DeansTalk - business management education

Deans Peter Henry (Stern) and Robert Bruner (Darden) - CNBC video "MBA Students: Wall S. vs Silicon Valley"

CNBC video 14 February, 2012

Stanford GSB Finance Expert: Federal Interpretation of Volcker Rule Would Lead to Constraints on U.S. Economic Growth and Recovery

January 17, 2012

Stanford Finance Expert: Federal Interpretation of Volcker Rule Would Lead to Constraints on U.S. Economic Growth and Recovery

Finance professor Darrell Duffie of the Stanford Graduate School of Business proposes alternative capital requirements for banks to eliminate potential unintended consequences of financial reform.

uValue - The Corporate Valuation App

uValue (uValue Mobile, iOS 4.0+, Jan 20, 2012) is a corporate valuation app for the iPad (now also available in its fully functional form for the iPhone and iPod Touch). The app helps you value businesses using conceptually rigorous, yet practical, widely-used tools. You can value firms using  the ‘weighted average cost of capital’ (WACC, or 'cost of capital') approach, the ‘adjusted present value’ (APV) approach, the ‘dividend growth model’ (DGM), or real option valuation (ROV) techniques. The app also includes a set of handy calculators to value bonds, annuities and perpetuities, as well as to calculate the cost of capital, to forecast exchange rates, to lever/unlever betas, and so forth.

Aswath Damodaran is a professor of Finance at the Stern School of Business, New York University.

Anant Sundaram is a professor of Finance at the Tuck School of Business at Dartmouth.

Time-Varying Fund Manager Skill - NYU Stern - New York University

 Via the (US) National Bureau of Economic Research (13 January 2012)

Time-Varying Fund Manager Skill - NYU Stern - New York University (PDF 47 pages, via NYU)

Mutual fund managers can outperform the market by picking stocks or timing the market successfully. Previous work has estimated picking and timing skill, assuming that each manager is endowed with a fixed amount of each and found some evidence of picking skills and little evidence of timing skills among successful managers. This paper estimates skill separately in booms and recessions and finds that the extent to which managers focus on stock picking or market timing fluctuates with the state of the economy. Stock picking is more prevalent in booms, while market timing dominates in recessions. We use this finding to develop a new methodology for detecting managerial skill. The results suggest that some but not all managers have skill. We describe the characteristics of the skilled managers and show that skilled managers significantly outperform the market.

An enormous literature asks whether investment managers add value for their clients and if so, how...

Pension funds, economies of scale? + the empathy gap

Something for the weekend, Financial Times, September 16, 2011.

FT Soapbox - (Bschool) Financial models create a false sense of security

www.ft.com/soapbox

Financial models create a false sense of security, September 5, 2011

....Given the tremendous changes in financial systems, these theories must be scrutinised and then abandoned as models for the future. As business schools and institutions continue to preach these principles, they perpetuate a fundamentally flawed system of thinking. Now more than ever, it is as important to teach the flaws as it is to teach the basis that presents them.

Didier Cossin is professor of finance and governance at IMD, director of the IMD Global Board Center and programme director for High Performance Boards

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MBAs must learn to love the SME market

The current limitations of the job market means that business schools need to embrace a wider audience

• It really does pay to change jobs

Schools must adapt to the new Arab spirit

Western business schools can play an important role in helping to bring a more accountable, professional and responsible business culture to the region

• Gaddafi regime collapsing

Universities must embrace cultural change

While freedom of teaching and research must be defended, bridges for mutual transfers of knowledge and best practices have to be built

Good leaders have more than the right skills

Business schools must look at their actions not through the lens of their knowledge, but through that of the student experience

Bigger is better mantra can reap dividends

French schools can no longer rest on their laurels: if the ‘grandes écoles’ system is to survive and thrive it must adapt and make a virtue of its size

Leadership depends on keeping it real

In an ever more shifting world, having a baseline of values and beliefs will be crucial

...

Professor Frank Warnock (Int. Finance) of Darden - U.S. Treasuries Lose 'Risk-Free' Luster

Council on Foreign Relations, August 6, 2011.

Francis E. Warnock, Adjunct Senior Fellow for International Finance

Paul M. Hammaker associate professor of business administration at the Darden Business School, University of Virginia. Former senior economist at the Board of Governors of the Federal Reserve System. Author of the Center for Geoeconomics reports How Dangerous Is U.S. Government Debt?, Two Myths About the U.S. Dollar, and Doubts About Capital Controls.

