Author Archives: support

UK Productivity Set to Rise with Green Transition

New research has found that the green transition could significantly boost productivity across the UK economy. The study, led by researchers from the universities of Exeter and Manchester, examined the impact of transitioning to low-carbon alternatives in the power, transportation, and heating sectors. As renewable energy continues to fall in cost and is now cheaper than fossil fuels in most parts of the world, the direct beneficiaries of this shift are these three energy-intensive sectors. However, the research emphasises that the most substantial benefits will not be limited to these industries alone, but will be felt across the broader economy, as the cost of essential services such as electricity, transportation, and heating falls, enhancing overall productivity.

The findings suggest a knock-on effect whereby cheaper energy inputs reduce operational costs for businesses across all sectors, effectively unlocking unspent income that can then be redirected into other areas of the economy, thereby stimulating growth. Dr Jean-François Mercure, who heads Exeter Climate Policy and led the study, noted that power, heating, and transport are not typically drivers of productivity growth. Yet, if energy services become cheaper, all other sectors stand to gain by operating more cost-effectively. However, the study stresses that these economic gains depend on whether the reduced energy costs are genuinely passed on to consumers, rather than being absorbed as profit by utility companies and their shareholders.

Currently, structural barriers are preventing these benefits from reaching the broader economy. Dr Mercure highlighted a key concern: despite falling renewable energy costs, electricity prices remain tied to the price of natural gas, which distorts the pricing mechanism and allows producers or distributors to pocket the savings instead of passing them on to consumers. This dynamic means that the potential productivity gains from a cleaner, cheaper energy system are not automatically realised and will require reform to ensure benefits are equitably shared. In other words, cheaper production does not guarantee more affordable access, and policy will play a decisive role in correcting this imbalance.

The research, which projects outcomes through to 2035, also carries broader global implications. Countries that rely heavily on imported fossil fuels, such as the UK, stand to benefit the most from the green transition. On the other hand, nations whose economies are closely tied to fossil fuel production may face net losses unless they begin to diversify rapidly. Dimitri Zenghelis of the University of Cambridge, a contributor to the study, called it not only a compelling argument for climate policy but also for smart economic policy. He framed the transition as a global race for competitive advantage that the UK cannot afford to ignore, stressing that clean energy represents a win-win opportunity for energy importers.

Hector Pollitt, another economist involved in the study, challenged the outdated belief that environmental policy and economic growth are mutually exclusive. He pointed to the UK’s offshore wind industry as a prime example of how climate-friendly initiatives can drive technological innovation and productivity. Pollitt argued that it is time to abandon the false dichotomy between emission reductions and economic development. Instead, green technology should be embraced as a powerful engine of growth in its own right, capable of reshaping the financial landscape for the better.

Coinciding with the publication of this research is the official launch of Exeter Climate Policy (ECP), a new policy advisory unit based at the University of Exeter. ECP aims to support governments and finance ministers in crafting resilient, effective, and locally tailored policies for the low-carbon transition. Professor Jean-François Mercure, Director of ECP, emphasised the need for region-specific climate-economic models that take into account a country’s unique circumstances, including resource availability, political conditions, and economic disparities. With experience working with international bodies like the UK Government, the European Commission, Brazil’s Ministry of Finance, and the World Bank, ECP offers an independent, collaborative, and evidence-driven approach to shaping the policies required for a fair and prosperous net-zero future. Supported by Green Futures Solutions, the initiative underscores the University of Exeter’s broader mission to lead transformative climate action as part of its Strategy 2030.

More information: Jean-Francois Mercure et al, The effects of low-carbon transitions on labour productivity: analysing UK electricity, heat, and mobility with a techno-economic simulation model, Climate Policy. DOI: 10.1080/14693062.2025.2522836

Journal information: Climate Policy Provided by University of Exeter

Fintech lenders gained ground after Wells Fargo scandal, UC Davis research finds

Leave a Reply

The 2016 Wells Fargo financial scandal profoundly eroded public trust in traditional banking institutions. It simultaneously fuelled a notable shift toward fintech lenders among homebuyers, according to a study conducted by the University of California, Davis. The research reveals that fallout from the scandal—one of the most notorious in the American banking sector since the 2008 financial crisis—played a pivotal role in altering consumer behaviour, not due to financial incentives, but due to a collapse in institutional trust.

The study, titled “Trust as an Entry Barrier: Evidence from FinTech Adoption,” was recently published in the Journal of Financial Economics and authored by Keer Yang, an assistant professor at the UC Davis Graduate School of Management with a focus on finance and financial technology. Drawing on a broad data set that spans nearly a decade, Yang’s research establishes a strong correlation between public exposure to the Wells Fargo scandal and the subsequent adoption of digital mortgage lending platforms. According to Yang, “Geographic areas with larger exposures to the Wells Fargo scandal increased the probability of consumers choosing fintech for their mortgage lender,” underscoring how reputational damage can open the door for disruptive financial innovation.

Fintech—short for financial technology—encompasses digital platforms that allow individuals and businesses to access banking and other financial services online. These services have proliferated in the past decade. While fintech’s appeal often lies in its convenience and technological edge, Yang’s research suggests that it was a breakdown in trust, rather than a difference in financial offerings, that spurred consumers to switch. Indeed, the study found that the costs of borrowing, including interest rates and fees for 30-year fixed-rate mortgages, remained relatively stable across banks and fintech firms in the aftermath of the scandal. “Therefore, it is trust, not the interest rate, that affects the borrower’s probability of choosing a fintech lender,” Yang concluded.

