greater sales.

Lead author Dr Sabrina Gottschalk, Lecturer in Marketing at Bayes Business School, said the findings demonstrate the potential financial benefits of using technology effectively in retail environments. Digital tools can guide shoppers towards promotions and new products while creating additional opportunities for advertising and customer engagement. However, she cautioned consumers to remain aware of how digital prompts and personalised recommendations may influence their purchasing decisions.

Dr Yusuf Oc, Senior Lecturer in Marketing at Bayes Business School, said the research shows clear increases in spending and purchasing among shoppers who choose digital assistance. The findings suggest supermarkets could encourage adoption through incentives such as loyalty rewards while tailoring promotions to different shopping periods. Overall, the study highlights both the commercial potential of AI-enabled shopping trolleys and the importance of understanding how digital technology can subtly shape consumer behaviour.

More information: Sabrina A. Gottschalk et al, Customer responses to smart shopping carts in supermarkets, Journal of Business Research. DOI: 10.1016/j.jbusres.2026.116337

Journal information: Journal of Business Research Provided by City St George’s, University of London

Credit Ratings and Corporate Financing Strategies

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On the surface, credit rating agencies assess a company’s financial health by examining its debt, equity, and ability to meet financial obligations. They assign letter grades that indicate the likelihood that a company will repay its debts. However, new research suggests that rating agencies may do more than evaluate financial risk. Their assessments can also influence how companies make financing and investment decisions.

Cesare Fracassi, associate professor of finance at the McCombs School of Business at The University of Texas at Austin, and Gregory Weitzner of McGill University examined how a change in Moody’s rating methodology affected corporate behaviour. They found that when Moody’s reclassified certain securities on companies’ balance sheets, affected firms subsequently borrowed an average of 22% more, even though their underlying financial circumstances had not changed.

A key factor in credit ratings is leverage, or the ratio of debt to equity. Generally, higher debt relative to equity indicates greater financial risk because a company has more obligations to repay. Yet not every financial security fits neatly into the categories of debt or equity. Some securities have characteristics of both, creating a grey area in determining a company’s leverage.

One example is preferred equity, also known as preferred stock. Like a bond, preferred stock generally pays a fixed dividend, making it resemble debt. Unlike conventional debt, however, it does not necessarily have to be repaid, and failure to pay a dividend does not automatically trigger default. Because of this hybrid nature, rating agencies traditionally treated preferred stock as 50% debt and 50% equity.

In July 2013, Moody’s changed its methodology for companies rated below investment grade, which were already considered relatively risky. Instead of treating preferred stock as half debt and half equity, Moody’s began classifying it as 100% equity. The accounting fundamentals and business operations of these companies had not changed, but the new classification made their financial positions appear stronger from a credit-rating perspective.

The researchers studied 475 companies rated below investment grade, including 44 that held preferred stock. Following Moody’s change, the affected companies appeared safer because their average leverage declined from 61.9% to 57.1%. According to the researchers, this reduction was comparable to receiving a one-notch improvement in a credit rating and effectively gave the companies additional capacity to borrow.

The companies took advantage of that capacity. During the remainder of 2013, affected firms increased their overall leverage by an average of 3.1 percentage points compared with other companies. They also increased assets and equipment by approximately 8%, suggesting that much of the additional financing supported business investment and growth. Their stock prices also rose by approximately 2.8%.

The findings demonstrate how credit ratings can shape corporate financing strategies even when a company’s underlying financial condition has not materially changed. Although increased borrowing and investment may benefit shareholders, additional debt can create greater risks for creditors. For investors, the research highlights the importance of looking beyond a company’s credit rating and examining its underlying financial position, financing choices, and risk exposure before making investment decisions.

More information: Cesare Fracassi et al, What’s in a Debt? Rating Agency Methodologies and Firms’ Financing and Investment Decisions, The Review of Corporate Finance Studies. DOI: 10.1093/rcfs/cfag026

Journal information: The Review of Corporate Finance Studies Provided by University of Texas at Austin

Chonnam National University Research Reveals the Financial Benefits of Environmental Responsibility

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Consumers are increasingly choosing products from companies that demonstrate genuine environmental responsibility. Although many studies have linked environmental, social, and governance (ESG) performance with stronger financial outcomes, the mechanism through which environmental responsibility translates into greater profitability has remained unclear. New research suggests that sustainability may improve corporate financial performance indirectly by increasing sales.