Professor Nouriel Roubini of Stern(NYU) business school proposes solutions in the Financial Times + Goldman Sachs forecast

Financial Times: Last three paragraphs, of an online article of this evening, which will appear tomorrow in print.

...misguided decision by Standard & Poor’s to downgrade the US...

...So can we avoid another severe recession? It might simply be mission impossible. The best bet is for those countries that have not lost market access – the US, UK, Japan, and Germany – to introduce new short-term fiscal stimulus while committing to medium-term fiscal austerity. The US downgrade will hasten demands for fiscal reduction, but America in particular should commit to look for significant cuts in the medium term, not an immediate fiscal drag that will worsen growth and deficits.

Most western central banks should also introduce further QE, even though its effect will be limited. The European Central Bank should not just stop rate hiking: it should cut rates to zero and make big purchases of government bonds to prevent Italy or Spain losing market access – the outcome of which would be a truly major crisis, requiring doubling (or tripling) of bail-out resources, or debt workouts and a eurozone break-up.

Finally, since this is a crisis of solvency as well as liquidity, orderly debt restructuring must begin. This means across the board reduction on the mortgage debt for the roughly half of America’s households that are underwater, and bail-ins for creditors of banks in distress. Greek-style coercive maturity extensions, at risk free rates, must also come for Portugal and Ireland, with Italy and Spain to follow if they lose market access. Another recession may not be preventable. But policy can stop a second depression. That is reason enough for swift and targeted action.

The writer is chairman of Roubini Global Economics, professor at the Stern School, NYU and co-author of Crisis Economics.

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Economics team at Goldman Sachs now say: "We now see a one-in-three risk of renewed recession".

Professor Raghuram Rajan of Finance at Chicago Booth GSB - "Washington and the Art of the Possible"

2011-08-04 www.project-syndicate.org

...In the meantime, US politicians might have done just about enough to convince debt markets that America’s credit is still good. For that, Americans – and others around the world – should stop pillorying them and give them their due credit.

Raghuram Rajan, a former chief economist of the IMF, is Professor of Finance at the University of Chicago’s Booth School of Business and author of Fault Lines: How Hidden Fractures Still Threaten the World Economy, the Financial Times Business Book of the Year.

(previously mentioned on DeansTalk: 5/2/2011, 15/2/2009)

Profesor Simon Johnson of Entrepreneurship at MIT's Sloan - "The stock market panic: Why now?"

CBS News, August 5, 2011  (also on the blog he set-up The Baseline Scenario)

...None of the current policy stances in the United States, Japan, or Europe is sustainable...

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MIT bio
Simon Johnson is the Ronald A. Kurtz (1954) Professor of Entrepreneurship at MIT's Sloan School of Management, a position he has held since 2004.

IMF bio
Economic Counsellor and Director, Research Department, IMF (March 2007-August 2008)

Simon Johnson was Economic Counsellor and Director of the Research Department (Chief Economist) at the IMF from March 2007-August 2008. Mr. Johnson was on leave from the Sloan School of Management at MIT, where he was the Ronald A. Kurtz Professor of Entrepreneurship. Mr. Johnson is an expert on the financial sector and economic crises. Over the past 20 years he has worked on crisis prevention and mitigation, as well as economic growth issues in advanced, emerging market, and developing countries. His work focuses on how policymakers can limit the impact of negative shocks and manage the risks faced by their countries. His PhD is in economics from MIT, while his MA is from the University of Manchester and his BA is from the University of Oxford.

Professor Luigi Zingales of Entrepreneurship & Finance at Chicago Booth GSB - "The Perverse Politics of Financial Crisis"

2011-07-25, www.project-syndicate.org

...if, for any reason, a country does end up in the danger zone, only two responses make economic sense. Either officials recognize immediately the inevitability of default and waste no resources trying to prevent it, or they believe that a default can be avoided and deploy all the resources at their disposal as fast as possible. As in many wars, a staged escalation in a financial crisis often leads to the worst possible outcome: a defeat with large losses....

Luigi Zingales is Professor of Entrepreneurship and Finance at University of Chicago Graduate School of Business and co-author, with Raghuram G. Rajan, of Saving Capitalism from the Capitalists (www.savingcapitalism.com).

Sir Ronald Cohen (HBS alum): capitalism has its consequences - The Telegraph

Article of The Telegraph, 26 Jun 2010    (Wikipedia Entry of Sir Ronald Cohen)

The man who started the private equity industry 40 years ago, is plotting to harness entrepreneurship to act as an agent for social change.