The Wells Fargo scandal itself became a symbol of systemic malpractice within the traditional banking industry. Beginning in 2002 and stretching until 2016, bank employees—under intense pressure to meet aggressive sales quotas—allegedly opened millions of unauthorised accounts and imposed unjustified fees on customers. Though investigative reporting by the Los Angeles Times brought some of these practices to light in 2013, public awareness and regulatory response surged in 2016 when Wells Fargo was fined $185 million by federal authorities, followed by a staggering $3 billion penalty imposed later by the U.S. government. These revelations sparked widespread outrage and prompted scrutiny into longstanding banking practices that many consumers had previously taken for granted.

In assessing the impact of the scandal, Yang’s study relied on diverse and robust sources of data, including Gallup surveys measuring public trust in banking, Google Trends search volumes related to banking scandals, and regional newspaper coverage of the Wells Fargo controversy. These were combined with deposit and mortgage loan figures from both traditional banks and fintech firms, providing a comprehensive view of consumer behaviour between 2012 and 2021. The findings paint a clear picture: in regions where Wells Fargo had a substantial presence, consumer migration to fintech mortgage providers increased by an average of 4% post-2016. This behavioural shift represents a considerable acceleration from the pre-scandal fintech market share of 2% in 2010, which grew to 8% by the time of the scandal’s eruption.

Interestingly, while the scandal significantly influenced mortgage lending preferences, it had only a marginal effect on traditional bank deposits. Yang attributes this to the perception of security provided by federal deposit insurance, which may have reassured depositors even as they sought alternatives for other financial products. Nonetheless, the research suggests that while deposit accounts may remain stable, other financial services—particularly those that require greater consumer discretion and trust, such as mortgages—are more susceptible to reputational risk and competitive disruption.

Ultimately, this study contributes to the growing body of literature that examines how trust serves as both a competitive advantage and a barrier to entry within the financial sector. By illustrating how a breach in ethical conduct by a dominant bank catalysed growth for its fintech competitors, Yang underscores the fragile nature of consumer loyalty and the profound implications that misconduct can have for the broader financial ecosystem. The case of Wells Fargo serves not only as a cautionary tale but also as a demonstration of how technology-driven alternatives can swiftly gain traction when traditional players falter.

More information: Keer Yang, Trust as an entry barrier: Evidence from FinTech adoption, Journal of Financial Economics. DOI: 10.1016/j.jfineco.2025.104062

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

Unemployment Benefits Seen as Better Option Than Low-Paying Jobs

Leave a Reply

You’ve likely come across the familiar expression: “It should be worth our time to work.” This notion is not exclusive to countries with limited public assistance; it holds relevance even in welfare-rich nations like Norway, where social safety nets are robust and designed to support those who are either temporarily or permanently out of the labour force. Whether individuals have left work by necessity or choice, the expectation that employment should provide a meaningful financial return persists across much of society. The idea underscores a broader economic principle—people will be more inclined to participate in the workforce if doing so offers a clear and tangible benefit over remaining unemployed.

This principle is known in economic and policy circles as the work incentive principle, which states that employment should always yield a financial advantage compared to receiving unemployment benefits. Roberto Iacono, an associate professor at the Norwegian University of Science and Technology (NTNU), has extensively studied the interplay between minimum wages and welfare provisions. His findings, published in PLOS, examine what happens when both the minimum wage and welfare benefits are reduced to very low levels. His research highlights the consequences of eroding the financial differential between working and claiming benefits—a differential essential to maintaining a motivated and engaged workforce.

In many developed countries, minimum wage laws are established not only to protect workers but to ensure that work remains an attractive option. By guaranteeing a baseline income, governments aim to keep more people within the labour market, thereby strengthening economic productivity and reducing dependency on state support. This aligns with the goals of the work incentive principle. When people who are capable of working see that their efforts will be financially rewarded, they are more likely to remain employed. From a macroeconomic perspective, this promotes a healthier and more resilient economy, thereby reducing the long-term strain on public resources.

However, the picture is not always so straightforward. One major limitation of the work incentive principle is that it can fail to account for those who genuinely cannot work due to illness, disability, or other barriers. When the financial advantages of working are preserved by keeping unemployment benefits extremely low, individuals who are unable to participate in the workforce may find themselves living in poverty. Thus, while the principle may work well in theory, in practice, it requires careful balancing to ensure that no vulnerable group is left behind. Social equity must be considered alongside economic efficiency in the formulation of wage and welfare policies.

A significant concern raised by Iacono’s research is what happens when the financial difference between low-paid work and welfare becomes negligible. In such a situation, the incentive to work disappears. If the minimum wage is set too low, particularly in comparison to subsistence-level welfare benefits, people may rationally choose not to work at all. This scenario is counterproductive to the very aims of the policy. As Iacono points out, when neither option offers a path beyond bare survival, the work incentive principle effectively collapses. For the principle to function, wages must be not only above benefit levels, but consistently above what is required to make ends meet.

The broader implications of these findings are especially relevant for policymakers across the developed world. While many countries continue to uphold welfare systems designed to catch those who fall through the cracks, they often do so in tandem with stagnant or insufficient minimum wages. This creates a fragile equilibrium in which the value of work is eroded over time. Iacono’s research presents a compelling argument that societies cannot rely solely on low wages to sustain high employment. If work is to remain a viable and desirable option, it must offer more than the mere avoidance of poverty—it must provide security, dignity, and the hope of progress. This, ultimately, is the only sustainable foundation for an inclusive and active workforce.

