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- Faculty Publications (148)
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- All HBS Web (311)
- Faculty Publications (148)
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- Article
Raising Capital Requirements: At What Cost?
By: Malcolm Baker and Jeffrey Wurgler
Since the financial crisis, bank capital positions have improved considerably. However, calls for heightened capital requirements have not abated. Federal Reserve Chair Ben Bernanke, Vice Chair Janet Yellen, and governors Daniel Tarullo and Jeremy Stein have all... View Details
Baker, Malcolm, and Jeffrey Wurgler. "Raising Capital Requirements: At What Cost?" Review of Financial Regulation Studies, no. 11 (Summer 2013): 4–6.
- January – February 2011
- Article
Benchmarks as Limits to Arbitrage: Understanding the Low-Volatility Anomaly
By: Malcolm Baker, Brendan Bradley and Jeffrey Wurgler
Contrary to basic finance principles, high-beta and high-volatility stocks have long underperformed low-beta and low-volatility stocks. This anomaly may be partly explained by the fact that the typical institutional investor's mandate to beat a fixed benchmark... View Details
Keywords: Volatility; Stocks; Investment Return; Investment Portfolio; Risk Management; Performance Expectations
Baker, Malcolm, Brendan Bradley, and Jeffrey Wurgler. "Benchmarks as Limits to Arbitrage: Understanding the Low-Volatility Anomaly." Financial Analysts Journal 67, no. 1 (January–February 2011).
- August 2006
- Article
Investor Sentiment and the Cross Section of Stock Returns
By: Malcolm Baker and Jeffrey Wurgler
We examine how investor sentiment affects the cross-section of stock returns. Theory predicts that a broad wave of sentiment will disproportionately affect stocks whose valuations are highly subjective and are difficult to arbitrage. We test this prediction by... View Details
Keywords: Behavioral Finance; Stocks; Investment Return; Forecasting and Prediction; Motivation and Incentives; Risk and Uncertainty; Volatility
Baker, Malcolm, and Jeffrey Wurgler. "Investor Sentiment and the Cross Section of Stock Returns." Journal of Finance 61, no. 4 (August 2006): 1645–1680.
- 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
Baker, Malcolm, Mathias F. Hoeyer, and Jeffrey Wurgler. "Leverage and the Beta Anomaly." Journal of Financial and Quantitative Analysis 55, no. 5 (August 2020): 1491–1514.
- January 2009
- Article
Multinationals as Arbitrageurs? The Effect of Stock Market Valuations on Foreign Direct Investment
By: Malcolm Baker, C. Fritz Foley and Jeffrey Wurgler
Empirical evidence of imperfect integration across world capital markets suggests a role for cross-border arbitrage by multinationals. Consistent with multinational arbitrage as a determinant of foreign direct investment (FDI) patterns, we find that FDI flows increase... View Details
Keywords: Multinational Firms and Management; Financial Markets; Foreign Direct Investment; Valuation; Capital Markets; Cross-Cultural and Cross-Border Issues; Cost; Forecasting and Prediction; Capital; Stocks; Integration
Baker, Malcolm, C. Fritz Foley, and Jeffrey Wurgler. "Multinationals as Arbitrageurs? The Effect of Stock Market Valuations on Foreign Direct Investment." Review of Financial Studies 22, no. 1 (January 2009): 337–369.
- Article
Capital Market-Driven Corporate Finance
By: Malcolm Baker
Much of empirical corporate finance focuses on sources of the demand for various forms of capital, not the supply. Recently, this has changed. Supply effects of equity and credit markets can arise from a combination of three ingredients: investor tastes, limited... View Details
Keywords: Behavioral Finance; Limits To Arbitrage; Market Efficiency; Securities Issuance; Supply Effects; Corporate Finance; Investment; Price; Capital Markets; Equity; Financial Services Industry
Baker, Malcolm. "Capital Market-Driven Corporate Finance." Annual Review of Financial Economics 1 (2009): 181–205.
- 19 Jan 2016
- First Look
January 19, 2016
emphasize users over producers. Large parts of the knowledge economy now routinely rely on users, communities, and open innovation approaches to solve important technological and organizational problems. This view of innovation, pioneered View Details
Keywords: Sean Silverthorne
- Fourth Quarter 2017
- Article
Optimal Tilts: Combining Persistent Characteristic Portfolios
By: Malcolm Baker, Ryan Taliaferro and Terry Burnham
We examine the optimal weighting of four tilts in U.S. equity markets from 1968 through 2014. We define a “tilt” as a characteristic-based portfolio strategy that requires relatively low annual turnover. This is a continuum, with small size (a very persistent... View Details
Baker, Malcolm, Ryan Taliaferro, and Terry Burnham. "Optimal Tilts: Combining Persistent Characteristic Portfolios." Financial Analysts Journal 73, no. 4 (Fourth Quarter 2017): 75–89.
- 17 Nov 2015
- First Look
November 17, 2015
forthcoming Journal of Financial Economics Introduction: New Perspectives on Corporate Capital Structure By: Acharya, Viral, Heitor Almeida, and Malcolm Baker Abstract—The National Bureau of Economic Research held a symposium titled... View Details
Keywords: Sean Silverthorne
- 27 Jan 2009
- First Look
First Look: January 27, 2009
Working PapersWhen Does Domestic Saving Matter for Economic Growth? Authors:Philippe Aghion, Diego Comin, Peter Howitt, and Isabel Tecu Abstract Can a country grow faster by saving more? We address this question both theoretically and... View Details
Keywords: Martha Lagace
- November 1993 (Revised September 1995)
- Supplement
Block 16: Management's Perspective
By: Malcolm S. Salter and Susan E.A. Hall
Supplements Block 16: Conoco's Green Oil Strategy (A). Reviews the environmental challenges facing the oil industry throughout upstream and downstream operations, and oil companies' competitive responses. Reviews Conoco's and Du Pont's environmental initiatives in more... View Details
Keywords: Local Range; Operations; Environmental Sustainability; Perspective; Competitive Strategy; Corporate Strategy
Salter, Malcolm S., and Susan E.A. Hall. "Block 16: Management's Perspective." Harvard Business School Supplement 394-075, November 1993. (Revised September 1995.)
