Corporate aging and investment decisions

Paper I: Corporate aging and internal resource allocation Abstract Various observers argue that established firms are at a disadvantage in pursuing new growth opportunities. In this paper, we provide systematic evidence that established firms allocate fewer resources to high-growth lines of business. However, we find no evidence of inefficient resource allocation in established firms. Redirecting resources from high-growth to low-growth lines of business does not result in lower profitability. Also, resource allocation towards new growth opportunities does not increase when managers of established firms are exposed to takeover and product market threats. Rather, it seems that conservative resource allocation strategies are driven by pressures to meet investors’ expectations. Our empirical evidence, thus, favors the hypothesis that established firms wisely choose to allocate fewer resources to new growth opportunities as external pressures force them to focus on efficiency rather than novelty (Holmström 1989). Paper II: Corporate aging and asset sales Abstract This paper asks whether divestitures are motivated by strategic considerations about the scope of the firm’s activities. Limited managerial capacity implies that exploiting core competences becomes comparatively more attractive than exploring new growth opportunities as firms mature. Divestitures help stablished firms free management time and increase the focus on core competences. The testable implication of this attention hypothesis is that established firms are the main sellers of assets, that their divestiture activity increases when managerial capacity is scarcer, that they sell non-core activities, and that they return the divestiture proceeds to the providers of capital instead of reinvesting them in the firm. We find strong empirical support for these predictions. Paper III: Corporate aging and lobbying expenditures Abstract Creative destruction forces constantly challenge established firms, especially in competitive markets. This paper asks whether corporate lobbying is a competitive weapon of established firms to counteract the decline in rents over time. We find a statistically and economically significant positive relation between firm age and lobbying expenditures. Moreover, the documented age-effect is weaker when firms have unique products or operate in concentrated product markets. To address endogeneity, we use industry distress as an exogenous nonlegislative shock to future rents and show that established firms are relatively more likely to lobby when in distress. Finally, we provide empirical evidence that corporate lobbying efforts by established firms forestall the creative destruction process. In sum, our findings suggest that corporate lobbying is a competitive weapon of established firms to retain profitability in competitive environments.

Flood triggering in Switzerland: the role of daily to monthly preceding precipitation

Determining the role of different precipitation periods for peak discharge generation is crucial for both projecting future changes in flood probability and for short- and medium-range flood forecasting. In this study, catchment-averaged daily precipitation time series are analyzed prior to annual peak discharge events (floods) in Switzerland. The high number of floods considered – more than 4000 events from 101 catchments have been analyzed – allows to derive significant information about the role of antecedent precipitation for peak discharge generation. Based on the analysis of precipitation times series, a new separation of flood-related precipitation periods is proposed: (i) the period 0 to 1 day before flood days, when the maximum flood-triggering precipitation rates are generally observed, (ii) the period 2 to 3 days before flood days, when longer-lasting synoptic situations generate "significantly higher than normal" precipitation amounts, and (iii) the period from 4 days to 1 month before flood days when previous wet episodes may have already preconditioned the catchment. The novelty of this study lies in the separation of antecedent precipitation into the precursor antecedent precipitation (4 days before floods or earlier, called PRE-AP) and the short range precipitation (0 to 3 days before floods, a period when precipitation is often driven by one persistent weather situation like e.g., a stationary low-pressure system). A precise separation of "antecedent" and "peak-triggering" precipitation is not attempted. Instead, the strict definition of antecedent precipitation periods permits a direct comparison of all catchments. The precipitation accumulating 0 to 3 days before an event is the most relevant for floods in Switzerland. PRE-AP precipitation has only a weak and region-specific influence on flood probability. Floods were significantly more frequent after wet PRE-AP periods only in the Jura Mountains, in the western and eastern Swiss plateau, and at the outlet of large lakes. As a general rule, wet PRE-AP periods enhance the flood probability in catchments with gentle topography, high infiltration rates, and large storage capacity (karstic cavities, deep soils, large reservoirs). In contrast, floods were significantly less frequent after wet PRE-AP periods in glacial catchments because of reduced melt. For the majority of catchments however, no significant correlation between precipitation amounts and flood occurrences is found when the last 3 days before floods are omitted in the precipitation amounts. Moreover, the PRE-AP was not higher for extreme floods than for annual floods with a high frequency and was very close to climatology for all floods. The fact that floods are not significantly more frequent nor more intense after wet PRE-AP is a clear indicator of a short discharge memory of Pre-Alpine, Alpine and South Alpine Swiss catchments. Our study poses the question whether the impact of long-term precursory precipitation for floods in such catchments is not overestimated in the general perception. The results suggest that the consideration of a 3–4 days precipitation period should be sufficient to represent (understand, reconstruct, model, project) Swiss Alpine floods.

Morphomechanical Innovation Drives Explosive Seed Dispersal

How mechanical and biological processes are coordinated across cells, tissues, and organs to produce complex traits is a key question in biology. Cardamine hirsuta, a relative of Arabidopsis thaliana, uses an explosive mechanism to disperse its seeds. We show that this trait evolved through morphomechanical innovations at different spatial scales. At the organ scale, tension within the fruit wall generates the elastic energy required for explosion. This tension is produced by differential contraction of fruit wall tissues through an active mechanism involving turgor pressure, cell geometry, and wall properties of the epidermis. Explosive release of this tension is controlled at the cellular scale by asymmetric lignin deposition within endocarp b cells-a striking pattern that is strictly associated with explosive pod shatter across the Brassicaceae plant family. By bridging these different scales, we present an integrated mechanism for explosive seed dispersal that links evolutionary novelty with complex trait innovation.

Mapping Emotion Terms into Affective Space: Further Evidence for a Four-Dimensional Structure

Recent empirical work on the semantics of emotion terms across many different cultures and languages, using a theoretical componential approach, suggested that four dimensions are needed to parsimoniously describe the semantic space of the emotion domain as reflected in emotion terms (Fontaine, Scherer, Roesch, & Ellsworth, 2007; Fontaine, Scherer, & Soriano, 2013). In addition to valence, power, and arousal, a novelty dimension was discovered that mostly differentiated surprise from other emotions. Here, we further explore the existence and nature of the fourth dimension in semantic emotion space using a much larger and much more representative set of emotion terms. A group of 156 participants each rated 10 out of a set of 80 French emotion terms with respect to semantic meaning. The meaning of an emotion term was evaluated with respect to 68 emotion features representing the appraisal, action tendency, bodily reaction, expression, and feeling components of the emotion process. A principal component analysis confirmed the four-dimensional valence, power, arousal, and novelty structure. Moreover, this larger and much more representative set of emotion terms revealed that the novelty dimension not only differentiates surprise terms from other emotion terms, but also identifies substantial variation within the fear and joy emotion families.