Once a Castle, Home is Now a Debtors' Prison
| Published: | February 2, 2012 |
|---|---|
| Feature: | Op-Ed |
| Forum: | open for comment; 6 Comments posted |
Forget the notion of the home as "castle." Twenty-two percent of Americans owe more on their mortgages than the value of their homes. Nicolas P. Retsinas offers ideas for how these "debtors' prisons" can be turned into productive housing.
Published in 2011
The New Challenge of Leading Financial Firms
| Published: | November 21, 2011 |
|---|---|
| Feature: | Executive Education |
| Forum: | open for comment; 12 Comments posted |
Running a financial organization, never easy to begin with, has quickly become one of the most difficult leadership challenges that an executive can undertake, requiring mastery of talent management, change management, and ethics. An interview with Professor Boris Groysberg, who teaches a new HBS Executive Education program on the subject with Professor Paul M. Healy.
How 'Hybrid' Nonprofits Can Stay on Mission
| Published: | October 17, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 13 Comments posted |
As nonprofits add more for-profit elements to their business models, they can suffer mission drift. Associate Professor Julie Battilana says hybrid organizations can stay on target if they focus on two factors: the employees they hire and the way they socialize those employees.
Doomsday Coming for Catastrophic Risk Insurers?
| Published: | September 19, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 5 Comments posted |
Insurance "reinsurers" underwrite much of the catastrophic risk insurance taken out to protect against huge disasters natural and man-made. Problem is, says Professor Kenneth A. Froot, reinsurers themselves are in danger of failing from a major catastrophic event.
Decoding Insider Information and Other Secrets of Old School Chums
| Published: | August 29, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 1 Comment posted |
Associate Professors Lauren H. Cohen and Christopher J. Malloy study how social connections affect important decisions and, ultimately, how those connections help shape the economy. Their research shows that it's possible to make better stock picks simply by knowing whether two industry players went to the same college or university. What's more, knowing whether two congressional members share an alma mater can help predict the outcome of pending legislation on the Senate floor.
What Loyalty? High-End Customers are First to Flee
| Published: | May 16, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 24 Comments posted |
Companies offering top-drawer customer service might have a nasty surprise awaiting them when a new competitor comes to town. Their best customers might be the first to defect. Research by Harvard Business School's Ryan W. Buell, Dennis Campbell, and Frances X. Frei.
Keeping Credit Flowing to Consumers in Need
| Published: | March 14, 2011 |
|---|---|
| Feature: | Research & Ideas |
| Forum: | open for comment; 2 Comments posted |
Regulators and policymakers are debating the best ways to revamp our damaged system of consumer and housing finance. The problem: turning the regulatory spigot too tightly could shut off the flow of needed credit to millions of lower-income Americans. A discussion with professor Nicolas P. Retsinas.
What's Government's Role in Regulating Home Purchase Financing?
| Q&A with: | David S. Scharfstein |
|---|---|
| Published: | February 24, 2011 |
| Feature: | Op-Ed |
The Obama administration recently proposed housing finance reforms to wind down Fannie Mae and Freddie Mac and bring private capital back to the mortgage markets. HBS professor David Scharfstein and doctoral student Adi Sunderam put forth a proposal to replace Fannie and Freddie and ensure a more stable supply of housing finance.
A Behavioral Model of Demandable Deposits and Its Implications for Financial Regulation
| Author: | Julio J. Rotemberg |
|---|---|
| Published: | February 18, 2011 |
| Paper Release Date: | December 2010 |
| Feature: | Working Papers |
Depositors are overconfident of their chances of recovering demandable deposits in a bank run. In a recent research paper, professor Julio J. Rotemberg reviews various government regulations available to be imposed on financial institutions—minimum capital levels, asset requirements, deposit insurance, and compulsory clawbacks—to understand how much they can help protect investors.
Published in 2010
Decoding Inside Information
| Authors: | Lauren Cohen, Christopher Malloy, and Lukasz Pomorski |
|---|---|
| Published: | December 8, 2010 |
| Paper Release Date: | October 2010 |
| Feature: | Working Papers |
Price setters and regulators face a difficult challenge in trying to understand the stock trading activity of corporate insiders, especially when it comes to figuring out whether the activity is a good indicator of the firm's financial future. This National Bureau of Economic Research paper discusses how to distinguish "routine" trades (which predict virtually no information about a firm's financial future) from "opportunistic" trades (which contain a great deal of predictive power). Research was conducted by Harvard Business School professors Lauren Cohen and Christopher Malloy and Lukasz Pomorski of the University of Toronto.