A study led by Professor Sang-Ho Lee from the Department of Economics at Chonnam National University, South Korea, in collaboration with Professor Arturo Garcia from Universidad Autónoma de Nuevo León, Mexico, has identified sales as a key mechanism connecting environmental responsibility with financial performance. The study was published online on May 22, 2026, in Corporate Social Responsibility and Environmental Management.

Growing concern about climate change has encouraged companies across industries to reduce greenhouse gas emissions, adopt greener technologies, and strengthen their environmental practices. At the same time, consumers are becoming increasingly conscious of the environmental consequences of their purchasing decisions, making environmental responsibility an important factor influencing consumer behaviour and corporate strategies.

“As green consumerism is increasing, the escalating global concern over climate change has compelled firms across numerous industries to integrate eco-friendly practices, such as greenhouse gas reduction and the adoption of green technologies, into their core operations,” explained Prof. Lee. This shift raises an important question for businesses: whether investments in environmental responsibility can generate measurable financial benefits and, if so, how those benefits emerge.

To investigate this relationship, the researchers analysed ESG ratings from the Korea Corporate Governance Service and financial information from the KIS Value database. Their sample included 579 publicly listed Korean companies, representing 2,316 firm-year observations between 2019 and 2022. Using mediation and moderated mediation analyses, they examined whether sales explain the relationship between environmental responsibility and financial performance and whether the effect differs across firm types and periods surrounding the COVID-19 pandemic.

The results showed that environmental responsibility did not directly improve financial performance. Instead, companies with stronger environmental performance achieved higher sales, which subsequently contributed to improved returns on assets and equity. This finding suggests that consumers’ responses to credible environmental practices can provide an important pathway through which corporate sustainability efforts ultimately create financial value.

The effect, however, was not the same for all companies. The sales-mediated relationship was significant among large Chaebol firms but not among non-Chaebol firms, suggesting that larger, more visible companies may be better positioned to translate environmental initiatives into consumer demand through their established reputations. The effect also became significantly stronger after the COVID-19 pandemic, potentially reflecting greater consumer and stakeholder attention to sustainability.

The findings provide businesses, investors, and policymakers with a clearer understanding of how environmental responsibility can contribute to economic performance. “This approach can be potentially applied to other countries that have different business styles and different degree of green consumerism,” said Prof. Lee. He concluded, “Our study emphasises not only the importance of green consumerism to improve environmental quality for a longer time horizon but also the financial performance-based sustainability of business strategies, as a win-win project for the earth and the people.”

More information: Arturo Garcia et al, Environmental Responsibility and Financial Performance: The Mediating Role of Sales in Korean Firms, Corporate Social Responsibility and Environmental Management. DOI: 10.1002/csr.70672

Journal information: Corporate Social Responsibility and Environmental Management Provided by Chonnam National University, The Research Information Management Team, Office of Research Promotion

Robinhood Users Favour Simplicity in Stock Selection

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Millions of investors using Robinhood tend to favour stocks that are simpler and easier to understand, according to new research from Washington State University (WSU). The study also found that these less complex stocks outperformed more complicated firms during the period examined, suggesting that a preference for simplicity may have benefited investors.

The research examined investment patterns among users of Robinhood, a popular commission-free mobile app and web-based trading platform. According to the company, Robinhood has about 28 million users, with an average age of 35. Researchers say understanding the investment behaviour of these younger, digitally savvy investors is increasingly important as they play a larger role in financial markets.

“These preferences have market effects,” said Mario Reyes, professor and chair of the Department of Finance & Management Science in WSU’s Carson College of Business. Reyes noted that greater demand from Robinhood users for simpler stocks could influence the market. The findings also have implications for investor relations, suggesting companies should communicate effectively with inexperienced individual investors as well as large institutional investors.

The study, published in Finance Research Letters, was co-authored by Ruixue Gao, who completed her PhD at WSU and has since joined Central Connecticut State University, George Jiang, professor and Investment Management Chair in Finance & Management Science, and Reyes. Founded in 2013, Robinhood Markets allows users to trade stocks, options and cryptocurrencies while also offering other financial services.

“The platform is very, very popular, and generally, these investors are very young,” Gao said. “We want to know what young people care about because they are the future of the stock market.” Previous research has found that Robinhood investors are often attracted to stocks with high “idiosyncratic volatility,” meaning their price movements may differ substantially from those of the broader market.

