Hornstein Presents Papers at American Economic Association Conference

Abigail Hornstein, associate professor of economics, presented two papers at the 2017 American Economic Association meeting held Jan. 6-8 in Chicago.

In her working paper, “Words vs. Actions: International Variation in the Propensity to Honor Pledges,” Hornstein used data on contracted and utilized foreign direct investment in China to show that firms fulfill an average of 59 percent of their pledges within two years. “The propensity to fulfill contracts is lower for firms from countries with greater uncertainty avoidance, power distance and egalitarianism; and is higher if the source country is more traditional,” she explained. Prior literature has shown that these cultural characteristics are associated with higher levels of utilized foreign direct investment, while Hornstein shows that these cultural characteristics also affect the likelihood that planned corporate investments are actually made.

Her other working paper, “Board Overlaps in Mutual Fund Families” (co-authored by Elif Sisli Ciamarra of Brandeis University), is based on hand-collected data on directors at 3,948 U.S. equity mutual funds belonging to 328 fund families. Hornstein and Sisli Ciamarra used this data to document the prevalence and effects of a common board structure whereby a set of directors serves simultaneously on the boards of multiple funds within the family. Fifty-nine percent of all funds have unitary board structures where a single board serves all funds within the complex. “We find that overlapping boards generally represent 74 percent of the funds within a family, and that this overlapping board structure provides limited benefits to investors while benefiting the fund family,” she said.

In addition to her paper presentations, Hornstein also was elected to the executive board of the Association for Comparative Economics Studies, for a term ending in 2020.