Ivo D. Tafkov

Determinants of Investor Demand for Cross-Listed Firms

By focusing on the decisions of investors to invest in cross-listed stocks, this paper presents new evidence on why we observe striking differences in the percentage of trade in foreign markets for cross-listed stocks. With a large sample of Toronto Stock Exchange (TSX) stocks cross-listed in the U.S. and Canada, we document the effect of investor recognition and risk characteristics on the distribution of trading volume. Firms that are more visible to American investors are traded more heavily in the U.S. At the same time, firms that offer diverse risk characteristics are attractive to Americans. While investors understand the benefits of international diversification, as they are attracted to stocks that are different (e.g., the stock of small firms with few assets in the U.S.), they also seek stocks that provide them with high returns.

Managerial Discretion and Task Interdependence in Teams

This study investigates whether the effect of managerial discretion over team members’ compensation on team performance depends on task interdependence. Task interdependence reflects the degree to which the increase in team performance resulting from a team member’s effort depends on the efforts and skills of the other team members. Consistent with our predictions, we find that, regardless of task interdependence, managers use their discretion over compensation to differentiate team members’ compensations. However, the effect of this differentiation on team performance depends on task interdependence. Specifically, our results show that managerial discretion over compensation has a positive effect on team performance when task interdependence is absent and negative effect on team performance when task interdependence is present. The results also suggest that predicted effects of task interdependence become more pronounced when task interdependence goes up. Supplemental analysis reveals that differentiating compensation among team members through managerial discretion hurts coordination and helping behavior among them. Our results have practical implications for firms, which have flexibility in designing their incentive systems in a team environment, because we identify conditions under which the effectiveness of granting managers discretion over team compensation is likely to vary.

Bring the Noise, But Not the Funk: Does the Effect of Performance Measure Noise on Learning Depend on Whether the Learning is Experiential or Vicarious?

Strategic performance measurement systems facilitate strategic learning by providing managers with performance measures useful for evaluating strategic performance and identifying opportunities for improvement. However, a significant body of literature points to the conclusion that performance measure noise can be a critical barrier to strategic learning. Importantly, this literature has focused almost exclusively on experiential learning (i.e., learning from one’s own experience). In contrast, the modern firm often offers opportunities to learn from observing others’ actions and outcomes (i.e., vicarious learning). We use an experiment to examine whether the effects of performance measure noise on managers’ strategic learning depends on the type of learning (experiential versus vicarious). We predict and find performance measure noise has a more deleterious effect on strategic learning when such learning occurs experientially rather than vicariously. Specifically, we find experiential learners demonstrate less learning as performance measure noise increases, but vicarious learners show no such effect of performance measure noise. Consistent with our theory, additional analyses reveal experiential learners process performance measure outcome information more myopically than do vicarious learners, which hinders learning. Notably, our results demonstrate these differences can be quite profound, such that depending on the level of performance measure noise, vicarious learning may be superior or inferior to experiential learning. Collectively, our research suggests performance measure noise and learning type play important roles in the extent to which firms realize the decision-facilitating benefits of strategic performance measurement systems. In particular, given that much of the learning in modern organizations occurs vicariously, our findings suggest performance measure noise may not be as detrimental to strategic learning as previously thought.