...has been back to Harvard and a clutch of other top universities to tell the students about the next big thing in the business world – social finance...

"We want to do the same thing for social entrepreneurship. We want to connect the capital markets to the social sector.

"I think it is going to be similarly powerful because the impact of the recent crisis on peoples consciousness has emphasised the importance of dealing with the social consequences of the [capitalist] system."

Sir Ronald is fervent in his belief that this is more than just the latest business fad, but a crunch-point moment for the entire Western market-based system.

"It is not enough to increase the standard of living at the high end. It is right at the same time to worry about those who are left behind," he says.

"I think societies everywhere will come to the conclusion that an important part of the capitalist system is having a powerful social sector to address social issues, because government doesn't have the resources."

...

World Investment Report 2011 - United Nations Conference

United Nations Conference on Trade and Development, 26/07/11

Global foreign direct investment (FDI) has not yet bounced back to pre-crisis levels, though some regions show better recovery than others. The reason is not financing constraints, but perceived risks and regulatory uncertainty in a fragile world economy.

The World Investment Report 2011 (PDF, 251 pages) forecasts that, barring any economic shocks, FDI flows will recover to pre-crisis levels over the next two years. The challenge for the development community is to make this anticipated investment have greater impact on our efforts to achieve the Millennium Development Goals.

In 2010 – for the first time – developing economies absorbed close to half of global FDI inflows. They also generated record levels of FDI outflows, much of it directed to other countries in the South. This further demonstrates the growing importance of developing economies to the world economy, and of South-South cooperation and investment for sustainable development.

Increasingly, transnational corporations are engaging with developing and transition economies through a broadening array of production and investment models, such as contract manufacturing and farming, service outsourcing, franchising and licensing. These relatively new phenomena present opportunities for developing and transition economies to deepen their integration into the rapidly evolving global economy, to strengthen the potential of their home-grown productive capacity, and to improve their international competitiveness.

Unlocking the full potential of these new developments will depend on wise policymaking and institution building by governments and international organizations. Entrepreneurs and businesses in developing and transition economies need frameworks in which they can benefit fully from integrated international production and trade. I commend this report, with its wealth of research and analysis, to policymakers and businesses pursuing development success in a fast-changing world.

BAN Ki-moon
Secretary-General of the United Nations

Wharton Globalization TrendLab 2011: "Global Risk: New Perspectives and Opportunities"

Globalization TrendLab 2011: "Global Risk: New Perspectives and Opportunities, (PDF, 42 pages)" April 7-8, 2011.

From the Lauder Institute website Conference page

Page 37 and 38 have a list of the more than 30 scholars and policymakers from around the world who gathered in Philadelphia for a two-day conference.

Executive Summary

The financial and economic crisis has heightened everyone’s awareness of systemic risk. Confidence in the ability of decision-makers, policymakers and institutions to handle such risks has been shattered. Psychology, a culture of destructive self-interest, and social processes have also been invoked as part of a complex set of conditions that led to the debacle. In turn, the crisis has accelerated some prevailing demographic, economic, and social trends, including population aging, political tensions, geopolitical instability and environmental degradation, as the focus of attention has unavoidably shifted towards short-term, immediate concerns. The crisis has placed the issue of systemic risk at the top of the global agenda, forcing analysts and policymakers to make a stark distinction between what is important and what is actually urgent.

In this white paper we provide an overview of the causes, consequences, and potential solutions to the problem of risk, focusing on economic and financial aspects, while also paying attention to political, social and environmental risks associated with the crisis and its aftermath. The analysis represents the outcome of a collective, multi-disciplinary effort at understanding risk by a group of more than 30 scholars and policymakers from around the world who gathered in Philadelphia for a two-day conference.

The analysis begins with the conventional explanations of the crisis, further adding political considerations, institutional constraints, psychology, and social processes. This prepares the stage for the assessment of the effectiveness of policy interventions during the crisis which, while averting a massive meltdown, generated a number of additional problems, both short-term and long-term. Failures in global governance and in understanding complex ripple effects are also explored. Risks building up in emerging economies—from financial to political and demographic—are presented as a stark reminder that global instability is punctuated by a growing number of troubled hot spots.

The conference participants identified four action items. First, global governance needs to be enhanced, a task that is not easy as a changing of the guard takes place due to the ascendancy of the emerging economies. Second, regulation must both set parameters for self-regulation and establish a set of cushions, bells and whistles to ameliorate the possibility of further systemic crises. Third, policymakers and scholars ought to adopt a more humble attitude in terms of the extent to which they are able to understand and overcome the complexities posed by crises. And fourth, as people adopt shorter time horizons due to incentives, demographics, politics, and cognitive biases, it is important to remain on the alert for the weaknesses and faults in the global economic, political, and social architecture.

