What we learnt from Bayes Business School research in 2023

Leasehold reform: why the government’s plans could make housing less affordable and less fair

A study co-authored by Dr Mark Andrew concluded that the UK Government’s leasehold reform proposals undermine its stated aim of improving fairness in the housing market.

The plans focus on making the premium for buying or extending a leasehold cheaper – not more transparent and fairer. This risks making housing even less affordable and reinforcing wealth inequalities.

The research showed those who stand to benefit the most from these windfall gains are existing owner-occupier leaseholders (mainly middle-income and a significant minority of higher-income households) and landlord leaseholders.

Some 40% of leasehold properties are privately rented, with lower income households over-represented in this sector. Many might face additional difficulty finding affordable accommodation if landlords decide to sell up to capitalise on the higher value of their leasehold property.

The report, Leasehold Reform Proposals in England and Wales: The unconsidered financial implications of reducing the premium in lease extensions, was published by the UK Collaborative Centre for Housing Evidence.

The name game: CEOs with ‘favourable’ surnames receive higher pay

Research from Bayes showed that the ‘favourability’ of a CEO’s surname plays a major role in determining their job security and can increase their total compensation by as much as 4.9%.

The paper, co-authored by Dr Jay Jung, Senior Lecturer in Accounting at Bayes, used data over a 16-year period to monitor changing preferences in how CEOs’ surnames and their origins were perceived in the United States, which was then tied to information about respective levels of CEO compensation and job security within the role.

‘Is Your Name Remunerative? Surname Favorability and CEO Compensation’, was published in the Journal of Corporate Finance.

Men less likely than women to share negative information, says study

A study involving research by Bayes has found that men are less likely to share negative information than women.

The researchers found little difference when it comes to positive news.

The authors suggest that this may be due to a greater concern among men around how others see them, resulting in a tendency to self-promote by sharing positive information about themselves while not revealing their negative experiences.

Professor Irene Scopelliti, Professor of Marketing and Behavioural Science at Bayes and one of the authors of the study, said:

“The advent of social media and digital communication channels has enabled unprecedented levels of information sharing, which is accompanied by an array of social and psychological consequences. Our results show that gender remains an important fault line when it comes to the desire and propensity to disclose negative information, and men may be differentially advantaged by, or vulnerable to, the consequences of information sharing compared to women.”

The study was published in the Journal of Experimental Social Psychology.

Research identifies “proxy discrimination” in insurance pricing

Insurance pricing models facilitate discrimination around gender and ethnicity, research involving Bayes has found.

Co-authored by Professor Andreas Tsanakas from Bayes, the study found that even in jurisdictions where it is unlawful to use data around protected characteristics to determine an insurance quote, companies use information such as postcodes to effectively determine the customer’s ethnicity.

Using data from a motor insurance portfolio, the study team found evidence of “proxy discrimination”.

Insurers should be required to demonstrate that discrimination is not a material issue in their portfolios and, if it is, to adjust their prices, Professor Tsanakas said.

Bayes European lending report found that borrowers are paying up to 6% “all-in” interest for loans on prime European properties

The first Bayes Business School European Commercial Real Estate Lending Report revealed the lending and loan pricing behaviour of different groups across Europe.

Written by Dr Nicole Lux, Senior Research Fellow at Bayes, the study found that the all-in interest for a loan on a prime stable asset across European cities now ranges between 4-6%, up from between 2-3% 12 months earlier.

Other  key highlights from the report, which covered data up to February 2023, include:

• Size matters: Loan pricing differs significantly depending on loan size, with rates for smaller loans of less than €5million being charged higher rates
• Borrowers need to know the local lenders: 92% of banks still only lend into their home market. In comparison, 38% of debt funds pursue a multi-country strategy.

A sporting chance for a longer life

Top-level sports people typically live more than five years longer than the rest of the population, a Bayes-funded study suggests.

The in-depth study by the International Longevity Centre UK (ILC) drew on the records of Commonwealth Games competitors since the inaugural event in 1930. It revealed significant differences in the longevity of medal winners compared to people in the general population that were born in the same year.

The report “Marathon or sprint: Do elite-level athletes live longer than average?”, by Professor Les Mayhew and Ray Algar, revealed that male swimmers lived 5.3 years longer than the general male population. Track and field athletes typically lived around average 4.5 years longer than the general male population.

Across all sports categories, women athletes typically had an extra 3.9 years of life.

Living in an almshouse boosts life expectancy, study finds

Living in an almshouse can boost the longevity of residents by up to two-and-a-half years, according to a Bayes report.