More information: Roberto Iacono, The Welfare versus Work Paradox, PLOS One. DOI: 10.1371/journal.pone.0321564

Journal information: PLOS One Provided by Norwegian University of Science and Technology

Visible Service Efforts May Counteract Tip Fatigue, Research Indicates

Leave a Reply

As tipping prompts become increasingly common in establishments where gratuities were once unheard of—such as fast-food counters, coffee shops, bakeries, and even self-service kiosks—consumers are beginning to express growing dissatisfaction with the practice. In many of these cases, customers are being asked to tip before any service has been delivered, contributing to a phenomenon widely referred to as “tipping fatigue” or “tipflation.” The result, according to a new study, is a noticeable shift in public sentiment: many people are growing weary of being asked to reward service that hasn’t yet occurred.

“Businesses should seriously consider whether they want to offer that tipping request,” cautioned Ruiying Cai, an assistant professor at Washington State University’s Carson College of Business and a co-author of the newly published research in the International Journal of Hospitality Management. “We know that down the road it might hurt the business because customers generally don’t like it.” Her comments echo the broader concern that routine digital prompts for tips—particularly those that are automatic or poorly timed—may erode consumer satisfaction and loyalty over time.

The study, authored by Cai in collaboration with hospitality scholars Demi Shenrui Deng of Auburn University and Lu Lu of Temple University, offers new empirical insights into how consumers react to tipping requests in what the researchers term “emerging tipping contexts.” These include businesses where tipping was not previously customary but has become increasingly common due to the rise of digital point-of-sale systems and shifts in consumer behaviour during the COVID-19 pandemic, when many people were more inclined to support frontline workers.

To explore these reactions, the researchers conducted two scenario-based experiments involving over 700 participants recruited through Prolific, a widely used online crowdsourcing platform for behavioural studies. In the first experiment, 320 respondents were asked to consider a hypothetical tipping situation in a coffee shop, focusing on whether an employee was physically present during the tipping request. Interestingly, while the presence of staff had no significant impact on the tipping decision, participants consistently reported more negative emotions and lower satisfaction when prompted for a tip, suggesting that the request itself—especially when made too early—can provoke discomfort and buyer’s remorse.

The second experiment, which involved 414 participants, explored the effects of timing and visibility. Specifically, it compared customer reactions when tipping was requested either before or after service, and whether any service effort was visible. Results revealed that tipping requests made before service were generally perceived more negatively, triggering emotional resistance and reducing the likelihood that customers would feel the tip was justified. However, when service efforts were made visible—such as through active engagement, attentiveness, or tangible service gestures—customer satisfaction improved, even in the presence of a tipping prompt.

Cai summarised this key takeaway succinctly: “Showcase the effort you have provided. Ensure it’s visible to customers. That can alleviate the negative feelings about a tipping request.” This insight provides a practical pathway forward for businesses navigating the challenge of integrating tipping into their customer interactions without alienating patrons. By making their labour and attentiveness more apparent—rather than relying on passive or automated systems—service providers may be able to reframe the tipping experience as more justified and rewarding for the customer.

The genesis of the research was, fittingly, an informal conversation at a professional conference, where Cai and her co-authors—both of whom earned their PhDs at Washington State University—shared their mutual frustrations with the ubiquity of tip prompts. That casual chat evolved into a formal investigation, reflecting a shared curiosity about the behavioural and emotional ramifications of this growing trend in consumer service culture.

While the current findings offer compelling evidence that both the timing of tip requests and the visibility of service effort influence customer satisfaction, the authors also emphasise the need for further study. Additional experiments across different demographics, industries, and cultural settings could deepen our understanding of how to deploy gratuity prompts effectively or whether to use them at all in specific contexts. Nevertheless, the message from this early research is clear: if businesses wish to maintain goodwill and avoid turning customers away, they must tread carefully when deciding how and when to ask for tips—and above all, make their service impossible to ignore.

More information: Ruiying Cai et al, Rethinking tipping request: Examining consumer reactions in emerging tipping contexts, International Journal of Hospitality Management. DOI: 10.1016/j.ijhm.2025.104221

Journal information: International Journal of Hospitality Management Provided by Washington State University

MSU Research Reveals How 2025 Tariffs Disrupted Global Supply Chains

Leave a Reply

In the wake of the most extensive series of U.S. tariff increases since the Great Depression, a newly published study from Michigan State University sheds light on how the 2025 trade shocks are reverberating through global supply chains. Featured in the Journal of Supply Chain Management, the research provides a timely theoretical framework designed to help both scholars and policymakers navigate an increasingly chaotic and unpredictable trading environment. As waves of tariffs were imposed, repealed, and reinstated within months, firms around the world were left scrambling to respond to a trade landscape marked not only by protectionism but by profound uncertainty.

“Unlike earlier trade disputes, the 2025 actions unfolded with extreme volatility,” said Professor Jason Miller, the study’s lead author and the Eli Broad Endowed Professor in Supply Chain Management at MSU. “We wanted to build a conceptual model that could explain how firms are reacting — and equip others to anticipate what may come next.” The framework developed by the researchers identifies three main categories of costs that shape how businesses react to such shocks: adjustment costs associated with shifting operations; transaction costs from renegotiating contracts or sourcing alternatives; and opportunity costs stemming from decisions made either too hastily or too late. These costs, the study argues, have a profound impact on a firm’s ability to relocate suppliers, change production sites, or pass higher prices on to consumers.

One of the study’s most notable contributions is its incorporation of uncertainty and potential misconduct into the traditional theoretical discourse around trade. In contrast to previous trade conflicts, where policy direction was more linear and stable, the rapid shifts of 2025 left companies unable to rely on long-term planning. Many were forced to prepare multiple contingency plans, unsure whether the tariffs would remain, be adjusted, or disappear altogether. “Some large importers had at least five, even ten, operational strategies sketched out simultaneously,” Miller observed, highlighting just how unstable the commercial environment had become.