To examine whether simplicity also influenced investment decisions, the researchers analysed Robinhood holdings from May 2018 through August 2020. They assessed companies using two measures of complexity. Accounting complexity was measured by the number of accounting items reported in a company’s annual U.S. Securities and Exchange Commission filings. In contrast, organisational complexity was based on the number of businesses or operating segments within a firm.

The analysis showed that more Robinhood users invested in companies that were less complex and easier to analyse. Importantly, the relationship remained even after researchers controlled for company size, indicating that investors’ preference for simplicity was not merely a tendency to favour smaller firms. The simpler stocks preferred by Robinhood investors also outperformed more complex stocks during the study period.

Across different measures and comparisons, the preference for simplicity remained consistent. “What stands out is that Robinhood investors consistently gravitate toward companies that are easier to understand,” Reyes said. “Whether we measured complexity through financial reporting or business structure, the pattern was the same.” The findings highlight how a growing generation of individual investors may influence markets through a preference for companies whose finances and business models are relatively straightforward.

More information: Ruixue Gao et al, Robinhood: Simple app simple stocks, Finance Research Letters. DOI: 10.1016/j.frl.2026.110446

Journal information: Finance Research Letters Provided by Washington State University

Rideshare Expansion Boosts Local Economies and Flexible Job Opportunities, Study Finds

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Ride-hailing has become a routine part of urban life in the United States, offering convenient transportation for passengers and flexible work for drivers. Yet the broader economic effects of services such as Uber and Lyft have been difficult to measure. As the platforms expanded across hundreds of cities over the past decade, questions remained about whether their growth translated into measurable benefits for local economies and labour markets.

A new study from Carnegie Mellon University and Oxford Saïd Business School examined the launch of ridesharing services across 167 U.S. metropolitan areas between 2010 and 2019. Because these transportation network companies (TNCs) entered different cities at different times, researchers were able to compare economic trends before and after their arrival while accounting for regional differences. The team combined publicly available workforce and economic data with statistical methods designed to evaluate policies and services introduced gradually over time.

The researchers found two notable changes after Uber and Lyft entered a region: GDP per capita increased, and the number of seasonal, temporary or intermittent jobs rose. They found no statistically significant effects on overall employment or wages. Together, the findings suggest that ride-hailing services may have expanded access to flexible employment while generating additional economic activity associated with greater mobility.

“Uber and Lyft have made a lot of claims over the years about boosting citywide economies and providing flexible jobs,” said Jeremy Michalek, professor of engineering and public policy and mechanical engineering at Carnegie Mellon University. “We find that the data do, in fact, corroborate some of these claims with evidence that Uber and Lyft have increased intermittent employment and economic output in US cities as they entered.”

Published in Nature Cities, the findings also offer insights into the broader effects of the gig economy. An increase in intermittent employment without a corresponding rise in total employment suggests that digital platforms can reshape labour markets by changing how and when people work rather than simply creating more jobs overall. Higher GDP per capita may also reflect wider economic ripple effects, as easier transportation allows passengers to make trips they otherwise might not take, helps workers travel to jobs and creates new patterns of local spending and economic activity.

The researchers also examined whether Uber and Lyft launched in cities that were already experiencing economic growth. They found no meaningful pre-existing trends in employment or wage growth, strengthening the evidence that the changes were associated with the arrival of ride-hailing services. Michalek noted that ride-hailing has produced a wide range of effects, from disrupting the taxi industry and increasing congestion to reducing discrimination and intoxicated driving. “This new evidence suggests they have had measurable positive effects on local economies, too.” The study provides policymakers and researchers with new evidence for understanding the broader economic footprint of ride-hailing and the growing gig economy.

More information: Adam Koling et al, Effects of Uber and Lyft on jobs, wages and GDP, Nature Cities. DOI: 10.1038/s44284-026-00478-0

Journal information: Nature Cities Provided by College of Engineering, Carnegie Mellon University

When Sugar Cravings Win Over Health

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Researchers at HSE University–Perm used electroencephalography (EEG) to examine how sugar cravings and health consciousness influence consumers’ evaluations of Cola-flavoured beverages. Their findings suggest that people who place greater importance on healthy eating experience more cognitive effort when deciding how much they are willing to pay for a drink and ultimately choose to spend less. The study was published in the British Food Journal.

