Investment →
- 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; 0 Comments.
- 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; 0 Comments.
- 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; 0 Comments.
- 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; 0 Comments.
- 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; 0 Comments.
- 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.
- 15 Feb 2016
- Working Paper Summaries
Replicating Private Equity with Value Investing, Homemade Leverage, and Hold-to-Maturity Accounting
This paper studies the asset selection of private equity investors and the risk and return properties of passive portfolios with similarly selected investments in publicly traded securities. Results indicate that sophisticated institutional investors appear to significantly overpay for the portfolio management services associated with private equity investments.
- 04 Feb 2016
- Working Paper Summaries
Risk Preferences and Misconduct: Evidence from Politicians
Risk-taking is widely understood to be a vital aspect of leadership, yet it may have a dark side. This study of financial risk-taking among politicians shows risk preferences to be an important antecedent of misconduct. Risk preferences as measured by portfolio choices between risky and safe investments were found to strongly predict political scandals. When employing risk-taking leaders, this suggests a potential tradeoff between performance and misconduct.
- 21 Jan 2016
- Working Paper Summaries
The Globalization of Angel Investments: Evidence across Countries
Examining a cross-section of 13 angel groups who considered transactions across 21 countries, this study finds that angel investors have a positive impact on the growth of the firms they fund, their performance, and survival, while the selection of firms that apply for angel funding varies across countries.
- 17 Nov 2015
- Lessons from the Classroom
How Activist Investors Became Respectable
Once reviled as villains operating on the fringes of the market, activist investors like Carl Icahn are now powerful forces at work in the mainstream of business, says Professor Joseph Fuller. And their influence is only growing. Open for comment; 0 Comments.
- 12 Nov 2015
- Working Paper Summaries
Catering to Investors Through Product Complexity
This paper investigates the rationale for issuing complex securities to retail investors.
- 21 Oct 2015
- Research & Ideas
How to Predict if a New Business Idea is Any Good
Professor Pian Shu tackles one of the most difficult questions in the startup world: How can you tell if a new business will succeed? Open for comment; 0 Comments.
- 05 Oct 2015
- Research & Ideas
What Companies Should Not Do in the Next Banking Crisis
Following the banking meltdown of 2008, many struggling companies in Spain did what they shouldn’t have: sacrificed their future for short-term gain. Professor Claudia Steinwender calls it the Groucho Marx Criterion. Open for comment; 0 Comments.
- 23 Jun 2014
- Research & Ideas
In Venture Capital, Birds of a Feather Lose Money Together
The more affinity there is between two VCs investing in a firm, the less likely the firm will succeed, according to research by Paul Gompers, Yuhai Xuan and Vladimir Mukharlyamov. Closed for comment; 0 Comments.
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; 0 Comments.