Richard Borghesi

Corporate Socially Responsible Investments: CEO Altruism, Reputation, and Shareholder Interests

Corporate managers often invest in activities that are deemed to be socially responsible. In some instances, these investments enhance shareholder value. However, in other cases, altruistic managers or managers who privately benefit from the positive attention arising from these activities may choose to make socially responsible investments even if they are not value enhancing. Given this backdrop, we investigate the various factors that motivate firm managers to make socially responsible investments. We find that larger firms, firms with greater free cash flow, and higher advertising outlays demonstrate higher levels of corporate social responsibility (CSR). We also find that companies with stronger institutional ownership are less likely to invest in CSR — which casts doubt on the argument that these investments are designed to promote shareholder value. Consistent with the literature that explores how CEO personal attributes influence corporate decision making, we find that female CEOs, younger CEOs, and managers who donate to both Republican and Democratic parties are significantly more likely to invest in CSR. This latter result suggests that CSR investments may not be driven solely for altruistic reasons, but instead may be part of a broader strategy to create goodwill and/or help maintain good political relations. Finally, we find a strong positive connection between the level of media scrutiny surrounding the firm and its CEO, and the level of CSR investment. This finding suggests that media attention helps induce firms to make socially responsible investments.

The late-season bias: explaining the NFL's home-underdog effect

This article examines price efficiency and out-of-sample predictability in the NFL point-spread betting market. Our main contribution to the existing literature is the identification of a persistent increase in bias magnitude during the final few weeks of each season. We demonstrate that this anomaly causes the much-documented home-underdog effect. We also offer evidence that the limits of arbitrage have enabled this phenomenon to persist for decades. Finally, we use several regression models to confirm our univariate analysis and show that these models can be used to implement profitable betting strategies. The predictive models presented differ from those in the prior literature by taking into account both short-term and aggregate biases.

Weather biases in the NFL totals market

I examine outcome predictability in the National Football League totals betting market using data from the 1984 through 2004 seasons. Results suggest that while weather is an important determinant of scoring, the market does not accurately incorporate the effects of adverse conditions into totals bet prices. Specifically, I demonstrate that heat, wind and rain reduce point production, and provide evidence that bettors underestimate this effect. I also present a betting strategy that accounts for expected weather conditions and produces an out-of-sample win rate significantly above the 52.38% profitability threshold.

The Impact of the Disposition Effect on Asset Prices: Insight from the NBA

In this paper we examine the price movements of contracts that represent bets on NBA games and find that the disposition effect causes significant deviations between contract prices and values. The contracts under examination are listed on Tradesports, a prediction market which provides an ideal venue for testing this and other behavioral theories because of its asset properties, market structure, and the absence of the joint hypothesis problem. In our analysis, we forecast the projected final combined scores of both teams in a contest based on observed within-game scores and game time remaining. At all points in time throughout each game, mean future returns (measured as Ticks to Expiry) should be no different than zero. However, we find that contracts which have fallen off pace to exceed the stated contract total become overpriced and experience negative future returns. Likewise, we provide evidence that contracts on games in which teams are on pace to exceed the stated total become underpriced and experience significantly positive future returns. These findings are consistent with the disposition effect in which traders tend to hold losing positions to avoid realizing losses yet prematurely unwind winning positions to realize gains.

The Financial and Competitive Value of NCAA Basketball Recruits

In this article, we examine the value of high school basketball prospects, and results indicate that each five-star (four-star) recruit generates US

A Case Study in Sports Law Analytics: The Debate on Widespread Point Shaving

625,000 (US

Predicting First-Year Returns of Health Care IPOs

178,000) in marginal revenue for his university. Additionally, university academic donations are strongly related to basketball performance and five-star recruits bring in an additional US

Market frictions and overpriced favourites: evidence from arena football

5,800,000 in funding on average as a result of their contribution to team success. Calculations indicate that if five-star players were to be fairly compensated, their earnings would be approximately US

Employee political affiliation as a driver of corporate social responsibility intensity

613,000. Four-star prospects would be paid roughly US

Political Affiliation and Pay Slice: Do Blue CEOs Accept Less Green?

166,000, three-star recruits US