While the research is grounded in supply chain management theory, its authors are keen to emphasise the broader human and societal impact of such disruption. Co-author Professor David Ortega, who holds the Noel W. Stuckman Chair in Food Economics and Policy at MSU, pointed to imported foodstuffs as particularly vulnerable. “When trade policy is unpredictable, food prices can climb sharply,” Ortega said. “This hits lower-income households the hardest, especially when products like bananas or pineapples — which are not grown domestically in significant quantities — offer no easy substitutes.” The ripple effects extend beyond consumers, he added, influencing agricultural production choices and triggering retaliatory measures from trade partners.

In addition to its theoretical elements, the paper offers practical guidance for future research, presenting a curated set of data sources to support empirical studies. These include firm-level import and export records, retail price indexes, and sector-specific trade data. The authors encourage analysis of how and when companies relocate sourcing, the extent to which tariffs are passed through to retail prices, how firms front-load inventory ahead of tariff changes, and where misconduct—such as mislabeling a product’s origin—may occur. This toolkit is intended to empower researchers and practitioners to monitor and assess the ongoing transformation of global commerce with greater precision.

Co-author Yao “Henry” Jin, an associate professor at Miami University’s Farmer School of Business, stressed the broader relevance of the framework. “The global supply chain we’ve known — one built on the assumption of relatively free and stable trade — is eroding,” he said. “Our work aims to help both industry and academia navigate this uncertain new world.” As Professor Miller concluded, the implications stretch far beyond academic interest. “These trade disruptions affect everyone, from government officials and business leaders to ordinary consumers,” he said. “Understanding how and why supply chains respond the way they do is critical if we’re to manage the consequences of such shocks more effectively.”

More information: Jason Miller et al, Shock and Awe: A Theoretical Framework and Data Sources for Studying the Impact of 2025 Tariffs on Global Supply Chains, Journal of Supply Chain Management. DOI: 10.1111/jscm.12350

Journal information: Journal of Supply Chain Management Provided by Michigan State University

Raising the Stakes After Falling Short: Strategic Inflation of Earnings Targets

Leave a Reply

When firms fall short of their earnings forecasts, the intuitive response might be to adopt a more conservative approach—lowering expectations, rebuilding credibility, and regaining investor trust gradually. Yet in reality, many companies opt for the opposite strategy. Instead of tempering their outlook, they announce even more ambitious goals for the following period. This counterintuitive behaviour is at the heart of a new study led by Professor Jungwon Min of Inha University in South Korea, alongside Professor Hyonok Kim of Tokyo Keizai University and Professor Konari Uchida of Waseda University’s Graduate School of Business and Finance in Japan. Their research, published online in the Review of Managerial Science on June 3, 2025, reveals how firms strategically inflate forward-looking projections to influence stakeholder perceptions following underperformance.

The study draws on an extensive dataset of 3,273 publicly traded Japanese firms spanning 12 years. The findings demonstrate a consistent and calculated trend: companies that miss their earnings targets frequently respond by issuing significantly overestimated goals for the subsequent reporting period. Roughly 65% of these optimistic forecasts are ultimately not met, indicating that the goals are not merely aspirational but are likely set with full awareness of their improbability. Nonetheless, this strategy often yields short-term rewards. “Despite recent target misses, stock prices respond positively to these overestimated targets,” noted Professor Uchida, underscoring the surprising effectiveness of this manoeuvre in the immediate term.

This pattern is best understood through the lens of organisational impression management—a concept describing how entities craft their image to external audiences, particularly after setbacks. In Japan, publicly listed firms are required to publish annual earnings forecasts, offering researchers a unique opportunity to analyse how projections evolve in direct response to previous performance. The study found that firms often follow a disappointing earnings report with a bold new target, linking the act of overpromising directly to prior failure. In this light, inflated forecasts serve as a reputational buffer, designed to maintain investor optimism and market confidence.

However, the tendency to inflate expectations is not universal. The study identifies several moderating factors that can restrain firms from adopting overly ambitious targets. For instance, the presence of large institutional investors and financial analysts exerts a disciplining effect, as these actors are better equipped to detect patterns of overstatement and demand accountability. Moreover, firms with female directors on their boards are less likely to issue inflated earnings projections. The authors attribute this to greater regulatory compliance and ethical conservatism typically associated with female leadership, which can temper risky or manipulative forecasting practices. This finding highlights the role of governance in mitigating short-sighted corporate behaviour.

Over time, repeated failures to meet inflated targets begin to erode stakeholder trust. As investors become more attuned to the pattern of unmet projections, the market response shifts from supportive to sceptical. “As target misses accumulate, investors may begin to recognise the pattern of biased estimates from firms with repeated earnings shortfalls,” said Uchida. This growing awareness introduces a feedback mechanism that can curtail the efficacy of inflated forecasting. The initial benefit of enhanced perception gives way to reputational damage, market penalties, and increased scrutiny, forcing firms to adopt more realistic expectations if they wish to maintain credibility.

At a deeper level, the study challenges the notion that corporate targets are always the product of data-driven analysis or shaped by peer comparisons. “We also find evidence that firms actively shape their performance targets rather than passively accepting those dictated by past performance or peer benchmarks,” Uchida explained. In other words, these projections are not mere reflections of operational reality; they are carefully constructed narratives designed to influence how the firm is perceived. This insight complicates our understanding of corporate disclosures, suggesting that they may serve strategic rather than informational purposes, especially in contexts of reputational repair.