Professor Gayle Allard (IE Business School) - Will the US Congress react in time?

Post of IE Economy Blog, 21 July, 2011.

As the deadline approaches for the US Congress to either raise the debt ceiling or enter into technical default on the huge US public debt, what appears to characterize the debate is a lack of concern for what will happen if the deadline is missed.

Republicans, determined not to raise taxes, refuse to approve any compromise that would violate that objective. Democrats, reluctant to make deep reforms to social programs, want most adjustments to happen on the revenues side. The deadlock has held firm even under the time pressure of looming nonpayment on the debt.

Professor Javier Carrillo (IE Business School) ¿Cómo hemos llegado hasta aquí?

El 19 Julio 2011 por Javier Carrillo

Professor Aswath Damodaran (Stern) - Default and Bankruptcy: Black, white and shades of grey

Post of his blog Musing on Markets, July 14,  2011.

The talk of default is all around us, as we watch Greece and Italy struggle with impending disaster and the fight over debt limits in the United States fills the airwaves. But what is default? What are the consequences? And given a choice, when is default the best option?...

Doors of opportunity open again for MBAs - Financial Times

Article of Della Bradshaw, June 27, 2011

...But the development that has taken most business schools by surprise is the strength with which banks and financial service firms have returned to the hiring trough...

Dean Glenn Hubbard (Columbia) - "Forget the debt ceiling and focus on debt"

Article of the Financial Times, May 26 2011

On May 15, the US hit its “debt ceiling” of $14,300bn, covering publicly owned debt held by the Federal Reserve and government trust funds, and Washington is in a furore. While budget debates are often more talk than action, this one needs more talk – but of a different kind...

The Economist - Eminent professors explain their subjects - Finance

Anant K Sundaram: Finance professor at the Tuck School of Business at Dartmouth College

Entrepreneurship and innovation reports from Darden School of Business (U. Virginia)

Via @DardenEVC

Batten Briefings is a series of research reports that address important and timely topics in entrepreneurship and innovation. Upcoming issues will examine trends in Venture Capital, “green” innovation, and corporate growth strategies.

Financing Innovation Series: What Ever Happened to Venture Capital?
February, 2011
Download pdf here or view interactive version online by clicking on graphic below.

For the first time in venture capital's history, ten-year average fund returns have been negative.

Open publication

Michael Lewis discusses The Big Short: Inside the Doomsday Machine, at Haas School of Business

Haas Video Room  (the book was recommended for understanding the crisis (one of two), what a layman should read, by Mervyn King the Governor of the Bank of England)

Author Michael Lewis discusses his book The Big Short: Inside the Doomsday Machine, the future of finance as he sees it, and his thoughts on whether today’s business students have a chance at changing it. (Running Time: 01:09:55)

Time magazine's - The 25 Best Financial Blogs

Inside the List, March 7, 2011

The financial crisis was horrible for the economy, but it was a great for financial blogs...

Once the list was compiled we invited the bloggers on the list to review their fellow bloggers. Many took us up on that offer. The list and ranking is TIME's. The reviews are theirs. The result is our list of the 25 best financial blogs.

Book: "Fault Lines", Business Book of the Year 2010, Financial Times.

RAJHURAM G. Rajan, "Fault Lines, How Hidden Fractures Still Threaten the World Economy", Princeton University Press, 2010.

CHAPTER ONE: Let Them Eat Credit 21
CHAPTER TWO: Exporting to Grow 46

...

Raghuram Rajan is currently the Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. (Profile on Booth blog)

The Economist, "Economics' most influential people", February 1st 2011

...which economists have the most important ideas in a post-crisis world?...the leader here was Raghuram Rajan...

FT video Link

Oct 28 2010  One of the few economists to see the financial crisis coming has won the Financial Times and Goldman Sachs Business Book of the Year award.

Is Facebook worth your time?

Article of CNN Money, April 18, 2008

The hot social network is fine for kids, but skeptical adults need a reason to sign up. One turns out to be getting good stuff in your News Feed.

By David Kirkpatrick, senior editor

NEW YORK (Fortune) -- Facebook, the 71-million-member social network, has attracted lots of adults during the last year as it became a global technology cause celebre. But I'm hearing more and more of these grown-up newbies questioning whether the service is really worth their time. Some find it more annoying than useful, and can't really figure out any benefit.