Consumers often face a trade-off between enjoying the taste of indulgent foods and considering their health value. This dilemma is particularly relevant for sugary drinks, which are typically chosen for pleasure rather than nutrition. The researchers investigated how this internal conflict affects consumers’ willingness to pay, defined as the maximum amount they would spend on a product.

The study involved 40 adults aged 18 to 59. Participants first completed questionnaires measuring their cravings for sweets and their attitudes toward healthy eating. They then tasted six Cola-flavoured beverages and rated each drink’s taste while indicating the highest price they would be willing to pay for a 330-millilitre can. No actual purchases were made.

The tasting consisted of two stages. In the first, participants sampled the beverages unthinkingly from identical clear glasses without knowing the brand. In the second, the packaging was revealed, allowing participants to see the brand name and sugar content. Throughout both stages, researchers monitored brain activity using EEG to understand the decision-making process better.

People with stronger cravings for sweets were willing to pay more for the beverages during the blind tasting, even though they did not rate the drinks as tasting better than other participants. Once the packaging and product information were revealed, however, these participants gave higher taste ratings and remained willing to pay more. The researchers suggest that familiar branding strengthened expectations of enjoyment, increasing the drinks’ perceived value.

Health-conscious participants showed a different pattern. During the blind tasting, EEG recordings revealed greater beta-wave activity in the prefrontal cortex when they decided how much they were willing to pay, indicating greater cognitive effort. This increased mental processing was associated with lower willingness to pay. Interestingly, the relationship disappeared once the product packaging and nutritional information were visible.

The study also found that demographic factors influenced purchasing decisions. Younger participants and women were generally willing to pay more for the beverages, while people with higher incomes were prepared to spend more during the branded tasting. Education level, regular consumption of Cola-flavoured drinks and the drinks’ sugar content did not significantly affect willingness to pay.

According to study co-author Daria Semyonova, the findings indicate that the conflict between taste and health emerges not while tasting the beverage but when consumers decide how much it is worth. In that decision-making process, cravings for sweets appear to outweigh health concerns, particularly when familiar brands reinforce expectations of pleasure.

More information: Daria Semenova et al, The taste–health dilemma in hedonic food consumption: behavioral attitudes, neural responses and willingness to pay for cola-flavored drinks, British Food Journal. DOI: 10.1108/BFJ-11-2025-1589

Journal information: British Food Journal Provided by National Research University Higher School of Economics

A Better Approach to Federal Stress Testing

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Could another financial crisis on the scale of 2008 happen again? And if it did, how well would today’s banks withstand the shock? To answer those questions, government regulators regularly stress-test large financial institutions, assessing how their balance sheets would perform under extreme economic conditions. A recent Federal Reserve Board stress test found that even in a severe recession, the largest U.S. banks could collectively absorb losses of $708 billion while remaining financially sound and able to continue lending.

Most stress tests rely on historical crises or hypothetical scenarios that closely resemble them. However, new research from the McCombs School of Business at The University of Texas at Austin suggests that the most memorable market crashes are not always the best indicators of future financial risk. Instead, the researchers propose a broader, data-driven method for identifying the scenarios most likely to expose weaknesses in financial institutions.

The new approach, developed by Rui Gao, associate professor, and Stathis Tompaidis, professor, in the Department of Information, Risk, and Operations Management, uses multifaceted market data rather than focusing primarily on headline-making events. In experimental tests, their models outperformed an existing regulatory approach by more effectively identifying the scenarios that produced the largest losses. “It’s not necessarily the large market moves, the headline days, that are the best days to use,” Tompaidis says. “It’s days where the stresses are complemented with each other.”

Stress testing has a long history. Tompaidis notes that the concept dates back to the 17th century, when gunsmiths “proof tested” gun barrels by firing them with heavy loads to see whether they would fail. Modern financial regulators use a similar principle, exposing institutions to hypothetical economic shocks to evaluate how their profits, losses, and capital positions would respond under pressure.

Designing those scenarios, however, is challenging. Regulators must balance transparency with effectiveness. Revealing too much about how scenarios are selected could allow financial institutions to tailor their portfolios to perform well on specific tests rather than genuinely improving resilience. Because stress testing is also costly and time-consuming, each scenario should be carefully chosen to reveal the greatest potential vulnerabilities.