Ultimately, this research offers a cautionary perspective on the strategic use of forward-looking statements. While ambitious targets may temporarily boost stock prices, their effectiveness hinges on the market’s continued willingness to believe in them. As repeated disappointment sets in, that goodwill can dissipate, turning what was once a clever short-term tactic into a long-term liability. In an environment where market sentiment can be as crucial as financial fundamentals, the line between confidence and deception becomes perilously thin. This study urges investors, regulators, and analysts alike to consider not just what companies promise, but why and how often they fail to deliver.

More information: Hyonok Kim et al, Performance target setting for organizational impression management: overestimated earnings targets after previous target misses, Review of Managerial Science. DOI: 10.1007/s11846-025-00910-0

Journal information: Review of Managerial Science Provided by Waseda University

New Study Reveals Strategic Motives Behind Accounting Standards

Leave a Reply

A recent study by Dr Heylel-li Biton of the Hebrew University Business School offers fresh insight into a long-standing question in international finance: why do foreign firms listed on U.S. stock exchanges opt for one accounting standard over another? Rather than simply conforming to regulatory norms in their listing jurisdiction, these companies make deliberate, strategic choices when selecting between International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (U.S. GAAP).

Published in The International Journal of Accounting, the research investigates the underlying motivations of U.S.-listed foreign private issuers (FPIs) in their adoption of accounting standards. In contrast to previous studies, which tended to focus on regulatory alignment or investor familiarity, Dr Biton’s work emphasises two pivotal yet often overlooked considerations: the desire for flexibility in financial reporting and the relative burden of compliance costs.

The findings reveal a nuanced calculus behind these firms’ decisions. Many FPIs lean towards IFRS when their financial reporting would benefit from the standard’s broader range of presentation options across core elements such as assets, liabilities, revenue, and expenses. In such cases, U.S. GAAP is often avoided due to its more rigid framework.
However, the study also finds that some firms prefer U.S. GAAP precisely because it reduces compliance complexity and associated costs. This advantage was especially relevant before the 2007 elimination of SEC reconciliation requirements for IFRS filers.

“This research demonstrates that selecting an accounting regime is far from a perfunctory regulatory choice,” said Dr Biton. “It is, in fact, a strategic decision informed by operational priorities, financial disclosure preferences, and cost efficiency. These findings have important implications not only for understanding firm behaviour but also for shaping more adaptive regulatory responses.”

To underpin her analysis, Dr Biton drew upon a comprehensive dataset encompassing 811 firms and 1,214 individual accounting regime selections between 1995 and 2015. Her methodological innovation—a scoring system to quantify the degree of reporting flexibility required by firms—was paired with data on compliance costs to produce a multidimensional understanding of the trade-offs involved in selecting a regime.

The implications of the study extend well beyond academia. For regulators and standard-setters, these insights shed light on the real-world considerations firms face when navigating transnational accounting environments. For investors, the findings shed light on how accounting policy choices may signal strategic priorities or constraints. For corporate decision-makers, the research underscores the importance of aligning financial reporting strategies with broader business objectives.

In an era marked by increasing regulatory complexity and global capital mobility, Dr Biton’s study contributes a timely and practical perspective to the ongoing dialogue on international accounting standards. It reaffirms that behind every accounting choice lies a strategic intent—one that bridges financial disclosure and the evolving realities of cross-border corporate governance.

More information: Heylel-li Biton, Accounting Regime Selection, The International Journal of Accounting. DOI: 10.1142/S1094406025430036

Journal information: The International Journal of Accounting Provided by The Hebrew University of Jerusalem

Beyond Demographics: Exploring the Economic Trajectories of India and China

Leave a Reply

In 2023, India officially overtook China to become the most populous country in the world—a landmark demographic milestone that is expected to persist throughout the remainder of the 21st century. This shift has sparked renewed debate about whether India might not only surpass China in population but also terms of socio-economic influence and global economic clout. A recent study conducted by researchers at the International Institute for Applied Systems Analysis (IIASA) offers a nuanced perspective on this question, exploring whether India’s demographic momentum can be translated into genuine economic power in the coming decades.

While sheer population size often captures the headlines, the researchers argue that a more meaningful measure lies in the concept of productivity-weighted labour force (PWLF). This metric accounts not merely for the number of working-age individuals but for the qualitative dimensions of human capital—particularly educational attainment and the overall quality of education. By focusing on these deeper indicators, the study challenges the conventional view that equates demographic youthfulness with economic superiority. Instead of relying on age structure or headcount alone, the PWLF framework offers a more refined lens for understanding labour force potential and future economic trajectories.

The study, published in Population Research and Policy Review, concludes that China is likely to retain a substantial economic lead for much of the next fifty years. This advantage is rooted not in the number of its workers but in their higher levels of education and greater workforce participation. Even as China’s population begins to shrink and age more rapidly, its educated workforce—shaped by decades of investment in schooling and infrastructure—continues to yield dividends. The results complicate popular narratives that depict China’s demographic decline as imminent and inevitable, as well as India’s demographic ascent as unambiguously beneficial.

One of the key messages from the study is that demographics alone do not determine an economy’s destiny. As IIASA researcher and co-author Guillaume Marois aptly puts it, “It’s not about how many people you have; it’s about what they can do.” His observation cuts to the heart of the issue: without commensurate investments in human capital, even a large and youthful population may fail to translate into economic strength. Policies aimed solely at increasing fertility rates—such as incentives for larger families—are insufficient and potentially misguided if they are not accompanied by strategies to expand opportunities and capacity for all citizens.

