Publications

SSRN

January 2021 (Revised June 2021)
Supplement

Eaton Corporation: Portfolio Transformation and The Cost of Capital (Abridged)

By: Benjamin C. Esty, E. Scott Mayfield and Daniel Fisher

In 2000, Eaton Corporation was a broadly diversified industrial conglomerate. But its strategy was evolving and its focus was narrowing around “power management” and more recently on “intelligent power,” the use of digitally enabled products and services designed to... View Details

Keywords: Mergers and Acquisitions; Business Conglomerates; Business Divisions; Cost of Capital; Corporate Finance; Value; Valuation; Industrial Products Industry; United States; Denmark; Republic of Ireland

Working Paper Summaries

How do Private Equity Fees Vary Across Public Pensions?

Keywords: by Juliane Begenau and Emil Siriwardane; Financial Services

Malcolm P. Baker

Malcolm Baker is the Robert G. Kirby Professor of Business Administration at the Harvard Business School, where he teaches the required course in finance and a short immersive program on investing in life sciences.

His research is in the... View Details

Keywords: asset management; asset management; asset management; asset management; asset management; asset management; asset management; asset management; asset management

March 2011 (Revised April 2011)
Case

Gold in 2011: Bubble or Safe Haven Asset?

By: Robin Greenwood and Benjamin Steiner

Case explores the pricing of gold in 2011. Is the pricing justified or are we in a speculative bubble? What data are useful in determining a view on this question? View Details

Keywords: Inflation and Deflation; Money; Asset Management; Investment; Price Bubble; Policy; Risk Management

January 2021 (Revised June 2021)
Case

Eaton Corporation: Portfolio Transformation and the Cost of Capital (Abridged)

By: Benjamin C. Esty, E. Scott Mayfield and Daniel Fisher

In 2000, Eaton Corporation was a broadly diversified industrial conglomerate. But its strategy was evolving and its focus was narrowing around “power management” and more recently on “intelligent power,” the use of digitally enabled products and services designed to... View Details

Keywords: Mergers and Acquisitions; Business Conglomerates; Business Divisions; Cost of Capital; Corporate Finance; Value; Valuation; Industrial Products Industry; United States; Denmark; Republic of Ireland

December 2019
Article

Brokers and Order Flow Leakage: Evidence from Fire Sales

By: Andrea Barbon, Marco Di Maggio, Francesco Franzoni and Augustin Landier

Using trade-level data, we study whether brokers play a role in spreading order flow information. We focus on large portfolio liquidations, which result in temporary drops in stock prices, and identify the brokers that intermediate these trades. We show that these... View Details

Keywords: Predatory Trading; Back Running; Fire Sales; Brokers; Stocks; Price; Information; Knowledge Dissemination; Ethics

23 Aug 2004
Research & Ideas

New Challenges for Long-Term Investors

more oriented to determining the right risk exposures of long-term investors. Once they have decided upon them, they can then look for skill elsewhere. There is no evidence that demographic changes have influence on stock returns and on liquid View Details

Keywords: by Ann Cullen

January 2002 (Revised October 2007)
Case

Grantham, Mayo, Van Otterloo & Co., 2001

By: Joshua Musher and Andre F. Perold

Asset manager GMO underperforms the market during the 1996-2000 stock market bubble because of the focus on absolute risk. After suffering significant client withdrawals, performance again shines when the bubble collapses. Did they win the battle only to lose the war?... View Details

Keywords: Customers; Asset Management; Stocks; Investment; Price Bubble; Mathematical Methods; Risk and Uncertainty

John D. Dionne has been a Senior Lecturer of Business Administration at the Harvard Business School since 2014 and is a recently retired Senior Managing Director and Senior Advisor to Blackstone. He is also Managing Partner of Franconia Capital, a... View Details

Robert F. White

Bob White is a Senior Lecturer in the Entrepreneurial Management Unit at the Harvard Business School where he teaches courses in the MBA program (Required and Elective curricula) and the Executive Education program. Courses taught include Entrepreneurial... View Details

May 2007
Article

Corporate Financing Decisions When Investors Take the Path of Least Resistance

By: Malcolm Baker, Joshua Coval and Jeremy Stein

We explore the consequences for corporate financial policy that arise when investors exhibit inertial behavior. One implication of investor inertia is that, all else equal, a firm pursuing a strategy of equity-financed growth will prefer a stock-for-stock merger to... View Details

Keywords: Behavior; Investment; Policy; Corporate Finance

2005
Other Unpublished Work

Corporate Financing Decisions When Investors Take the Path of Least Resistance

By: Malcolm Baker, Joshua Coval and Jeremy Stein

We explore the consequences for corporate financial policy that arise when investors exhibit inertial behavior. One implication of investor inertia is that, all else equal, a firm pursuing a strategy of equity-financed growth will prefer a stock-for-stock merger to... View Details

Keywords: Decisions; Behavior; Stocks; Mergers and Acquisitions; Policy; Investment; Financial Institutions; Equity; Corporate Finance

2023
Working Paper

The Effects of Cryptocurrency Wealth on Household Consumption and Investment

By: Darren Aiello, Scott R. Baker, Tetyana Balyuk, Marco Di Maggio, Mark J. Johnson and Jason Kotter

This paper uses transaction-level data across millions of accounts to identify cryptocurrency investors and evaluate how fluctuations in individual crypto wealth affect household consumption, equity investment, and local real estate markets. We estimate an MPC out of... View Details

Keywords: Cryptocurrency; Marginal Propensity To Consume; Household Balance Sheet; Real Estate; Etherium; Bitcoin; Investment; Housing; Spending

SSRN

February 1997 (Revised April 1997)
Case

Harrington Financial Group

By: Robert C. Merton and Alberto Moel

In early 1997, Harrington Bank, a small Indiana savings and loan (thrift) wondered what its next move should be. Harrington was acquired in 1988 by the principals of Smith Breeden Associates, a money-management and consulting firm specializing in the application of... View Details

Keywords: Banks and Banking; Mergers and Acquisitions; Price; Risk Management; Mortgages; Contracts; Asset Management; Investment; Financial Services Industry

07 Feb 2008
Working Paper Summaries

Attracting Flows by Attracting Big Clients: Conflicts of Interest and Mutual Fund Portfolio Choice

Keywords: by Lauren H. Cohen & Breno Schmidt; Financial Services

2020
Chapter

Climate Change Is Going to Transform Where and How We Build

By: John D. Macomber

As fires, floods, and droughts increasingly threaten homes, businesses, and other institutions, climate risk has become financial risk. This implies that homeowners and investors have been making location decisions without properly pricing the cost of potential peril,... View Details

Keywords: Climate Change; Housing; Mortgages; Geographic Location; Real Estate Industry

Research Summary

The Baby Business: How Markets are Changing the Future of Birth

By: Debora L. Spar

It is difficult to conceive of the child as commerce. For even at the start of the 21st century, we like to believe that some things remain beyond both markets and science; that there are some things that money can't buy. In economic terms, these things are defined as... View Details

June 2018
Article

Deviations from Covered Interest Rate Parity

By: Wenxin Du, Alexander Tepper and Adrien Verdelhan

We find that deviations from the covered interest rate parity (CIP) condition imply large, persistent, and systematic arbitrage opportunities in one of the largest asset markets in the world. Contrary to the common view, these deviations for major currencies are not... View Details

Keywords: Interest Rates; Financial Markets; Banks and Banking; Price