Existing stress tests often centre on well-known market crashes, when stock prices, interest rates, currencies, commodities, and market volatility all shifted dramatically. But Gao explains that real-world risks are more complex. Different financial stressors can move in different directions, meaning several famous crises may actually test institutions in similar ways. A better approach is to combine severe yet complementary scenarios that uncover different types of risk.

Working with former McCombs doctoral student Rohit Arora, the researchers evaluated 2,828 historical market scenarios spanning April 2008 to June 2019. Their algorithm selected four scenarios with complementary stress factors and tested them against 1,000 simulated investment portfolios. The researchers’ scenarios identified the single worst historical outcome about 40% of the time, while their most accurate model successfully captured the five worst outcomes approximately 95% of the time. Compared with the Commodity Futures Trading Commission’s baseline scenarios, the new approach consistently detected more severe losses.

The findings suggest that combining multiple, complementary market stressors provides regulators with a more accurate picture of financial risk than relying on famous market crashes alone. The approach could also reduce the number of stress tests needed while improving their effectiveness. Ultimately, the researchers hope their models will help regulators better identify financial vulnerabilities before the next crisis arrives. As Gao puts it, “We want to choose scenarios to help regulators to evaluate risks more accurately.”

More information: Rohit Arora et al, Choosing Scenarios to Estimate Resilience and Stress Test Financial Institutions, Management Science. DOI: 10.1287/mnsc.2024.06126

Journal information: Management Science Provided by University of Texas at Austin

Islamic Bonds Boosted Corporate Capital Access

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In the late 1990s, Malaysia introduced a new way for corporations to raise capital by allowing the issuance of Shariah-compliant bonds, known as sukuk. Unlike conventional bonds, sukuk are structured to comply with Islamic law, which prohibits the payment or receipt of interest. The approach proved highly successful, according to a comprehensive study co-authored by UC Riverside finance professor Jean Helwege. Published in the Journal of Financial Economics, the research found that Islamic bonds attracted billions of dollars in new investment without displacing the conventional corporate bond market, ultimately expanding businesses’ access to financing and supporting Malaysia’s economic growth.

The researchers analysed two decades of Malaysia’s corporate bond market after sukuk were introduced in 1997. Rather than competing directly with conventional bonds, Islamic bonds attracted investors and institutions that would not otherwise purchase interest-bearing securities. “The overall finding was that these bonds increased in popularity,” Helwege said. “People did like to buy them, but it didn’t make the conventional bonds go away. The result was that there’s more financing overall, and it does seem to have been helpful to the growth of the Malaysian economy.” The findings challenge the assumption that introducing a new financial product divides an existing market, showing instead that sukuk expanded the total pool of capital available to businesses.

Although Islamic bonds produce returns that closely resemble those of conventional bonds, they are structured differently to comply with religious principles. Instead of explicitly paying interest, sukuk use contractual arrangements based on profit sharing or asset-backed financing that generate similar economic outcomes. “From an investor’s perspective they look extremely similar,” Helwege said. “But there are details in the structure that make them consistent with the Islamic world.” Sukuk also cannot finance businesses involved in activities prohibited under Islamic law, such as gambling. While often described as profit-sharing instruments, Helwege noted that they differ from equity because investors still expect to recover their principal without giving up ownership in the company.

Malaysia provided an ideal setting for the study because it deliberately developed an Islamic capital market alongside its conventional bond market. This dual system allowed researchers to observe how companies and investors responded when presented with two securities offering similar financial returns but different religious eligibility. Many corporations chose to issue both conventional bonds and sukuk, enabling them to reach traditional investors as well as Islamic investors, particularly those in wealthy Gulf states and other regions. Even as Islamic bond issuance expanded, conventional bonds continued to play a significant role in corporate financing.

The study also found that pricing differences between conventional bonds and sukuk remained relatively modest. Although issuing Islamic bonds requires additional costs, including obtaining religious certification, companies benefited from access to a broader investor base. In the late 1990s, annual sukuk issuance totalled less than US$2.5 billion, compared with US$5 billion to nearly US$18 billion in conventional bond issuance. By 2017, Islamic bond issuance had climbed to more than US$20 billion annually, while conventional bond issuance remained relatively stable. The growth illustrates how sukuk evolved from a niche financial product into a major source of corporate funding without weakening the conventional bond market.

