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New research on finance from Harvard Business School faculty on issues including corporate investment, governance, and accounting management.
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Cruising in Crisis: How Carnival Is Riding Out the COVID-19 Storm

by Michael Blanding

COVID-19 has devastated the cruise industry, but one company may emerge stronger: Carnival. A case study by Stuart Gilson reveals how the cruising juggernaut is navigating the pandemic. Open for comment; 0 Comments.

Running a Consumer Fintech Startup within Goldman Sachs

Marcus by Goldman Sachs marked a dramatic shift for the 150-year-old financial institution, which historically had served only businesses and the wealthiest people. The fintech startup operated within Goldman Sachs, offering unsecured personal loans for the mass market, high-yield deposits, and a credit card in partnership with Apple. Harvard Business School associate professor Rory McDonald discusses the challenges of launching and operating a startup within an established company in his case, “Marcus by Goldman Sachs.” Open for comment; 0 Comments.

IPO or M&A? How Venture Capital Shapes a Startup's Future

by Rachel Layne

To a cash-strapped founder, any funding seems like a win, but research by Rory McDonald and colleagues shows that much more is at stake when it comes to venture capital. Open for comment; 0 Comments.

Currency Hedging in Emerging Markets: Managing Cash Flow Exposure

by Laura Alfaro, Mauricio Calani, and Liliana Varela

Economies with less liquid foreign exchange derivative markets offer firms fewer options to hedge their currency risk. Given the limitations of natural hedging, these firms are more exposed to systemic risk.

Readers Ask: What's the Next 'Big Thing' in Finance?

by Kristen Senz

Lauren Cohen tackles questions about bitcoin, podcasts, and weightlifting on Working Knowledge’s “Office Hours” series. Open for comment; 0 Comments.

Real Credit Cycles

by Pedro Bordalo, Nicola Gennaioli, Andrei Shleifer, and Stephen J. Terry

The financial crisis of 2008 renewed economists’ interest in financial fragility, specifically understanding its origins. This paper shows how market participants’ expectations can be part of standard macroeconomic models and significantly improve their explanatory power.

Stock Price Reactions to ESG News: The Role of ESG Ratings and Disagreement

by George Serafeim and Aaron Yoon

Company performance evaluations have included sell-side analyst forecasts, recommendations, and credit ratings, but a newer set has emerged: environmental, social, and governance (ESG) ratings. This study finds that ESG ratings are useful for predicting future ESG news, but their predictive ability diminishes for firms with large disagreement between raters.

In the Red: Overdrafts, Payday Lending, and the Underbanked

by Marco Di Maggio, Angela Ma, and Emily Williams

Low-income customers turn to payday lenders and check cashers for basic financial needs when traditional banks push them out of the system through high overdraft fees and other penalties. Reducing overdraft fees improves consumers’ overall financial health and access to cheaper credit.

A New Way to Cut Credit Card Debt: Pay Off One Purchase at a Time

by Kristen Senz

Letting credit card customers pay back specific purchases encourages borrowers to go beyond the minimum, says research by Michael Norton and colleagues. Open for comment; 0 Comments.

'Repayment-by-Purchase' Helps Consumers to Reduce Credit Card Debt

by Grant E. Donnelly, Cait Lamberton, Stephen Bush, Zoe Chance, and Michael I. Norton

Many consumers fail to pay off credit card debt each month and suffer financial consequences. Repayment-by-purchase, allocating payment toward specific purchases on a credit card bill, helps consumers gain a sense of progress and control over credit card debt.

Short-Termism, Shareholder Payouts, and Investment in the EU

by Jesse M. Fried and Charles C.Y. Wang

Shareholder-driven “short-termism,” as evidenced by increasing payouts to shareholders, is said to impede long-term investment in EU public firms. But a deep dive into the data reveals a different story.

COVID Not Slowing VC Investment

by Danielle Kost

Despite the economic uncertainty, most venture capitalists expect their investments to outperform major equity indexes and are still funding new endeavors, says Paul Gompers. Open for comment; 0 Comments.

Accounting for Product Impact in the Consumer Finance Industry

by George Serafeim and Katie Trinh

A framework and method for measuring and monetizing product impact across industries, applying it to two competitors in the consumer finance space.

COVID Was Supposed to Increase Bankruptcies. Instead, They've Gone Down.

by Rachel Layne

Down economic cycles and increasing unemployment usually usher in a rise in bankruptcies. Not so in the COVID-19 recession, where just the reverse has happened. Research by Raymond Kluender and colleagues. Open for comment; 0 Comments.

Venture Capitalists and COVID-19

by Paul A. Gompers, Will Gornall, Steven N. Kaplan, and Ilya A. Strebulaev

This survey of more than 1,000 venture capitalists finds that the VC industry and its portfolio companies have reduced their activity less than in previous recessions and have been more resilient than many other sectors of the global economy.

Private Equity and COVID-19

by Paul A. Gompers, Steven N. Kaplan, and Vladimir Mukharlyamov

Private equity investors are seeking new investments despite the pandemic. This study shows they are prioritizing revenue growth for value creation, giving larger equity stakes to management teams, and targeting somewhat lower returns.

Long-Run Returns to Impact Investing in Emerging Markets and Developing Economies

by Shawn Cole, Martin Melecky, Florian Mölders, and Tristan Reed

Examination of every equity investment made by the International Finance Corporation, one of the largest and longest-operating impact investors, shows this portfolio has outperformed the S&P 500 by 15 percent.

The Stock Market Value of Human Capital Creation

by Matthias Regier and Ethan Rouen

Measuring human capital creation is complex but increasingly important to managers for understanding the relationship between employee expenditures and firm performance. This paper develops a strategy to examine aspects of the intangible human capital investment embedded in a firm’s personnel expense. Closed for comment; 0 Comments.

Does Venture Capital Attract Human Capital? Evidence from a Randomized Field Experiment

by Shai Bernstein, Kunal Mehta, and Richard Townsend

Using a randomized field experiment conducted on a large online search platform, this study illustrates how investments by top venture capital investors attract potential employees and improve the pool of candidates available for the startup.

The Dark Side of Fintech Borrowing

by Rachel Layne

Fintechs have revolutionized the banking industry, but some customers end up worse for the experience, according to research by Marco Di Maggio and colleagues. Open for comment; 0 Comments.