Why Do We Chase Stars?
| Published: | November 4, 2010 |
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| Feature: | What Do YOU Think? |
| Forum: | closed | 46 Comments posted |
Summing Up: Is it wise for companies to recruit "star" performers? Discussing the book "Chasing Stars", Jim Heskett's readers support the idea that talent is portable between employers and that women are better at it than men. (Next Forum opens December 2)
How Did Increased Competition Affect Credit Ratings?
| Authors: | Bo Becker and Todd Milbourn |
|---|---|
| Published: | November 3, 2010 |
| Paper Release Date: | October 2008, revised July 2009, September 2010 |
| Feature: | Working Papers |
When Fitch Ratings took on Standard & Poor's and Moody's as an alternative credit rating agency in the 1990s, there was a general assumption that the increased competition would lead to higher-quality corporate debt ratings from the incumbents. In fact, their ratings quality declined during the 10-year study period, according to Harvard Business School's Bo Becker and Washington University's Todd Milbourn. One possible cause: competition weakens reputational incentives that drive ratings quality.
How Government can Discourage Private Sector Reliance on Short-Term Debt
| Q&A with: | Robin Greenwood |
|---|---|
| Published: | October 13, 2010 |
| Feature: | Research & Ideas |
Financial institutions have relied increasingly and excessively on short-term financing--putting the overall system at risk. Should government step in? Harvard researchers Robin Greenwood, Samuel Hanson, and Jeremy C. Stein propose a "comparative advantage approach" that allows government to actively influence the corporate sector's borrowing decisions.
Crashes and Collateralized Lending
| Authors: | Jakub W. Jurek and Erik Stafford |
|---|---|
| Published: | October 12, 2010 |
| Paper Release Date: | April, 2010 |
| Feature: | Working Papers |
This paper presents a framework for understanding the contribution of systematic crash risk to the cost of capital for a variety of different types of securities. The framework isolates the systematic crash risk exposure of different collateral types (equities, corporate bonds, and CDO tranches), and provides a simple mechanism for allocating the cost of bearing this risk between a financing intermediary and investor. Research was conducted by Jakub W. Jurek (Bendheim Center for Finance, Princeton University) and Erik Stafford (Harvard Business School).
What Brazil Teaches About Investor Protection
| Q&A with: | Aldo Musacchio |
|---|---|
| Published: | May 17, 2010 |
| Feature: | Research & Ideas |
When Brazil entered the 20th century, its companies were a model of transparency and offered investor protections that government did not. Can our financial regulators learn a lesson from history? HBS professor Aldo Musacchio shares insights from his new book.
Just Say No to Wall Street: Putting A Stop to the Earnings Game
| Authors: | Joseph Fuller and Michael C. Jensen |
|---|---|
| Published: | May 13, 2010 |
| Paper Release Date: | April 2010 |
| Feature: | Working Papers |
Over the last decade, companies have struggled to meet analysts' expectations. Analysts have challenged the companies they covered to reach for unprecedented earnings growth, and executives have often acquiesced to analysts' increasingly unrealistic projections, adopting them as a basis for setting goals for their organizations. As Monitor Group cofounder Joseph Fuller and HBS professor emeritus Michael C. Jensen write, improving future relations between Main Street and Wall Street and putting an end to the destructive "earnings game" between analysts and executives will require a new approach to disclosure based on a few simple rules of engagement. (This article originally appeared in the Journal of Applied Corporate Finance in the Winter 2002 issue.)
Published in 2009
Good Banks, Bad Banks, and Government's Role as Fixer
| Published: | December 21, 2009 |
|---|---|
| Feature: | Views on News |
Government action to stem collapse of the U.S. financial system was certainly warranted, agrees professor Robert Pozen. But results include less competition and increased risk to taxpayers. A Q&A from the HBS Alumni Bulletin and book excerpt from Too Big to Save?
Shareholders Need a Say on Pay
| Published: | November 2, 2009 |
|---|---|
| Feature: | Research & Ideas |
"Say on pay" legislation now under debate Washington D.C. can be a useful tool for shareholders to strengthen the link between CEO pay and performance when it comes to golden parachutes, says Harvard Business School professor Fabrizio Ferri. Here's a look at how the collective involvement of multiple stakeholders could shape the future of executive compensation.
HBS Begins Teaching Consumer Finance
| Q&A with: | Peter Tufano |
|---|---|
| Published: | October 28, 2009 |
| Feature: | Lessons from the Classroom |
Last spring HBS became the first top-ranked U.S. business school to offer a course in consumer finance. Professor Peter Tufano talks about the course and his determination to make consumer finance a broadly accepted academic pursuit. From the HBS Alumni Bulletin.
Why Competition May Not Improve Credit Rating Agencies
| Q&A with: | Bo Becker |
|---|---|
| Published: | August 31, 2009 |
| Feature: | Research & Ideas |
Competition usually creates better products and services. But when competition increased among credit rating agencies, the result was less accurate ratings, according to a study by HBS professor Bo Becker and finance professor Todd Milbourn of Washington University in St Louis. In our Q&A, Becker discusses why users of ratings should exercise a little caution.