The findings have implications beyond Islamic finance. As markets increasingly develop specialised investment products tailored to specific groups of investors, including environmentally and socially responsible funds, the research suggests that new financial instruments can increase access to capital when they attract investors who would otherwise remain on the sidelines. For Helwege, the study’s central message is clear: accommodating religious values strengthened rather than fragmented the market. “It was a popular product,” she said. “The conventional bonds didn’t disappear. There was simply more financing available overall.”

More information: Antje Berndt et al, The impact of introducing a (nearly) redundant security: Evidence from Malaysian corporate bonds, Journal of Financial Economics. DOI: 10.1016/j.jfineco.2026.104310

Journal information: Journal of Financial Economics Provided by University of California – Riverside

Why Do Some Businesses Pay Less Tax?

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Few issues spark more public debate than large corporations paying little—or sometimes no—federal income tax. Since 2018, the U.S. federal corporate income tax rate has been 21%, its lowest level in decades, down from a peak of 53% in 1969. Yet many companies pay even less because of deductions, credits, and other provisions that reduce their effective tax rate—the share of income they actually pay in tax. According to the Institute on Taxation and Economic Policy, at least 88 profitable corporations paid no federal income tax in 2025. Why do some businesses pay more tax than others, and what explains these differences?

A new study from the McCombs School of Business at The University of Texas at Austin analysed three decades of research on corporate tax avoidance to identify the factors that have the greatest influence on companies’ effective tax rates. The researchers compared 31 commonly cited explanations using more than 8,000 annual observations of publicly traded U.S. companies over two decades. Their findings suggest that low tax rates are driven less by manipulation than by a combination of business decisions, financial circumstances, and tax policy. “There’s all this noise about companies that don’t pay taxes or have very low tax rates, but if you dig in, a lot are driven by pretty benign factors,” says Andrew Belnap, assistant professor of accounting.

The study found that investment choices are the single biggest driver of differences in corporate tax rates, accounting for 34% of the variation in cash taxes paid. Companies investing heavily in research and development often benefit from valuable tax credits. Businesses with substantial intangible assets, such as patents and trademarks, can also lower taxes because these assets are easier to allocate across international borders. In addition, firms that earn income through subsidiaries in lower-tax countries generally face lower overall tax burdens.

Financial pressures also play a major role, explaining 21% of the variation in tax rates. Companies facing cash constraints are more motivated to minimise tax payments because preserving cash is essential to their operations. The researchers also found that many tax differences arise naturally from a company’s operating profile rather than deliberate tax planning. Factors such as profitability, accumulated operating losses, and debt levels all influence the amount of tax a business ultimately pays. Even within a single corporation, different business divisions can face markedly different tax rates because of the nature of their activities.

The study also challenges several common assumptions about corporate tax avoidance. Characteristics that often attract public attention—including CEO compensation, board composition, ownership structure, and company size—were found to explain relatively little of the variation in effective tax rates. One notable exception was the influence of individual executives. The researchers found that managers leave a distinct “tax fingerprint” that often follows them from one company to another, with management-related factors accounting for nearly one-quarter of the variation in corporate tax rates.

The findings offer policymakers a clearer picture of where reforms could have the greatest impact. Rather than relying primarily on increased audits or changes to corporate governance, the researchers suggest focusing on rules governing research and development incentives, intangible assets, and international income reporting. Improving transparency around where companies earn their income could also help strengthen tax policy. As Belnap notes, companies largely respond to the incentives built into the tax system, meaning that reducing tax avoidance ultimately depends on changing those incentives rather than simply increasing enforcement.

More information: Andrew Belnap et al, Explaining Corporate Tax Avoidance, Management Science. DOI: 10.1287/mnsc.2024.04839

Journal information: Management Science Provided by University of Texas at Austin

Researchers Say Women Need Better Support to Thrive in Business

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Researchers are calling for a fundamental rethink of how women are supported to start and grow businesses, arguing that existing approaches have not kept pace with the digital transformation of the workplace. A new study from the University of East London suggests that while long-standing barriers—including unequal access to finance, limited professional networks and greater caring responsibilities—continue to affect women entrepreneurs, digital technologies now offer new opportunities to overcome many of these challenges. The researchers argue that policies and business support programmes should place digital innovation at the centre of efforts to help more women succeed in entrepreneurship.

Published in the Journal of Management Development, the study examines 50 years of research encompassing more than 12,000 academic papers before proposing a new framework for women’s entrepreneurship in the digital age. The researchers contend that digital workplace innovation—including remote and hybrid working, cloud-based technologies and online collaboration tools—can create more flexible pathways into entrepreneurship. They argue that developing digital skills can also help women build confidence, expand professional networks, gain business experience and access leadership opportunities that were previously more difficult to attain.

