Publications

August 2020
Article

Leverage and the Beta Anomaly

By: Malcolm Baker, Mathias F. Hoeyer and Jeffrey Wurgler

The well-known weak empirical relationship between beta risk and the cost of equity—the beta anomaly—generates a simple tradeoff theory: As firms lever up, the overall cost of capital falls as leverage increases equity beta, but as debt becomes riskier the marginal... View Details

Keywords: Risk Anomaly; Leverage; Capital Structure; Risk and Uncertainty

24 May 2014
News

Analysts’ dim view of CSR brightens over time

Research Summary

The Role of Institutions in Overcoming Imperfect Monitoring in Relational Contracting (with Carmit Segal)

In a world in which firms can be hit by transitory adverse shocks it may be too costly for any single worker to verify the true state of the world. In this case, it may not be possible for firms to lower wages in response to adverse shocks and still have the workers... View Details

2007
Working Paper

Investor Sentiment in the Stock Market

By: Malcolm Baker and Jeffrey Wurgler

Real investors and markets are too complicated to be neatly summarized by a few selected biases and trading frictions. The "top down" approach to behavioral finance focuses on the measurement of reduced form, aggregate sentiment and traces its effects to stock returns.... View Details

Keywords: Investment; Markets; Behavioral Finance; Stocks

January 2020
Case

SK Group: Social Progress Credits

By: George Serafeim, Ethan Rouen and David Freiberg

SK Group was one of the largest companies South Korea. A family-run conglomerate consisting of around 120 subsidiaries and employing more than 100,000, SK was tightly knit into the fabric of Korean society. SK viewed their future success as contingent upon the strength... View Details

Educators

Article

Management Practices, Relational Contracts and the Decline of General Motors

By: Susan Helper and Rebecca Henderson

General Motors was once regarded as one of the best managed and most successful firms in the world, but between 1980 and 2009 its share of the U.S. market fell from 62.6% to 19.8%, and in 2009 the firm went bankrupt. In this paper we argue that the conventional... View Details

Keywords: Organizational Design; Management Practices and Processes; Insolvency and Bankruptcy; Manufacturing Industry; Auto Industry; United States

January – February 2011
Article

Creating Shared Value

By: Michael E. Porter and Mark R. Kramer

The capitalist system is under siege. In recent years business has been criticized as a major cause of social, environmental, and economic problems. Companies are widely thought to be prospering at the expense of their communities. Trust in business has fallen to new... View Details

Keywords: Customer Value and Value Chain; Economic Growth; Economic Systems; Corporate Social Responsibility and Impact; Environmental Sustainability; Trust; Human Needs; Welfare; Competitive Advantage; Value Creation

March 2009 (Revised April 2011)
Course Overview Note

Growing, Financing, and Managing Family and Closely Held Firms: Overview of the Course

By: Belen Villalonga

Most companies around the world are controlled by their founding families, including more than half of all public corporations in the U.S. and Europe and more than two thirds of those in Asia. These companies are the subject of the Financial Management of Family and... View Details

Keywords: Family Business; Financial Management; Corporate Governance; Governing and Advisory Boards; Family Ownership; Business and Stakeholder Relations; Valuation

Martin Sinozich is a Senior Lecturer in the Entrepreneurial Management Unit at Harvard Business School, where he teaches in both MBA and Executive Education programs. For first-year MBAs, Martin teaches in Field Global Immersion, a required course that... View Details

2024
Working Paper

Hidden Alpha

By: Manuel Amman, Alexander Cochardt, Lauren Cohen and Stephan Heller

This paper documents the central role of hidden connections between fund managers and firm officers in financial markets, drawing on an extensive dataset of over 100 thousand manually identified Facebook profiles and their 35 million Facebook friends. Our findings... View Details

Keywords: Returns; Investment Return; Networks

June 2020
Article

U.S. Monetary Policy and Emerging Market Credit Cycles

By: Falk Bräuning and Victoria Ivashina

Foreign banks’ lending to firms in emerging market economies (EMEs) is large and denominated predominantly in U.S. dollars. This creates a direct connection between U.S. monetary policy and EME credit cycles. We estimate that over a typical U.S. monetary easing cycle,... View Details

Keywords: Global Business Cycle; Monetary Policy; Reaching For Yield; Money; Policy; Credit; Emerging Markets

13 May 2008
First Look

First Look: May 13, 2008

Publication:Financial Analysts Journal (forthcoming) Abstract We compare the earnings forecast performance of analysts at a large buy-side firm to that of sell-side analysts. Our tests show that the buy-side View Details

Keywords: Martha Lagace

July 1999 (Revised June 2000)
Case

Edward Jones

By: Michael E. Porter and Gregory C. Bond

Edward Jones is a leading, highly profitable retail brokerage firm with a unique strategy very different from those of its rivals. The case describes Jones's activities and allows a rich discussion of its positioning choices, supporting activities, and tradeoffs. Jones... View Details

Keywords: Financial Institutions; Business or Company Management; Goals and Objectives; Growth and Development Strategy; Growth Management; Business Strategy; Competition; Competitive Strategy; Financial Services Industry; Financial Services Industry

Educators

Research Summary

The Value of Family Ownership, Control, and Management

In collaboration with Professor Raphael Amit of Wharton, Belén Villalonga is investigating how family ownership, control, and management affect firm value. Their forthcoming Journal of Financial... View Details

October 2019
Case

Impax Laboratories: Executing Accretive Acquisitions (A)

By: Benjamin C. Esty and Daniel Fisher

Impax Laboratories was a technology-based pharmaceutical company that used a “dual platform” strategy to sell both generic and branded treatments. While Impax had grown organically for most of its history, it was beginning to use major acquisitions for growth. In the... View Details

Keywords: Financial Reporting; Financial Statements; Mergers and Acquisitions; Capital Structure; Competition; Competitive Advantage; Corporate Strategy; Pharmaceutical Industry; United States

Educators

Dennis W. Campbell is currently the Dwight P. Robinson Jr. Professor of Business Administration at Harvard Business School. His research and teaching activities focus broadly on how management control systems can be designed to balance short-term strategy execution... View Details

Keywords: financial services; financial services; financial services; financial services; financial services; financial services; financial services

06 Nov 2006
Research & Ideas

How South Africa Challenges Our Thinking on FDI

pushing the envelope on offering products for an emerging market, the need to go in and set up a business or acquire your own company in order to have exposure to this area is lessened. What many firms or asset managers who want exposure... View Details

Keywords: by Martha Lagace

December 2010
Article

The Case for Professional Boards

By: Robert C. Pozen

When the world's largest financial institutions had to be rescued from insolvency in 2008, many experts laid the blame at the feet of corporate boards. But insufficient board oversight is a problem that had supposedly been solved in 2002. As the United States... View Details

Keywords: Financial Institutions; Insolvency and Bankruptcy; Governing and Advisory Boards; Failure; Accounting Audits; Quality; Behavior; Legal Liability; Experience and Expertise; Corporate Governance; Governance Controls; Performance Effectiveness; United States

2011
Other Unpublished Work

Deference from Low-status Firms: Maintaining Status without Resources

By: Mikolaj Jan Piskorski and Bharat N. Anand

This paper proposes a set of conditions under which high-status firms retain their positions, even if they lose resources. Firms are considered high status if they obtain ties from other high-status firms. Within the class of high-status firms, we distinguish between... View Details

Keywords: Business Ventures; Venture Capital; Financial Condition; Alliances; Rank and Position; Status and Position; Financial Services Industry; United States