Publications

January 2019
Article

Bubbles for Fama

By: Robin Greenwood, Andrei Shleifer and Yang You

We evaluate Eugene Fama's claim that stock prices do not exhibit price bubbles. Based on U.S. industry returns 1926–2014 and international sector returns 1985–2014, we present four findings: (1) Fama is correct in that a sharp price increase of an industry portfolio... View Details

Keywords: Bubble; Market Efficiency; Predictability; Price Bubble; Stocks; Price; Forecasting and Prediction

June 1991 (Revised December 1997)
Case

Takeover of the Norton Co., The

By: Thomas R. Piper

After a decade of mediocre performance, the Norton Co. enters 1990 with the prospect of increased sales in the next few years. Yet Norton is pursuing slow growth industries, and a lower than expected earnings announcement at the beginning of 1990 has depressed earnings... View Details

Keywords: Mergers and Acquisitions; Business Conglomerates; Goals and Objectives; Forecasting and Prediction; Performance Evaluation; Revenue; Bids and Bidding; Business Processes; Ownership Stake

Siyu Zhang is a second-year doctoral student at HBS. Zhang joined Harvard Business School in 2020 as a Research Associate and has been working on macroeconomic forecasting projects. Prior to joining HBS, he was a Data Scientist at John Hancock, where he utilized... View Details

September 2024
Article

Investing in the Next Generation: The Long-Run Impacts of a Liquidity Shock

By: Patrick Agte, Arielle Bernhardt, Erica M. Field, Rohini Pande and Natalia Rigol

How do poor entrepreneurs trade off investments in business enterprises versus children's human capital, and how do these choices influence intergenerational socio-economic mobility? To examine this, we exploit experimental variation in household income resulting from... View Details

Keywords: Socio-economic Mobility; Entrepreneurship; Education; Income; Literacy; Poverty

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Research Summary

Dawn Matsumoto's research investigates managers' financial reporting decisions including the incentives driving these decisions and the impact of these decisions on capital market participants. She is interested in the role of financial intermediaries (such as... View Details

Article

Waves in Ship Prices and Investment

By: Robin Greenwood and Samuel G. Hanson

We study the link between investment boom and bust cycles and returns on capital in the dry bulk shipping industry. We show that high current ship earnings are associated with high used ship prices and heightened industry investment in new ships, but forecast low... View Details

Keywords: Business Earnings; Price; Investment; Shipping Industry

2024
Working Paper

Finance Without Exotic Risk

By: Pedro Bordalo, Nicola Gennaioli, Rafael La Porta and Andrei Shleifer

We address the joint hypothesis problem in cross-sectional asset pricing by using measured analyst expectations of earnings growth. We construct a firm-level measure of Expectations Based Returns (EBRs) that uses analyst forecast errors and revisions and shuts down any... View Details

Keywords: Investment Return; Financial Markets; Behavioral Finance; Risk and Uncertainty

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Research Summary

Understanding and Managing Information Intermediaries

Brian Bushee is investigating whether information intermediaries such as institutional investors and financial analysts are sophisticated and efficient users of accounting information and whether these intermediaries' decisions influence the choices made by... View Details

Research Summary

Wall Street Research

By: Paul M. Healy

Wall Street research helps to support a well-functioning capital market by providing investors with information about investment opportunities, and corporate issuers with liquidity for their stocks. Yet surprisingly little is known about how Wall Street research... View Details

Keywords: Sell-side Analysts; Brokerage; Investment Banking; Buy-side Analysts; Compensation; Financial Services Industry

May 1993
Case

Kaufmann Manufacturing Company (A)

By: Julie H. Hertenstein and William J. Bruns Jr.

A management team at Kaufmann is studying the latest year's operations and sales, which seem to have led to very confusing financial results. Sales exceeded forecast and production for the first six months, however Kaufmann reported a loss. Yet, when sales were below... View Details

Keywords: Budgets and Budgeting; Earnings Management; Cost Accounting; Financial Reporting; Cost vs Benefits; Capital Budgeting; Cost Management; Profit; Outcome or Result

20 Mar 2008
Working Paper Summaries

Sell Side School Ties

Keywords: by Lauren H. Cohen, Andrea Frazzini & Christopher J. Malloy; Financial Services

01 Aug 2016
Research & Ideas

Retail Execs Underplay Current Performance to Investors--but Why?

“leaning against the wind.” But in looking at basic stock return data, it became clear that managers understated their post-quarter private information. And in studying management guidance issued around earnings announcement dates,... View Details

Keywords: by Dina Gerdeman; Financial Services

2015
Working Paper

The Probability of Rare Disasters: Estimation and Implications

By: Emil Siriwardane

I analyze a rare disasters economy that yields a measure of the risk neutral probability of a macroeconomic disaster, p*t. A large panel of options data provides strong evidence that p*t is the single factor driving option-implied jump risk measures in the cross... View Details

Keywords: Financial Markets; Forecasting and Prediction; Financial Crisis; Macroeconomics

SSRN

December 2021
Article

Trade Policy Uncertainty and Stock Returns

By: Marcelo Bianconi, Federico Esposito and Marco Sammon

A recent literature has documented large real effects of trade policy uncertainty (TPU) on trade, employment, and investment, but there is little evidence that investors are compensated for bearing such risk. To quantify the risk premium associated with TPU, we exploit... View Details

Keywords: Trade Policy; Uncertainty; Stock Returns; Risk Premium; Tariff Rates; Portfolio Analysis; Trade; Policy; Risk and Uncertainty; Stocks; Investment Return

SSRN

January 1999 (Revised June 2006)
Case

Advanced Technologies, Inc.

By: Thomas R. Piper

The CEO of a semiconductor equipment manufacturer is assessing the financial forecasts and financing plan prepared by the chief financial officer. Continued rapid growth will create substantial financing pressures, especially if profitability fails to recover and/or if... View Details

Keywords: Forecasting and Prediction; Earnings Management; Financial Condition; Financial Reporting; Risk and Uncertainty; Economic Slowdown and Stagnation; Outcome or Result; Growth and Development; Crisis Management; Profit; Financial Strategy; Semiconductor Industry; Manufacturing Industry

October 2007
Background Note

Price Formation

By: Joshua D. Coval and Erik Stafford

Investigates how prices are formed in competitive capital markets. Focuses on a single security called AOE. Students compete with computer traders and each other for market making and informed trading profits. Participants receive a variety of public news in the form... View Details

Keywords: Capital Markets; Price; Profit; Corporate Disclosure; Newsletters; Industry Structures; Business Processes; Competitive Strategy

April 2010 (Revised May 2017)
Case

Tremblant Capital Group

By: Robin Greenwood

Brett Barakett, CEO and founder of Tremblant Capital Group, a New York–based hedge fund, must decide what to do with his fund's position in Green Mountain Coffee Roasters, which has dropped in value by more than 40% in recent months. Tremblant is a hedge fund that... View Details

Keywords: Business Earnings; Behavioral Finance; Stocks; Investment Funds; Consumer Behavior; Competitive Advantage; Financial Services Industry; New York (city, NY)