The study also highlights the importance of mentorship in fostering entrepreneurial success. Experienced women entrepreneurs, the researchers say, play a critical role in supporting the next generation by sharing practical knowledge, offering guidance and helping aspiring business owners navigate persistent structural barriers. Strengthening these mentoring relationships, combined with greater access to digital technologies, could create a more inclusive and supportive entrepreneurial ecosystem.

Professor Kirk Chang, from the Royal School of Business and Law at the University of East London, said the conversation about women’s entrepreneurship needs to evolve alongside changes in the modern workplace. “For years we’ve talked about the barriers women face in business, and those barriers remain real,” he said. “But the world of work has changed dramatically. If we want more women to build successful businesses, we need to rethink the support we give them. Digital skills, flexible ways of working and access to technology should no longer be treated as optional extras. They should be part of the foundation.”

Co-author Dr Ozlem Ozdemir, Senior Lecturer in Business Administration, said traditional models of entrepreneurship no longer reflect the realities of today’s business environment. “Too often we ask how women can succeed within traditional models of entrepreneurship,” she said. “Our research suggests it is time to rethink the model itself. As business becomes increasingly digital, we need new ways of supporting women that reflect how modern businesses actually operate.”

The researchers emphasise that technology alone will not eliminate the challenges women face. They argue that digital tools must be accompanied by investment in digital literacy, inclusive workplace practices and stronger institutional support from governments, educators and business development organisations. By adopting this broader approach, they hope their new framework will help shape more effective policies and programmes that enable more women to launch, grow and sustain successful businesses in an increasingly digital economy.

More information: Kirk Chang et al, Women entrepreneurship theory through digital workplace innovation: a new concept, Journal of Management Development. DOI: 10.1108/JMD-06-2025-0331

Journal information: Journal of Management Development Provided by University of East London

Why Humans Evolved to Be Overconfident

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Researchers at the University of Bath and The London School of Economics and Political Science (LSE) believe they have solved a long-standing evolutionary mystery: why humans remain persistently overconfident despite the costly mistakes it can cause. Published in Psychological Review, the study argues that overconfidence—believing you are more capable than you really are—has endured through evolution not in spite of its costs, but because of them. The researchers compare overconfidence to a peacock’s tail, an elaborate but burdensome feature that survives because only the healthiest birds can afford to carry it. Likewise, they suggest that human self-belief acts as a costly signal of underlying ability.

“Overconfidence is strikingly common and often costly,” said Professor Chris Dawson, a behavioural economist at the University of Bath’s School of Management. It contributes to failed businesses, excessive risk-taking and poor decisions, yet evolution has not eliminated it. Instead, the researchers argue that the costs of overconfidence are unevenly distributed. People with greater ability are less likely to suffer severe consequences from inflated self-belief, allowing them to project confidence more successfully than those with lower ability. As a result, overconfidence remains a credible indicator of competence because only the most capable individuals can consistently sustain it.

The researchers also argue that confidence provides important social and professional advantages. “Confidence opens doors,” said Professor Dawson. Confident individuals are more likely to gain influence, attain leadership positions, secure promotions and form valuable relationships. However, confidence alone is not enough to guarantee success. Once opportunities arise, genuine ability determines who performs well. If overconfidence carried no cost, anyone could exaggerate their abilities without consequence, making self-belief meaningless as a signal. Its credibility depends on the fact that excessive confidence is more costly for less capable individuals.

The study builds on a theory proposed by evolutionary biologist Robert Trivers, who suggested that self-deception evolved because genuinely believing our own claims makes us more convincing to others by eliminating subtle signs of dishonesty, such as nervousness or vocal strain. However, the new research addresses a question left unanswered by Trivers: if overconfidence is so common, why do people not simply dismiss confident claims? Professor David de Meza of LSE explains that although people naturally discount others’ self-belief, those who are not overconfident risk being underestimated. Because inflated confidence remains costly, it continues to provide meaningful information about underlying ability.

The findings may also help explain why men generally display higher levels of overconfidence than women. According to Professor Dawson, historical differences in mating strategies meant that women often assessed qualities such as status, commitment and resourcefulness—traits that are difficult to observe directly. Overconfidence evolved as a credible way for men to signal these hidden qualities. The researchers stress that this reflects evolutionary pressures rather than conscious behaviour in modern society, offering a possible explanation for long-observed differences in confidence between the sexes.

