Investment
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- 04 Sep 2018
- Working Paper Summaries
Investing Outside the Box: Evidence from Alternative Vehicles in Private Capital
Private equity vehicles that differ from the traditional structure have become a major portion of investors’ portfolios, especially over the past decade. This study identifies differences in performance across limited and general partners participating in such vehicles, as well as across the two broad classes of alternative vehicles.
- 02 Apr 2018
- Research & Ideas
Is 'Gut Feel' a Good Reason to Invest in a Startup?
Most investments in startups should never be made, at least when using by-the-numbers reasoning. But funded they are. Laura Huang believes investors use gut instinct to manage that risk. Open for comment; Comment(s) posted.
- 31 Mar 2018
- Working Paper Summaries
Expected Stock Returns Worldwide: A Log-Linear Present-Value Approach
Over the last 20 years, shortcomings of classical asset-pricing models have motivated research in developing alternative methods for measuring ex ante expected stock returns. This study evaluates the main paradigms for deriving firm-level expected return proxies (ERPs) and proposes a new framework for estimating them.
- 09 Feb 2018
- Working Paper Summaries
Developing Novel Drugs
This paper contributes to our understanding of how financing constraints affect the direction of innovation in drug development. The authors develop a new measure of drug novelty based on molecular characteristics, and explore the tradeoffs involved in decisions to develop more novel therapies. Open for comment; Comment(s) posted.
- 31 Oct 2017
- Working Paper Summaries
Mutual Funds as Venture Capitalists? Evidence from Unicorns
Larger mutual funds and those having more stable funding are more likely to invest in privately held startups known as unicorns. Mutual funds are less involved in corporate governance, especially boards of directors, but have more protections when it comes to liquidating their stakes.
- 02 Oct 2017
- What Do You Think?
Do Bitcoin and Digital Currency Have a Future?
SUMMING UP Bitcoin has shown to be a powerful digital currency, but the real story of the future is Blockchain, say James Heskett's readers. Open for comment; Comment(s) posted.
- 21 Sep 2017
- Cold Call Podcast
State Street’s SHE: Investing in Women Leaders
As investors increasingly demand investment opportunities that match their social beliefs, financial services firms are busy designing new products. In this podcast, Vikram Gandhi discusses the expanding influence of impact investing and how State Street Global Advisers is responding. Open for comment; Comment(s) posted.
- 28 Aug 2017
- Research & Ideas
Should Industry Competitors Cooperate More to Solve World Problems?
George Serafeim has a theory that if industry competitors collaborated more, big world problems could start to be addressed. Is that even possible in a market economy? Open for comment; Comment(s) posted.
- 07 Aug 2017
- Working Paper Summaries
Governance Through Shame and Aspiration: Index Creation and Corporate Behavior in Japan
By exploiting the unique features of Japan’s JPX-Nikkei 400 index, this paper examines how membership in a stock index serves as a source of prestige that can motivate managers and influence corporate governance norms. Findings are important for understanding non-pecuniary mechanisms to induce meaningful changes in corporate behavior.
- 13 Jul 2017
- Working Paper Summaries
Catering Through Disclosure: Evidence from Shanghai-Hong Kong Connect
The researcher studies firms’ use of disclosure to build investor confidence when they operate in a market where the institutions that support the supply of credible information are weak.
- 13 Jun 2017
- Research & Ideas
Why Global Investments Are Still a Good Bet
International markets often move together, so does a global investment portfolio even make sense anymore? Luis Viceira still sees plenty of advantages in looking beyond home markets. Open for comment; Comment(s) posted.
- 02 Mar 2017
- What Do You Think?
Is China About to Overtake the US for World Trade Leadership?
SUMMING UP. It's better for the United States if China is an economic ally rather than a competitor for world trade leadership, James Heskett's readers conclude. Open for comment; Comment(s) posted.
- 10 Feb 2017
- Working Paper Summaries
The Persistent Effect of Initial Success: Evidence from Venture Capital
To understand better what channels might account for persistence in the fund-level performance of private equity firms, the authors examine the individual investments underlying fund-level returns.
- 30 Jan 2017
- Research & Ideas
Vanguard, Trian And The Problem With 'Passive' Index Funds
Index funds are the major shareholders in many large- and medium-sized public companies, but their passive investment nature offers few checks on those companies’ executives, says Luis Viceira. Open for comment; Comment(s) posted.
- 30 Nov 2016
- Working Paper Summaries
The Stock Market and Bank Risk-Taking
It is clear that risk-taking by financial institutions is one of the main causes of financial crises and severe recessions. Yet we know relatively little about what gives rise to such risk-taking in the first place. This paper presents evidence that a focus on short-term stock prices induces publicly-traded banks to increase risk relative to privately-held banks. The findings provide support for the view that compensation schemes should require management to hold stock for longer periods to mitigate their incentives to pump up short-term earnings and the short-term stock price.
- 15 Aug 2016
- Research & Ideas
Black Swans and Big Trends Can Ruin Anyone's Internet Prediction
Coming off the dot-com bust, Thomas R. Eisenmann was confident enough in his internet vision that he wrote a book about what would happen next. For the most part, he was wrong. He offers lessons learned for navigating the boom-bust cycle. Open for comment; Comment(s) posted.
- 09 Aug 2016
- Working Paper Summaries
Shareholder Activism on Sustainability Issues
Shareholder proposals on environmental, social, and governance (ESG) topics have more than doubled in the last two decades. Testing the effect that ESG proposals have on firms’ subsequent ESG performance and market valuation, the authors find a considerable portion (42 percent) of ESG proposals to be financially beneficial and associated with subsequent increases in environmental and social performance, too. Managers need to identify significant sustainability issues, based on their industry, wisely because errors could be value-destroying as the authors show declines in financial value for the rest of the sample (58 percent).
- 21 Jul 2016
- Cold Call Podcast
How Small Investors Can Bet Big on Brands They Love
LOYAL3 allows consumers to make small stock purchases of companies they love. In this Cold Call podcast, Luis M. Viceira discusses LOYAL3's move into IPOs and the idea that shareholders make better customers. Open for comment; Comment(s) posted.
- 04 Mar 2016
- Working Paper Summaries
Credit-Market Sentiment and the Business Cycle
Using United States data from 1929 to 2013, Jeremy C. Stein and colleagues emphasize the role of credit-market sentiment as an important driver of the business cycle.
IQ from IP: Simplifying Search in Portfolio Choice
Mutual fund managers solve their complex “search problem” for superior investable returns by tracking—and trading—on very particular sets of firms and insiders. These sets are chosen strategically and remain very persistent over time, as does the outperformance these insiders’ trades afford to the given fund managers.