India, in particular, stands at a crossroads. Its vast and growing youth population does hold potential for a demographic dividend, but only if structural barriers are addressed with urgency. The study highlights the importance of sustained and inclusive investment in education, particularly for girls and young women, alongside initiatives to address the country’s persistently low female labour force participation. Without substantial progress on these fronts, the sheer size of India’s population may become more of a burden than a blessing, stifling its aspirations for economic parity with China.

On the other hand, China faces the challenge of maintaining economic dynamism amid a rapidly ageing population. The study suggests several strategies the country could adopt to mitigate the impact of demographic decline, including raising the retirement age, increasing reliance on automation, and enhancing workforce productivity. In essence, while India’s challenge is to harness its demographic momentum through inclusive development, China’s task is to preserve its existing economic strength through adaptation and resilience.

Ultimately, the study reinforces a broader global truth: that the future of economic growth will be shaped less by raw numbers and more by the cultivation of human potential. For both India and China—and indeed for all nations—the strategic priority must be to foster education, promote gender equality, ensure social protections, and build inclusive, productive labour markets. As Marois concludes, “The demographic race between giants will be determined more by human capital development than total population size.” It is a powerful reminder that in the twenty-first century, the engine of prosperity will not be demography alone but the dignity, capacity, and agency of people.

More information: Guillaume Marois et al, The Demographic Race between India and China, Population Research and Policy Review. DOI: 10.1007/s11113-025-09966-y

Journal information: Population Research and Policy Review Provided by International Institute for Applied Systems Analysis

Is Your Colleague a Snoop? BU Study Shows Workplace Spying Raises Stress Levels

Leave a Reply

Nosy colleagues are a nearly universal fixture in the modern workplace—those individuals who peer over your shoulder at your screen, linger too long during conversations between others or ask prying questions that stray into uncomfortable territory. Encountering them can create a subtle yet persistent sense of unease. Many workers instinctively withdraw or avoid engagement, slipping away to another room or pretending to be preoccupied when the office’s resident busybody comes near. While some level of curiosity is natural, distinguishing between friendly interest and genuine intrusion often proves challenging, especially in workplaces where social interaction is encouraged or even expected.

This grey area—where curiosity borders on invasion—is precisely what has long challenged researchers interested in workplace behaviour and employee privacy. Some people are more naturally open about their lives, while others maintain firm boundaries. Yet until recently, organisational psychologists lacked a clear framework to study nosiness as a distinct phenomenon. Dr Richard A. Currie of Boston University has sought to fill this gap. With colleague Dr Mark G. Ehrhart of the University of Central Florida, Currie conducted a series of four studies involving surveys of 350 young adults, seeking to understand how nosiness manifests in the workplace, how often it occurs, and what effects it may have on individuals and teams.

Through their research, Currie and Ehrhart defined nosiness as “employees’ intrusive attempts to obtain private information from others at work.” They developed a measurable scale for workplace nosiness, identifying core behaviours such as excessive questioning, unsolicited gossip, and invasive probing into both professional and personal matters. Importantly, they distinguished nosiness from more neutral or positive traits, such as social curiosity, arguing that nosiness carries inherently negative implications. According to their findings, roughly a third of participants witnessed nosy behaviour weekly, while another third observed it monthly—suggesting this is far from a rare or harmless quirk.

What makes nosiness particularly insidious, the researchers argue, is its impact on workplace dynamics and individual well-being. Employees who feel their boundaries are being violated often react by withdrawing—sharing less information, avoiding collaboration, and even concealing knowledge from those perceived as intrusive. This pattern, documented in the latter studies of Currie’s project, correlates with higher stress levels, lower job satisfaction, and diminished team performance. Moreover, workplaces perceived to be competitive—where colleagues constantly jostle for recognition or advancement—tended to see more frequent nosy behaviour, suggesting that informational intrusion may be used as a tactic to gain an edge.

The research also uncovered generational differences in how nosiness is both practised and perceived. Younger workers were more frequently seen engaging in nosy behaviour than their older colleagues. This raises intriguing questions about evolving norms around privacy and authenticity, particularly in an era that encourages employees to “bring their whole selves to work.” While this ideal may promote openness and emotional honesty, it can also blur boundaries and lead to a sense of obligation to disclose more than one is comfortable with. Currie reflects on this tension, observing that the pressure to be authentic may inadvertently lead to burnout or stress, particularly if workers feel they have no safe space for privacy and confidentiality.

Currie’s work has practical applications beyond academic insight. In the hospitality sector, for example, he found that supervisor nosiness—especially when it involved questions about personal lives—was linked to reduced perceptions of fairness and diminished knowledge sharing among frontline staff. However, when supervisors were seen as authentic and trustworthy, the adverse effects were softened, illustrating the role that leadership style plays in moderating social boundaries. Currie has since incorporated these lessons into his teaching, encouraging students to reflect on their own biases and information-seeking behaviour. Though he acknowledges that curiosity is natural and even beneficial in moderation, he emphasises the importance of respecting others’ desire for privacy. “Sometimes,” he says, “the most respectful thing we can do is not to ask.”

More information: Richard A. Currie et al, Mind Your Own Business: Developing and Validating the Workplace Nosiness Scale, Journal of Business and Psychology. DOI: 10.1007/s10869-025-10018-7

Journal information: Journal of Business and Psychology Provided by Boston University

Thriving at Work: Are Grit and Talent Enough for Minority Professionals?

Leave a Reply

After reviewing 337 peer-reviewed journal articles exploring disparities in career success between minority and non-minority groups, Dr Melika Shirmohammadi, Assistant Professor of Human Resource Development, found a recurring pattern: individuals from minority backgrounds are frequently perceived as ‘outsiders’ in the workplace. This outsider status, she argues, makes them more susceptible to what she calls complex visibility. This condition shapes how others perceive these individuals and how such perceptions influence their access to critical career advancement resources such as mentorship, networks, role models, and professional development opportunities. Her findings challenge the notion that success is solely a matter of talent and diligence, instead pointing to subtle, systemic forces at play.