Even some tech cognoscenti, many of whom are active and engaged Facebook users, are souring on the service...

...I remain convinced there are significant benefits to be found in making Facebook a central part of one's online life - but appreciate that for many it will take time before those benefits become obvious.

Just one view of Facebook:

"Society 'should be shamed' by £14bn city bonuses"

Opening paragraphs of an article of Daily Mail, 29th August 2007.

Comments (18) (18 comments at hour of publishing on this blog).

Record bonuses paid to City workers were yesterday condemned as "society's shame".

The chief executive of Barnardo's joined a growing list of politicians, trade unions and charities who have lambasted this year's £14billion payouts - the biggest Britain's financial community has ever known.

Soaring stock markets and a rash of company takeovers have pushed financial firms' profits to record levels. As a result, 4,200 "City slickers" have received bonuses of more than £1million each...

Finance - All downhill from here?

Article from eFinancialCareers.com, March 8, 2007

Markets may be plummeting but profits – and pay – for finance recruiters remain robust.

“The general feeling is that some of the smaller recruitment firms are having to offer big pay increases,” says Simon Hughes, a consultant at Strata Search, a headhunter of headhunters (‘rec to rec’) firm. “Consultants who would have earned a £30k base two years ago are now on £50k.”

Rising pay reflects recruiters’ rising profitability. Last week Michael Page and Robert Walters reported pre-tax profits up by around 50% year-on-year on the back of strong global demand for lawyers, accountants and finance staff.

Hays announced a more modest six percent rise in profits, but revealed it was purchasing IT in finance and pharmaceutical recruiter James Harvard for an impressive £24m upfront, followed by £19m over three years.

How much longer will finance hiring stay firm? Matthew Earl, a recruitment industry analyst at Investec, says City recruiters should be able to cruise through the remains of 2007 without too much trouble, and that 2008 looks fairly good too.

“We think conditions should be good for one to two years,” says Earl. “You’re seeing much higher jobs growth in the financial services sector than elsewhere in the economy and there’s a huge shortage in the supply of skilled labour.”

Individual recruitment consultants are likely to profit from this state of affairs, but by less than might be anticipated. Recruiters are increasing salaries, but Hughes says they are also increasing the benchmarks that need to be reached before commission is paid out. “A rule of thumb is that everyone gets a third of what they invoice, but only above a certain threshold – typically three times salary,” he says.

Finance Pros Hold Out For the Perfect Match

From CFO.com via CareerJournal (WSJ)

It's the middle of August and former Thomasville Furniture Industries CFO Paul Dascoli, 45, is riding a 300-foot roller coaster at Cedar Point Park with his two fearless teenagers. But his mind is on a roller-coaster journey of its own, contemplating the ramifications of a corporate reorganization that prompted him to resign rather than accept a diminished role. He has been toiling in a rented office for three months, sending out résumés and working the phones. "It is intense and tiring," he says, "but you can't let up until a deal is done...

Finance Salaries: Up, Up, Up

Article of BusinessWeek, January 9th, 2007.

As Corporate America calls upon the dealmakers' services, salaries and bonuses in the finance industry soar even higher.

Last year, investment banks, private equity firms, and hedge funds rewrote the dealmaking record book. Deal volume, industry profits, and CEO bonuses all reached new heights (see BusinessWeek.com, 12/19/06, "Deals of the Year, in a Year of Deals").

Now the money is trickling down through the ranks of the financial-services industry. Bonuses, which were set last December, are typically paid out during January, February, and March. At many firms such as Goldman Sachs Group (GS) everyone from the secretary to the most senior partner is eligible to partake in the record payout. Goldman Chief Executive Lloyd Blankfein received a bonus of $53 million, a securities industry record. The average payout at Goldman was about $622,000.

The money is flooding into New York City, where financial services account for 5% of the jobs but 20% of total pay...

Barbarians at the gate once more as merger mania grips the City

Article by the Guardian, November 22, 2006

Another day, another $75bn changing hands. Not since the internet-driven boom of the late 1990s have the markets been gripped by such a frenzy of takeover activity. In a single 24-hour period, eight deals worth more than $1bn (£526m) were tabled this week....

....Colin Blaydon, a professor at Dartmouth College's Tuck School of Business in New Hampshire, said: "It's a brave new world out there with all this capital available." Private equity funds are being bolstered by huge amounts of capital from pension schemes - many of which, particularly in the US, are underfunded and need spectacular long-term returns not found on the stock market...