The study further argues that loss aversion—the tendency to fear losses more than we value equivalent gains—works alongside overconfidence rather than against it. While people often project confidence, they frequently behave more cautiously in practice, preventing excessive risk-taking without undermining the confident image they present. “People talk confidently but act cautiously,” said Professor de Meza. The researchers conclude that overconfidence and loss aversion form a complementary pair, allowing people to seize opportunities while avoiding catastrophic mistakes. They caution that attempts to eliminate these biases could produce unintended consequences by reducing persuasion, ambition and opportunity-seeking, while encouraging greater risk-taking.

More information: Chris Dawson et al, Talking the Talk, Not Walking the Walk: The Coevolution of Overconfidence and Loss Aversion, Psychological Review. DOI: 10.1037/rev0000644

Journal information: Psychological Review Provided by University of Bath

Global Income Inequality Between North and South Deepens

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A new study published in the journal New Political Economy suggests that the income gap between the Global North—the world’s advanced economies—and the Global South—the developing economies—has widened substantially over the past six decades. Conducted by economists Jason Hickel and Dylan Sullivan at the Institute for Environmental Science and Technology at the Universitat Autònoma de Barcelona (ICTA-UAB), Spain, the research estimates that the gap has increased by 170% to 270% since 1960. Analysing annual data from 173 countries representing 99.9% of the global population, the study challenges the widely held belief that poorer nations are steadily catching up with wealthier ones through economic growth and market liberalisation.

The researchers found that while some measures suggest limited relative convergence, the overall picture remains one of widening inequality. Since 1960, the economies of the Global North captured four to ten times more income growth than those of the Global South, depending on the method of comparison. The relative income of the Global South improved by no more than three percentage points, and even this modest gain was driven almost entirely by China’s economic rise. Excluding China, the relative position of developing economies actually deteriorated. Meanwhile, the share of the world’s population living in the Global South increased from 80% in 1960 to 86% in 2023, highlighting the persistence of the global economic divide.

China emerged as the study’s notable exception. Although it has significantly improved its relative economic standing, its GDP per capita still reaches only about 22% to 38% of the average level in the Global North. According to the authors, this places China at roughly the same relative position achieved decades ago by regions such as Latin America, West Asia and North Africa, and Eastern Europe before widespread market liberalisation. The findings suggest that China’s experience is unique rather than evidence of a broader trend of convergence among developing economies.

The study also identifies the 1980s and 1990s—the era of neoliberal reforms, structural adjustment programmes, and market liberalisation promoted by the International Monetary Fund and the World Bank—as a period when inequalities between the Global North and South intensified. Four major developing regions experienced prolonged economic contractions during this period. Latin America’s income fell by 7% and required 13 years to recover, while the Middle East and North Africa saw a 25% decline with a 25-year recovery. Eastern Europe and Central Asia experienced a 36% drop over 17 years, and Sub-Saharan Africa suffered a 23% decline that took 36 years to reverse. By comparison, the Great Recession reduced incomes in advanced economies by only 4%, with recovery occurring within six years.

Although several countries, including South Korea, Taiwan, Greece, Portugal and a number of Eastern European states, have been reclassified by the International Monetary Fund as advanced economies since 1980, the authors argue these cases are exceptional rather than representative. They contend that these countries were incorporated into the economic core largely because of geopolitical considerations, particularly during and after the Cold War. The study notes that the United States provided extensive economic and military assistance to strategic allies, citing South Korea and Israel as examples of countries that received extraordinary levels of support compared with most developing nations.

According to the researchers, the evidence challenges the conventional view that poorer countries are simply following the same development path as wealthier nations with a time lag. Instead, they argue that the divide between the Global North and South reflects structural features of the global economic system rather than a temporary development gap. They conclude that achieving sustained development in the Global South may require strengthening domestic industrial capacity, expanding South–South trade, reducing dependence on advanced economies and major reserve currencies, and addressing the structural barriers that continue to shape global economic inequality.

More information: Jason Hickel et al, The myth of catch-up development: trends in core–periphery inequality from 1960 to 2023, New Political Economy. DOI: 10.1080/13563467.2026.2659076

Journal information: New Political Economy Provided by Universitat Autonoma de Barcelona