Social Learning in the COVID-19 Pandemic: Community Establishments’ Closure Decisions Follow Those of Nearby Chain Establishments

As conveners that bring various stakeholders into the same physical space, firms can powerfully influence the course of pandemics such as coronavirus disease 2019. Even when operating under government orders and health guidelines, firms have considerable discretion to keep their establishments open or closed during a pandemic. We examine the role of social learning in the exercise of this discretion at the establishment level. In particular, we evaluate how the closure decisions of chain establishments, which are associated with national brands, affect those of proximate, same-industry community establishments, which are independently owned or managed. We conduct these analyses using cell phone location tracking data on daily visits to 230,403 U.S.-based community establishments that are colocated with chain establishments affiliated with 319 national brands. We disentangle the effects of social learning from confounding factors by using an instrumental variables strategy that relies on local variation in community establishments’ exposure to closure decisions made by brands at the national level. Our results suggest that closing decisions of community establishments are affected by the decisions made by chain establishments; a community establishment is 3.5% more likely to be open on a given day if the proportion of nearby open chain establishments increases by one standard deviation. This paper was accepted by Olav Sorenson, organizations.

The Effects of Consistency among Simultaneous Forecasts on Weather-Related Decisions

People access weather forecasts from multiple sources [mobile telephone applications (“apps”), newspapers, and television] that are not always in agreement for a particular weather event. The experiment reported here investigated the effects of inconsistency among forecasts on user trust, weather-related decisions, and confidence in user decisions. In a computerized task, participants made school-closure decisions on the basis of snow forecasts from different sources and answered a series of questions about each forecast. Inconsistency among simultaneous forecasts did not significantly reduce trust, although inaccuracy did. Moreover, inconsistency may convey useful information to decision-makers. Not only do participants appear to incorporate the information provided by all forecasts into their own estimates of the outcome, but our results also suggest that inconsistency gives rise to the impression of greater uncertainty, which leads to more cautious decisions. The implications for decisions in a variety of domains are discussed.

Predicting School Closures in an Era of Austerity: The Case of Chicago

What factors do administrators consider when (dis)investing in public facilities? We model school closure decisions in Chicago from 2003 to 2013 with multinomial logit models that estimate the decision to close or “turnaround” schools as a function of building, student, geographic, political, and neighborhood factors during two mayoral administrations. The results from our specifications validate the “official” rationale for closures and turnarounds: Low test scores are associated with closures and turnarounds under Mayor Daley, and underutilization is associated with closures under Mayor Emanuel. However, our findings also reveal some distance between technical-rational decision making and the realities of capital budgeting under austerity. The race of students and proximity to both the Central Business District and charter schools also predicted closures. This suggests multiple, potentially conflicting, interests that school districts balance to serve the needs of school-age populations and taxpayers and also the potential for burdening already vulnerable populations with the negative effects of disinvestment.

The financial impact of retail store closure announcements

Purpose While store closure announcements frequently appear in newspapers, little is known about the financial impact of store closure decisions on the retailer’s market value. The purpose of this paper is to investigate the stock market reaction to the announcements of retail store closure decisions. Design/methodology/approach The authors collect data from news articles on store closure announcements in the USA during 1995-2016. Using the four-factor model in an event study, the authors compute the abnormal stock returns for the retail firms due to these announcements. Findings Based on the authors’ analysis for sample and matching control firms, the abnormal stock returns for store closure announcements are found to be positive overall. The authors find evidence that the positive effects of the announcements are stronger, particularly for the firms which have positive sales growth at the time of the announcements. The authors also report that industry competition acts as a negative moderator in the relationship between announcements and financial impacts. Practical implications The authors’ analysis implies the investors’ positive sentiment of store closure announcements as a viable cost-cutting strategy, especially when it is done proactively by better performing retailers. The findings should be useful to the supply chain managers of retail industries in making store closure decisions. Originality/value This paper is believed to be the first to address the impact of retail store closure announcements on the stock market. The authors’ approach of categorizing the firms based on their sales growth seems to be the first in the event study literature on corporate restructuring.

California Marine Oil Spill Fisheries Closure: Key Processes of the Department of Fish and Game (DFG), Office of Spill Prevention and Response (OSPR), During a Fisheries Closure Event

ABSTRACT Determining whether to close a commercial, recreational, or subsistence fishery after an oil spill is a difficult emergency decision that must be made quickly by California state authorities. California state law now states that fisheries affected by a spill must be closed within 24 hours of a spill of one barrel (42 gallons) or more of oil, unless it can be determined that the actual risk is non-existent or has been mitigated. However, assessing the amount of oil truly spilled, the status of spilled oil containment versus spreading rate, and determining which fisheries are in the potential path of oil are all confounding factors. While the goal of the law is to protect people from consuming fish or shellfish that exceed established petroleum contaminant thresholds, caution is used to make sure fisheries are not closed unnecessarily. The California fishery closure protocol articulates the separate, specific, and coordinated roles and responsibilities of the Department of Fish and Game (DFG) and the Office of Environmental Health Hazard Assessment (OEHHA). These protocols are internal to the two involved California state agencies, and are separate from any fishery closure decisions that might be made by the National Marine Fisheries Service for spills in federal waters.

Revitalisation of branch lines in South Africa: A long-term view for sustainability

South Africa's national railway management is considering the further closing of a number of branch lines due to profitability pressures from stakeholders. This paper cautions against a myopic approach to such closures. Traditionally these decisions are driven by short-term profit motives realised through resulting core line densification. The research presented in this paper demonstrates the importance of 1) taking cognisance of potential branch lines flows; 2) considering freight transport externalities and road usage costs; and 3) understanding long-term demand, in informing closure decisions. The research results reveal considerable volume opportunities for branch lines which, if captured, will significantly reduce both the direct transport costs for this traffic as well as externality charges for the economy. This will therefore not only render rural economies more competitive but also enable the provision of more sustainable freight transport to these communities. The research approach will be of value to researchers in both developed and developing economies to inform the continuous debate regarding rail rationalisation and rail revival.

An Examination of the Effect of CPA Firm Type on Bank Regulators' Closure Decisions

This study examines the effect of CPA firm type on regulators' decisions with respect to the closure of banks. Using a sample of 116 closed and 116 nonclosed banks in the state of Texas during 1990–1991, we estimate regression models which include (1) financial characteristics of the sample banks, (2) other characteristics of the sample banks, (3) the type of auditor's opinion received by the bank (with respect to the bank's ability to continue as a going concern), and (4) the CPA firm type (Big 6 vs. non-Big 6). Our results indicate that banks receiving modified opinions from Big 6 firms were more likely to be continued (not closed) by regulators than those receiving modified opinions from non-Big 6 firms. In contrast, banks receiving nonmodified opinions from non-Big 6 firms were more likely to be closed than those receiving nonmodified opinions from Big 6 firms. These findings indicate that, ceteris paribus, banks audited by Big 6 firms are more likely to be continued, consistent with regulators' perceptions that economic reporting incentives may result in Big 6 firms being more likely to modify their opinions to reflect going-concern uncertainties.