- January 1988 (Revised April 1989)
- Background Note
Europe's New Industrial Revolution
By: Malcolm S. Salter and Roy V. Eales
Salter, Malcolm S., and Roy V. Eales. "Europe's New Industrial Revolution." Harvard Business School Background Note 388-099, January 1988. (Revised April 1989.)
- April 1985
- Background Note
NIKE: International Context
By: Malcolm S. Salter and Michael J. Roberts
Keywords: Apparel and Accessories Industry
Salter, Malcolm S., and Michael J. Roberts. "NIKE: International Context." Harvard Business School Background Note 385-328, April 1985.
- 2005
- Working Paper
Can Mutual Fund Managers Pick Stocks? Evidence from Their Trades Prior to Earnings Announcements
By: Malcolm Baker, Lubomir Litov, Jessica Wachter and Jeffrey Wurgler
We consider measures of stock-picking skill of mutual fund managers based on the earnings announcement returns of the stocks that they hold and trade. Relative to standard approaches, this approach focuses on an especially informative subset of the returns data,... View Details
Keywords: Stocks; Asset Management; Business Earnings; Forecasting and Prediction; Competency and Skills
Baker, Malcolm, Lubomir Litov, Jessica Wachter, and Jeffrey Wurgler. "Can Mutual Fund Managers Pick Stocks? Evidence from Their Trades Prior to Earnings Announcements." NBER Working Paper Series, No. w10685, February 2005. (First Draft in 2004.)
- March 2016
- Article
Dividends as Reference Points: A Behavioral Signaling Approach
By: Malcolm Baker, Brock Mendel and Jeffrey Wurgler
We outline a dividend signaling model that features investors who are averse to dividend cuts. Managers with strong unobservable cash earnings separate by paying high dividends but retain enough to be likely not to fall short next period. The model is consistent with a... View Details
Keywords: Investment
Baker, Malcolm, Brock Mendel, and Jeffrey Wurgler. "Dividends as Reference Points: A Behavioral Signaling Approach." Review of Financial Studies 29, no. 3 (March 2016): 697–738.
- Teaching Interest
Executive Education: Finance for Senior Executives
By: Malcolm P. Baker
Finance for Senior Executives provides the frameworks to strategically use financial resources and position your company for future success. By examining corporate finance from both internal and external perspectives, this HBS Executive Education
- August 2006
- Article
Predicting Returns with Managerial Decision Variables: Is There a Small-Sample Bias?
By: Malcolm Baker, Ryan Taliaferro and Jeffrey Wurgler
Many studies find that aggregate managerial decision variables, such as aggregate equity issuance, predict stock or bond market returns. Recent research argues that these findings may be driven by an aggregate time-series version of Schultz's (2003, Journal of Finance... View Details
Keywords: Prejudice and Bias; Fairness; Managerial Roles; Management Analysis, Tools, and Techniques; Equity; Bonds; Financial Markets; Investment; Capital Markets; Borrowing and Debt; Investment Return
Baker, Malcolm, Ryan Taliaferro, and Jeffrey Wurgler. "Predicting Returns with Managerial Decision Variables: Is There a Small-Sample Bias?" Journal of Finance 61, no. 4 (August 2006): 1711–1730. (Section V of "Pseudo Market Timing and Predictive Regressions, NBER Working Paper Series, No. 10823, contains additional analyses.)
- Article
Can Mutual Fund Managers Pick Stocks? Evidence from Their Trades Prior to Earnings Announcements
By: Malcolm Baker, Lubomir Litov, Jessica Wachter and Jeffrey Wurgler
We consider measures of stock-picking skill of mutual fund managers based on the earnings announcement returns of the stocks that they hold and trade. Relative to standard approaches, this approach focuses on an especially informative subset of the returns data,... View Details
Baker, Malcolm, Lubomir Litov, Jessica Wachter, and Jeffrey Wurgler. "Can Mutual Fund Managers Pick Stocks? Evidence from Their Trades Prior to Earnings Announcements." Journal of Financial and Quantitative Analysis 45, no. 5 (October 2010): 1111 –1131.
- June 2012
- Article
Comovement and Predictability Relationships Between Bonds and the Cross-Section of Stocks
By: Malcolm Baker and Jeffrey Wurgler
Government bonds comove more strongly with bond-like stocks: stocks of large, mature, low-volatility, profitable, dividend-paying firms that are neither high growth nor distressed. Variables derived from the yield curve that are already known to predict returns on... View Details
Keywords: Relationships; Bonds; Stocks; Investment Return; Cash Flow; Quality; Risk and Uncertainty; Forecasting and Prediction; Profit
Baker, Malcolm, and Jeffrey Wurgler. "Comovement and Predictability Relationships Between Bonds and the Cross-Section of Stocks." Review of Asset Pricing Studies 2, no. 1 (June 2012): 57–87.
- May 1982 (Revised February 1983)
- Supplement
Ford Motor Co. (D)
Keywords: Auto Industry
Salter, Malcolm S. "Ford Motor Co. (D)." Harvard Business School Supplement 382-166, May 1982. (Revised February 1983.)