Adelphi Business Review

Dear Friends and Colleagues,

This seventh edition of the Adelphi Business Review features five journal articles that were recognized by the Robert B. Willumstad School of Business as Best Papers through the Bender Award program, named in honor of the first dean of the School, James F. Bender, PhD. We hear daily about the importance of data, and two of these papers focus on using data related to predicting health outcomes and using simulation to improve supply chain management decisions. Two papers focus on strategic decisions related to mergers and acquisitions (M&A) and management styles. The final paper proposes a new type of business structure where profits support a social cause. I hope you enjoy reading about each of these topics.

Predicting Shortages in a Supply Chain Using Simulation

Eunji Lim, PhD

A supply chain shortage is a serious problem that can lead to assembly plant shutdowns. However, predicting such shortages using simulation poses a challenge because we often don't have all of the information we need. In “Simulation-Based Prediction,” Eunji Lim, PhD, associate professor of decision sciences, investigates this problem. She formulates a prediction problem such as the problem of computing the conditional expectation of the quantity needed of interest, given the observed state of the system. She has come up with a new way to use simulation that can help even when we don't have all the information about how things are right now. Dr. Lim's proposed new simulation methodology is appropriate for the many settings in which the observed current state does not provide all of the information necessary to determine the simulation’s initial state. With the use of such methods, simulation has the potential to more accurately predict upcoming supply chain bottlenecks, and to enhance predictions in the many other problem settings where simulation is commonly used.

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Will Companies Strategically Sequence the M&A Announcement and Quarterly Earnings Release?

Huajing Hu, PhD

Managers can choose when they announce important news about their companies, like mergers and acquisitions (M&A) or their financial performance every quarter. Investors often focus on short-term gains and may be influenced by these announcements. Do managers, who have a lot of information about their company, use the timing of these announcements to make investors react positively and increase the company's valuation? A study by Huajing Hu, PhD, associate professor of finance, and her coauthors, empirically demonstrates that managers do strategically time these announcements. They find that companies are more likely to announce quarterly earnings before announcing an M&A if the earnings meet analyst expectations. This helps the acquiring companies in M&A deals, especially when they plan to use their own stock as the method of payment. In summary, companies try to make themselves look good by timing their announcements strategically, which can benefit them in M&A deals.

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Can Data Analytics Empower Treatment Decision-Making in Cancer Prognosis?

Zahra Sedighi-Maman, PhD

When individuals receive a cancer diagnosis, it is an emotionally challenging moment that raises profound concerns. Patients often grapple with uncertainties, wondering about their chances of overcoming the disease and the duration they may have. Providing precise responses to these inquiries proves to be a complex task for medical professionals. Zahra Sedighi-Maman, PhD, assistant professor of decision sciences, along with a colleague from Georgetown University, have been working on important research to harness the potential of data analytics in providing healthcare professionals with a useful tool to predict lung cancer survivability. Lung cancer is a major global health concern and a leading cause of cancer-related deaths, according to the World Health Organization. They recently published their findings in a research paper “An Interpretable Two-Phase Modeling Approach for Lung Cancer Survivability Prediction” in the journal Sensors. Their work introduces a two-phase data analysis framework that helps healthcare providers assess lung cancer survival and predict how long a patient may survive in an interpretable manner using data analytics.

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“Paternalism as a Long-Term Strategy of a Management Control System”

Charles Richard Baker, PhD

This paper explores the way Michelin, a large multinational company, manages its business has changed over time, focusing on paternalism, where those in charge make decisions for the well-being of employees. The study looks at Michelin's reports from 2009 to 2021, and finds that their management style evolved from traditional control to emphasizing social responsibility. Charles Richard Baker, PhD, professor of accounting, and a colleague used a historical method, studying both old and recent data, and analyzed annual reports. They identified different forms of paternalism at Michelin, such as traditional, welfare-focused, managerial and freedom-oriented approaches. The evolution of Michelin's management system, called the "Paternalistic Management Control System," led the company toward corporate social responsibility (CSR), showing a greater concern for society and the environment. Contrary to common beliefs that paternalistic management becomes outdated in big international companies, this research challenges that notion. It demonstrates how aspects of paternalism can persist even as family-owned enterprises grow into multinational companies. The practical implication is that paternalism remains relevant in big companies, and the study provides a unique perspective on Michelin's history, showing how it has embraced paternalistic elements while also focusing on social responsibility.

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Proposal for a New Type of Societal-Focused Business Organization

Robert Goldberg

Nonprofits face a challenge ensuring that managers adhere to the mission of endowers. In this article, Robert Goldberg, James F. Bender Clinical Professor of Finance, and a colleague propose the creation of a Donor Investor Organization, a new type of investor-owned tax-exempt legal structure where profits are committed to a specified social purpose. Individuals would own shares in the organization, but the investors would not be entitled to any of the profits. Instead, investors would receive a stream of tax deductions based on the profit contributions made by the organization. Investors would not receive a dividend but would retain full voting control and decisions on liquidation. The shares would be tradable at prevailing market prices. If the organization does well, while doing good, future societal contributions, and tax deductions, would increase and the investor could sell the shares at a profit or continue to hold and receive larger future deductions. But, if the organization wasted the assets, the projected tax deductions would decline, and the value of the shares would fall. At some point, investors could liquidate the assets and donate the proceeds to other charities.

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