Publications

Educators

Purchase

December 2015 (Revised May 2017)
Case

Corning, 2002

By: Malcolm Baker

Corning, with large investments in fiber optic technology, was hit particularly hard by the collapse of the telecommunications industry in 2001. With over $4 billion in debt, the firm's survival appears to rest on raising additional equity capital. James Flaws, the... View Details

Keywords: Financial Strategy; Financial Condition; Financial Instruments; Valuation; Capital; Public Equity; Stock Shares; Business or Company Management; Strategy; Manufacturing Industry; Industrial Products Industry

Educators

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

Profile

Melcolm Ruffin

mind." At the NBA, Melcolm was influenced by two more Black HBS alumni, Malcolm Turner and Mark Tatum. Together with Malcolm, Melcolm worked on the NBA's innovative sponsorship agreement with Gatorade... View Details

Keywords: Entertainment/Media

01 Sep 2017
News

Turning Point: Getting to Giving

classes I teach at our church. Now I talk to people about money all the time. At HBS, Professor Malcolm Salter gave us this advice in our last class together: “Live beneath your means.” At the time it struck... View Details

Keywords: Amalya “Ami” Campbell (MBA 1997); Social Assistance; Health, Social Assistance

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

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

01 Aug 1998
News

High Honors

Field remain strong. From 1994 to 1997, he headed the HBS Canadian Initiative, a program conceived by former HBS Dean John H. McArthur in part to enable a geographically and culturally diverse group of qualified Canadian students to... View Details

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

01 Jun 2004
News

Stevenson Accepts Key University Position

one of my great joys has been engaging alumni and friends of HBS. Having the opportunity to involve alumni in all facets of the University will surely be one of the best parts of this new assignment.” HBS professor Malcolm S. View Details

Keywords: Colleges, Universities, and Professional Schools; Educational Services

Web

HBS - The year in Review

MBA 2021 Dean's Award Press Release Faculty Recognized for Teaching & Academic Support Five faculty members were recognized by graduating MBA students for their exceptional contributions to the HBS experience: members View Details

01 Mar 2006
News

HBS Global Forum Set for June

of top-ranking industry leaders and government officials , including Jeffrey R. Immelt (MBA ’82), chairman and CEO of GE, and Robert Rubin, former Treasury Secretary. HBS professor Malcolm Salter is the... View Details

Keywords: Colleges, Universities, and Professional Schools; Educational Services

01 Sep 2004
News

Faculty Research

Associate Professor John Gourville considers the alternatives in this Q&A. Enron’s Lessons for Managers Just as the Challenger space shuttle disaster was a learning experience for engineers, so too is the Enron crash for managers, says HBS professor View Details

Keywords: Colleges, Universities, and Professional Schools; Educational Services; Publishing Industries (except Internet); Information

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

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

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

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

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

May 2012
Article

Global, Local, and Contagious Investor Sentiment

By: Malcolm Baker, Jeffrey Wurgler and Yu Yuan

We construct investor sentiment indices for six major stock markets and decompose them into one global and six local indices. In a validation test, we find that relative sentiment is correlated with the relative prices of dual-listed companies. Global sentiment is a... View Details

Keywords: Business and Shareholder Relations; Globalization; Stocks; Markets; Capital; Financial Services Industry