“Career success isn’t just about hard work or talent; people also face challenges like being judged unfairly, overlooked, or pressured to hide who they are,” Shirmohammadi explained in her article published in the Journal of Management. These added burdens result in unequal access to professional opportunities, which in turn contributes to lower career outcomes for minority groups. Shirmohammadi’s research focuses on four historically marginalised populations: women, racial and ethnic minorities, individuals with disabilities, and the LGBTQ+ community. Across all four, she found that the way they are seen—or not seen—has tangible consequences for their progression in the workplace.

The framework of complex visibility developed by Shirmohammadi encompasses three overlapping dynamics: hyper-visibility, invisibility, and managed visibility. Hyper-visibility occurs when a person stands out, often in ways tied to stereotypes or expectations—such as being the only Black employee in a department. Invisibility, by contrast, manifests when individuals feel their perspectives or contributions are overlooked or undervalued. Managed visibility involves a conscious effort to moderate one’s identity to fit into dominant norms—for instance, modifying dress, speech, or behaviour in ways that conceal cultural or personal identity markers. These dimensions create a paradox in which individuals may simultaneously feel exposed and unseen.

For example, someone who is hyper-visible due to their identity—say, a woman of colour in a leadership team otherwise dominated by white men—may simultaneously feel her voice goes unheard during key decision-making processes. This experience of simultaneous visibility and erasure can take a psychological toll, influencing not only one’s sense of belonging but also one’s ability to use available resources effectively. Similarly, members of the LGBTQ+ community or individuals with disabilities may manage their visibility by concealing aspects of themselves to avoid discrimination, resulting in fewer opportunities to connect with mentors or participate in professional development initiatives authentically.

The broader statistical picture confirms these concerns. Shirmohammadi’s analysis reveals that minority groups continue to be significantly underrepresented in senior leadership roles. Despite growing awareness and policy efforts, women still make up only around 9% of CEOs and 30% of board members across Europe and North America. Political representation follows a similar trend: only 29 countries currently have a woman as head of state or government, and just 23.3% of ministerial positions are held by women. Racial and ethnic minorities fare even worse, with boardroom representation standing at just 19% in the United States, 12.5% in the UK, and 9% in Australia, despite these groups comprising large portions of the general population. For LGBTQ+ individuals and people with disabilities, accurate representation is even harder to gauge, as many feel unsafe disclosing such identities in the workplace.

Looking ahead, Shirmohammadi advocates for intentional organisational change grounded in a deeper understanding of visibility and its implications. “Organisational decision-makers should develop a comprehensive understanding of the complex visibility influencing access to career advancement resources in their context,” she urges. To mitigate disparities, she recommends proactive interventions that facilitate equitable access to mentorship, networks, role models, training, and workplace support systems. Rather than placing the burden on individuals to navigate biased structures, she advocates for institutions to reform those structures so that all professionals, regardless of their identity, have equal opportunities to thrive.

More information: Melika Shirmohammadi et al, Career Success and Minority Status: A Review and Conceptual Framework, Journal of Management. DOI: 10.1177/01492063251342190

Journal information: Journal of Management Provided by University of Houston

Mounting Systemic Threats in US Leveraged Loan Market Could Spark Next Financial Crisis, Study Warns

Leave a Reply

A recent study by the University of Bath uncovered troubling distortions in the U.S. leveraged loan market, raising concerns that a new financial crisis could be on the horizon. According to the research, loans with high levels of leverage are being systematically underpriced, particularly by non-bank lenders—often referred to as “shadow banks”—that operate outside the scope of traditional financial regulation. This mispricing, the authors argue, poses a systemic risk that may go undetected until it manifests in severe economic instability.

Leveraged loans, typically extended to borrowers with substantial debt burdens or subpar credit histories, have seen default rates soar to their highest levels in four years. Data from the Financial Times in December 2024 indicated that the U.S. leveraged loan default rate had climbed to 7.2%, marking its highest point since the end of 2020. Many indebted companies are turning to distressed debt exchanges as a last-ditch effort to avoid bankruptcy. These arrangements often erode investor recovery rates, underscoring the fragility and precariousness of this market segment.

Dr Ru Xie, Associate Professor of Finance at the University of Bath’s School of Management and lead author of the study titled Leveraged Loans: Is High Leverage Risk Priced In?, emphasised that the risk associated with leverage is not being adequately priced in—especially by non-bank financial institutions. Since 2014, the pricing of leverage risk has deteriorated markedly, with the sharpest decline evident among the riskiest borrowers. These are typically clients of shadow lenders who issue loans with minimal protective covenants and then package these loans into securities to be sold on secondary markets. The diminished risk premium, particularly for the most vulnerable segments, suggests a breakdown in how financial markets evaluate and compensate for credit risk.

The study portrays a market landscape reshaped by structural changes over the past decade. The rapid ascent of non-bank lenders, the explosive growth of collateralised loan obligations (CLOs), and the proliferation of covenant-lite loan structures have created a breeding ground for systemic vulnerability. Unlike traditional banks, non-bank lenders are not subject to the same rigorous oversight, yet they now originate a significant share of new leveraged loans. This decentralisation of credit risk, with weak documentation standards and limited transparency, leaves regulators in a difficult position—largely unable to see or address the full extent of risk accumulating within the system.