Almshouses provide affordable community housing for local people in housing need. They are generally designed around a courtyard to provide a ‘community spirit’. Residents live independently but have easy access to friendship and support.

Analysing up to 100 years’ worth of residents’ records from various almshouses in England, the research suggested that living in these communities can reduce the negative impact on health and social wellbeing which affects many older people in lower socioeconomic groups.

Co-author Professor Ben Rickayzen, Professor of Actuarial Science at Bayes Business School, said:

“It is well known that, on average, the lower a person’s socioeconomic status, the lower their life expectancy. However, intriguingly, our research has found that this doesn’t have to be the case. We discovered that many almshouse residents receive a longevity boost when compared to their peers of the same socioeconomic status from the wider population.”

Download the full report, Almshouse Longevity Study – Can living in an almshouse lead to a longer life?

Temp or permanent? Balancing healthcare worker recruitment in uncertain times

Health is one of the sectors hardest hit by a shortage of employees. The sector also needs to achieve the correct mix of permanent and temporary workers – and this is complicated by fluctuations in demand.

Temporary workers help hospitals respond quickly to variations in patient demand, and when permanent staff are unavailable.

However, skilled temporary staff are generally more expensive than their permanent counterparts.

Two of the authors of a new study, Dr Navid Izady and Professor Lilian M de Menezes, said it is difficult to get the right balance between permanent and temporary recruitment.

“Using historical data on patient demand and recruitment, our approach provides a simple methodology for a complex decision faced by many care providers across the world.

“This decision concerns specifying the number of permanent positions to advertise in preparation for a highly volatile demand period, knowing that there will be further opportunities later on to complement the workforce using more expensive temporary workers.

“Our approach incorporates three main sources of uncertainty in such decision making,: uncertainty in demand, uncertainty in recruitment and uncertainty in duration of services.”

The paper is titled A framework for optimal recruitment of temporary and permanent healthcare workers in highly uncertain environments.

How to come up with a winning brand slogan

A study from Bayes and partner organisations uncovered the word properties that make slogans effective.

However, the researchers found that the attributes which make a slogan easier to process lead to it being more likeable but less memorable, and vice versa.

Previous research has recommended that slogans should be creative or capture the soul of the brand, but the authors found that people preferred slogans that are shorter, omit the brand name and use words that are linguistically common and abstract. In contrast, slogans are less liked, but better remembered, if they are long, include the brand name and feature unusual and concrete words.

One co-author of the paper, Professor Zachary Estes, Professor of Marketing at Bayes, said the paper sheds light for the first time on the trade-offs that brands face when crafting a new slogan.

'Intel Inside: The Linguistic Properties of Effective Slogans' was published in the Journal of Consumer Research.

Mandatory EU financial disclosure increases frequency and quality of M&A deals, says study

Forcing private firms to disclose their financial statements leads to more mergers and acquisitions (M&As) and better deals, according to a paper published by a researcher from Bayes.

The study found that financial disclosure increases M&A activity by reducing "information friction" in the market for corporate control.

It reveals the positive spillover from implementation of the 2003 European Commission (EC) directive on financial reporting, counteracting the common view that M&A deals are value-destroying in nature.

Key findings from the research show:

• M&As of private targets increased when the disclosure regulation came into force.
• Mandatory reporting intensity is positively correlated with M&A activity, even when accounting for different ways to measure such activity.
• Using data following an acquisition, the researchers found that the target companies have higher growth rates where there have been more mandated disclosures in the industry.

Co-author Dr Francisco Urzúa, Reader in Finance at Bayes said:

“Our study shows that more deals take place following the implementation of mandatory reporting in the EU, but not only that, targets that are disclosing thanks to this regulation improve their performance after the acquisition. There are more and better deals taking place thanks to it.”

The paper has been published in the Review of Financial Studies.

UK takes European top spot in Bayes’ annual index of investment destinations

The United Kingdom remains the top target in Europe for inbound and domestic investment, according to the annual index published in August by the Mergers and Acquisitions Research Centre  at Bayes.

Now in its second decade, the M&A Attractiveness Index compares deal activity and attractiveness to investors in 148 countries. The UK was second globally – just behind the US and ahead of Singapore.

Produced by Dr Naaguesh Appadu, Senior Research Fellow at Bayes, the report also provides additional analysis into the opportunities and challenges facing countries, including the clear importance to investors of environmental, social and governance (ESG) considerations when completing a deal and the importance of strong national infrastructure.

Dr Appadu said:

“For the UK, it is notable that it has retained this position for a second year despite the issues associated with Brexit.”