Publications

We show that the secular upward shift in short-run cross-country correlations of stock and bond returns does not necessarily imply a decline in the benefits of global portfolio diversification for long-horizon investors. We show that this increase in correlations has... View Details

TeachingInterests

Finance I

By: Archie L. Jones

This course examines the role of finance in supporting the functional areas of a firm, and fosters an understanding of how financial decisions themselves can create value.

Topics covered include:

Basic analytical skills and principles of... View Details

Article

Analyzing Scrip Systems

By: Kris Johnson, David Simchi-Levi and Peng Sun

Scrip systems provide a nonmonetary trade economy for exchange of resources. We model a scrip system as a stochastic game and study system design issues on selection rules to match potential trade partners over time. We show the optimality of one particular rule in... View Details

Keywords: ＂Repeated Games＂; Stochastic Trust Game; Dynamic Program; P2P Lending; Scrip Systems; Artificial Currency; Non-monetary Trade Economies; Marketplace Matching; Currency; Operations; Game Theory

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19 Feb 2019
News

Payless liquidation sale prices: What you need to know about store closing sales

10 Jul 2018
First Look

New Research and Ideas, July 10, 2018

easy to compare online, discount coupons and codes have high uptake, and sellers often bear the cost of shipping products to buyers. In addition to these factors, online selling precludes many methods of price discrimination exercised in... View Details

Keywords: Dina Gerdeman

November 2020
Supplement

Valuing Celgene's CVR

By: Benjamin C. Esty and Daniel Fisher

When Bristol-Myers Squibb (BMS) acquired Celgene Corporation in November 2019, Celgene shareholders received cash, BMS stock, and a contingent value right (CVRs) that would pay $9 if the U.S. Food and Drug Administration (FDA) approved three of Celgene’s late stage... View Details

Keywords: Mergers and Acquisitions; Value; Valuation; Judgments; Decision Making; Cash Flow; Financial Instruments; Cognition and Thinking; Pharmaceutical Industry; Biotechnology Industry; United States

January 1989 (Revised September 1995)
Case

MSDI-Alcala de Henares, Spain

By: Timothy A. Luehrman

Merck & Co., Inc. is evaluating a proposed cost-saving investment by its Spanish subsidiary. The case introduces techniques of discounted cash flow valuation analysis in a multicurrency setting. Can be used to teach basic international parity conditions as they relate... View Details

Keywords: Business Subsidiaries; Cash Flow; Cost Management; Currency; Investment; Management Analysis, Tools, and Techniques; Valuation; Spain

January 1989 (Revised October 1993)
Background Note

Note: Valuing a Business Acquisition Opportunity

By: William E. Fruhan Jr.

Describes how to value an acquisition opportunity as a capital budgeting problem. Cash flows are discounted at the cost of capital and debt is deducted to value the equity capital of the target company. A key contribution of the note is the discussion of five methods... View Details

Keywords: Valuation; Acquisition; Opportunities

September 2010 (Revised August 2013)
Case

Liza Davis and the Bargain Hunting Customer

By: Francisco de Asis Martinez-Jerez and Lisa Brem

Liza Davis, an upscale women's fashion retailer, is reeling from worldwide recession and lower demand. Should the company target the fast-growing bargain hunter segment or hold the line on price discounts to preserve their brand image? Customer profitability... View Details

Keywords: Competitive Strategy; Price; Product Positioning; Customer Value and Value Chain; Business Cycles; Financial Crisis; Profit; Knowledge Use and Leverage; Fashion Industry; Retail Industry

March 2001
Background Note

Extracting Information from the Futures and Forwards Markets: The Relation between Spot Prices, Forward Prices and Expected Future Spot Prices

Discounted cash flow valuation calls for using expected future prices of inputs or outputs. This case describes the relationship between spot prices, forward/future prices, and expected future prices. Knowing current forward and future prices alone is not enough to... View Details

Keywords: Price; Cash Flow; Valuation; Futures and Commodity Futures

May 2009
Case

Ceres Gardening Company: Funding Growth in Organic Products

By: John H. McArthur and Sunru Yong

Ceres is a leading player in the growing organic gardening industry, selling seeds, small plants, and related items. Their distribution depends heavily on retail sales through independent nurseries and garden centers. Because these small dealers are unable to finance... View Details

Keywords: Accounting Procedures; Marketing; Business Growth; Plant-Based Agribusiness; Marketing Strategy; Expansion; Business Growth and Maturation; Marketing Channels; Credit; Financial Statements; Sales; Retail Industry; Agriculture and Agribusiness Industry

2010
Chapter

The Euro as a Reserve Currency for Global Investors

By: Luis M. Viceira and Ricardo Gimeno

This article explores the demand for the euro for risk management purposes and the evidence of stock market integration in the euro area. We define a reserve currency as one that investors demand either because it helps them hedge real interest risk and inflation risk,... View Details

Keywords: Volatility; Inflation and Deflation; Capital Markets; Currency; Stocks; Financial Markets; Financing and Loans; Investment Return; Investment Portfolio; Risk Management

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2007
Working Paper

Dynamics of Platform Competition: Exploring the Role of Installed Base, Platform Quality and Consumer Expectations

By: Feng Zhu and Marco Iansiti

This paper seeks to answer three questions. First, which drives the success of a platform, installed base, platform quality or consumer expectations? Second, when does a monopoly emerge in a platform-based market? Finally, when is a platform-based market socially... View Details

Keywords: Price; Network Effects; Digital Platforms; Monopoly; Quality; Competitive Advantage; Digital Platforms

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January 2009 (Revised July 2015)
Case

Restaurant Promotions in 2015

By: Benjamin Edelman

A variety of services offer consumers discounts when dining at participating restaurants. This case examines four such services: Entertainment Book, Restaurant.com, Rewards Network, and Groupon. Despite key functional similarities, each of the services chooses an... View Details

Keywords: Marketing Strategy; Two-Sided Platforms; Service Delivery; Service Operations; Internet; Food and Beverage Industry; Service Industry

July 2005 (Revised April 2008)
Case

The Rise of Kmart Corporation 1962-1987

By: John R. Wells and Travis Haglock

Tracks the development of the Kmart discount store chain from its inception in 1961 to its peak in 1990 and examines the contribution of each Kmart chief executive to the chain's success. In, parallel, compares the performance of Wal-Mart over the same period along a... View Details

Keywords: History; Strategic Planning; Leadership; Competitive Strategy; Performance Evaluation; Retail Industry; United States

12 Jan 2011
News

To Groupon or Not To Groupon: New Research on Voucher Profitability

05 Mar 2019
Working Paper Summaries

The Impacts of Increasing Search Frictions on Online Shopping Behavior: Evidence from a Field Experiment

Keywords: by Donald Ngwe, Kris J. Ferreira, and Thales Teixeira; Retail; Apparel & Accessories; Consumer Products

September 2002 (Revised April 2004)
Background Note

Valuing Cash Flows in an International Context

Addresses the question of how to value cash flows in an international context. Focuses on entrepreneurial ventures, but its content applies to finance issues that arise in established multinational enterprises. Addresses cash flows, discount rates, country risk... View Details

Keywords: International Finance; Valuation; Cash Flow