Professor David Newton, co-author of the report, warned that these risks should not be viewed solely through a credit lens. “With today’s heightened geopolitical tensions—from global trade disruptions to military conflicts—and continued market volatility, the mispricing of leverage risk takes on macroprudential significance,” he said. “Should a wave of distress emerge among leveraged borrowers—particularly those financed by shadow banks—we could witness a new credit or banking crisis that escapes regulatory detection until it is too late.” His remarks highlight the growing divide between the visible portions of the financial system and the opaque, complex web of lending arrangements that now operate primarily out of view.

The researchers identified two primary forces driving this decline in risk sensitivity. First, the growing use of covenant-lite loans, which lack the performance-based protections traditionally embedded in lending agreements, significantly increases information asymmetry. With fewer covenants, banks and other lenders have reduced incentives or capacity to monitor borrower behaviour, especially when loans are bundled into CLOs and sold off in tranches. Second, the increasing securitisation of these loans further weakens the alignment of interest between originators and investors. As the risk is passed downstream to third-party investors, the original lenders retain little incentive to uphold rigorous underwriting standards.

In light of these findings, the authors call for more robust regulatory scrutiny of non-bank lenders and the structures they employ. They argue that opaque securitisation practices, coupled with weak documentation and loose lending standards, have enabled a build-up of systemic risk that traditional oversight mechanisms are ill-equipped to address. Global financial authorities, including the European Central Bank and the Bank of England, have recently voiced similar concerns about shadow banking and the unchecked expansion of leveraged lending. The University of Bath study adds an urgent academic perspective to this growing chorus, underscoring the need for coordinated policy action before the next crisis takes root.

The research presents a sobering assessment of the leveraged loan market’s trajectory in the United States. It suggests that without meaningful reform, the current path of underpricing leverage risk—driven by shadow lending, weakened oversight, and a securitisation-fuelled boom—could culminate in a destabilising financial event. As policymakers, investors, and regulators grapple with mounting economic uncertainty and complex global risks, this study serves as both a warning and a call to pre-emptively address the structural vulnerabilities now embedded within modern credit markets.

More information: Ru Xie et al, Leveraged loans: is high leverage risk priced in?, Inderscience Online Journals. DOI: 10.1504/IJBAAF.2025.146550

Journal information: Inderscience Online Journals Provided by University of Bath

Collaborate with Rivals to Influence Tech Standards

Leave a Reply

In the 1970s and 1980s, home movie watchers faced a dilemma between two competing video cassette formats: Sony’s Betamax and JVC’s VHS. Though Betamax was often seen as technically superior, VHS ultimately triumphed. This success was mainly due to JVC’s decision to partner with a wider network of film and television producers, illustrating how broad collaboration can help determine the prevailing standard in a technological showdown. This so-called “format war” became a defining case study of how ecosystems of industry players influence technological adoption.

Today, such format battles continue in more advanced arenas—Apple’s iPhone versus Android or Nintendo versus PlayStation. However, modern technology firms have grown more mindful of the need to establish compatibility standards that serve an entire industry ecosystem rather than simply advancing the interests of the original inventors or patent holders. These standards are not just about technical superiority but also about ensuring a broad enough support base across companies, which can help embed technology more deeply into the market.

Recent research by Ramkumar Ranganathan, an associate professor at Texas McCombs, sheds light on how tech companies now strategically influence the shaping of such standards. His work shows that firms often cooperate and compete within the same space—particularly on standard-setting committees. These committees, composed of representatives from multiple companies, negotiate the technical specifications that become industry norms. Each participant seeks to promote their interests while coordinating with others to arrive at shared rules.

One of the case studies examined in this research is the competition between Wi-Fi and WiMAX, two rival standards for wireless internet. Wi-Fi eventually prevailed, but the path to dominance involved complex interactions among various players, from computer and router manufacturers to telecom firms and chipset developers. Ranganathan and his co-authors, John Chen and Anindya Ghosh, analysed over 40,000 technical documents and 18,000 comments from IEEE standard-setting committees dating from 1996 to 2011. Their findings reveal that success often depends on whether a company’s proposal is well-positioned within the broader technological architecture and how well it connects to others in the ecosystem.

The researchers identified two key types of resources that firms use to shape standards: patents and partnerships. Patents can grant companies a strong foundation from which others can build, lending credibility to their technical proposals. However, an abundance of patents without robust partnerships can be problematic. Other companies may be wary of engaging with a patent-heavy firm, fearing it might monopolise shared value. On the other hand, partnerships alone are not enough—if a company’s core technology is misaligned with its partners’ strategic direction, then its influence is curtailed despite its connections.

Another compelling insight from the study concerns the flexibility of potential partnerships. Companies not tied down by rigid existing alliances may have more room to manoeuvre. By forming fresh partnerships aligned with evolving standards, they may find it easier to influence the core technology. Such firms are more likely to have their proposals accepted by standards committees because their contributions are perceived as beneficial to a broader swathe of the ecosystem, not just their commercial interests.

Ultimately, Ranganathan’s research highlights the principle of interdependence in shaping technology standards. The days when a single firm could impose a proprietary standard unilaterally are gone. Instead, influence depends on being embedded within a cooperative network of stakeholders collectively invested in the outcome. Standards committees can issue technical specifications but cannot compel companies to adopt them in real-world products. As such, the actual adoption of standards is determined in the marketplace—by consumers, manufacturers, and complementary partners—making collaboration and ecosystem thinking essential for technological success.

More information: Ram Ranganathan et al, Shaping Ecosystem Rules: Complementarities, Interdependencies, and Firms’ Success in Coordinating Ecosystems Via Standard-Setting, Organization Science. DOI: 10.1287/orsc.2022.16136

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