Publications

September 2019 (Revised February 2020)
Teaching Note

Commonwealth Bank of Australia: Unbanklike Experimentation

By: Ryan W. Buell and Leslie K. John

Email mking@hbs.edu for a courtesy copy.

This Teaching Note explains the theory of the case and teaching plan for the case: Commonwealth Bank of Australia: Unbanklike Experimentation (619-018). In August 2017,... View Details

Keywords: Transparency; Experimentation; Banks and Banking; Credit Cards; Customer Focus and Relationships; Competitive Strategy; Banking Industry; Australia

October 2018 (Revised September 2022)
Case

Stock-Based Compensation at Twitter

By: Jonas Heese, Zeya Yang and Mike Young

Olivia Nash, an analyst at leading hedge fund BlueShark Capital Management, had just finished listening to the hour-long earnings call for Twitter’s Q4 2017 results. Was Twitter doing well? That depended on which numbers she chose to believe. According to Generally... View Details

Keywords: Twitter; Non-GAAP Disclosure; Stock-based Compensation; Earnings Management; Corporate Disclosure; Compensation and Benefits; Stocks; Measurement and Metrics

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

November 2004 (Revised April 2005)
Case

Deutsche Bank: Finding Relative Value Trades

Deutsche Bank's Fixed Income Research Group is looking for yield curve trades to pitch to clients as well as for their proprietary trading desk. The group has data on recent bond trades and a proprietary term structure model, which they can use to develop trading... View Details

Keywords: Bonds; Capital Markets; Investment Banking; Institutional Investing; Banking Industry; Germany

September 2004
Teaching Note

Between a Rock and a Hard Place: Valuation and Distribution in Private Equity (TN)

By: G. Felda Hardymon, Josh Lerner and Ann Leamon

Teaching Note to (9-803-161). View Details

Keywords: Valuation; Distribution; Private Equity; Venture Capital; Investment Portfolio; Stocks

August 2003
Article

When Does the Market Matter? Stock Prices and the Investment of Equity-Dependent Firms

By: Malcolm Baker, Jeremy Stein and Jeffrey Wurgler

We use a simple model of corporate investment to determine when investment will be sensitive to non-fundamental movements in stock prices. The key cross-sectional prediction of the model is that stock prices will have a stronger impact on the investment of firms that... View Details

Keywords: Stocks; Price; Investment; Equity; Forecasting and Prediction; Rank and Position; Markets

November 2003
Article

The Maturity of Debt Issues and Predictable Variation in Bond Returns

By: Malcolm Baker, Robin Greenwood and Jeffrey Wurgler

The maturity of new debt issues predicts excess bond returns. When the share of long-term debt issues in total debt issues is high, future excess bond returns are low. This predictive power comes in two parts. First, inflation, the real short-term rate, and the term... View Details

Keywords: Borrowing and Debt; Bonds; Investment Return; Financial Markets; Forecasting and Prediction

06 Apr 2021
Working Paper Summaries

Currency Hedging in Emerging Markets: Managing Cash Flow Exposure

Keywords: by Laura Alfaro, Mauricio Calani, and Liliana Varela; Financial Services

June 1998
Background Note

Note on Alternative Methods for Estimating Terminal Value

By: William E. Fruhan Jr.

Reviews basic techniques for estimating terminal value in the valuation of businesses. Among the techniques discussed are perpetuities, growing perpetuities, use of multiples, and liquidation value. A rewritten version of an earlier note. View Details

Keywords: Financial Liquidity; Bonds; Valuation

October 2023
Article

Stock Market Stimulus

By: Robin Greenwood, Toomas Laarits and Jeffrey Wurgler

We study the stock market effects of the arrival of the three rounds of “stimulus checks” to U.S. taxpayers and the single round of direct payments to Hong Kong citizens. The first two rounds of U.S. checks appear to have increased retail buying and share prices of... View Details

Keywords: Stock Market; COVID-19 Pandemic; Fiscal Stimulus; Stimulus Payments; Impact; Stocks; System Shocks; Price; Spending; United States; Hong Kong

April 2020
Supplement

Oaktree: Pierre Foods Investment

By: Victoria Ivashina and Terrence Shu

This case is a setting to discuss “loan to own” investment strategy that is often pursued by distressed investors. The aftermath of the 2007 financial crisis left many companies with poor liquidity and limited ability to obtain credit. One of these companies was Pierre... View Details

Keywords: Distress Investing; Investment; Debt Securities; Strategy; Restructuring

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

June 2015 (Revised May 2017)
Case

LOYAL3: Own What You Love™

By: Luis M. Viceira and Allison M. Ciechanover

This case features San Francisco–based financial technology startup, LOYAL3. Founded in 2008, the company seeks to disrupt the capital markets and democratize access to those markets for retail investors. By the fall of 2014, LOYAL3 had three products. In the first,... View Details

Keywords: Capital Markets; Stocks; Strategic Planning

2014
Working Paper

The Rise and Fall of Demand for Securitizations

By: Sergey Chernenko, Samuel G. Hanson and Adi Sunderam

Collateralized debt obligations (CDOs) and private-label mortgage-backed securities (MBS) backed by nonprime loans played a central role in the recent financial crisis. Little is known, however, about the underlying forces that drove investor demand for these... View Details

Keywords: Debt Securities; Financial Markets; Financial Crisis

Winter 2013
Article

Fear of Rejection? Tiered Certification and Transparency

By: Emmanuel Farhi, Josh Lerner and Jean Tirole

The sub-prime crisis has shone a harsh spotlight on the practices of securities underwriters, which provided too many complex securities that proved to ultimately have little value. This uproar calls attention to the fact that the literature on intermediaries has... View Details

Keywords: Debt Securities; Corporate Disclosure; Corporate Governance

October 2009
Article

Attracting Flows by Attracting Big Clients

By: Lauren Cohen and Breno Schmidt

We explore a new channel for attracting inflows using a unique dataset of corporate 401(k) retirement plans and their mutual fund family trustees. Families secure substantial inflows by being named the trustee of a 401(k) plan. We find that family trustees... View Details

Keywords: Value; Information; Investment Funds; Stocks; Relationships; Financial Services Industry

spring 1990
Article

Earnings and Risk Changes Surrounding Primary Stock Offers

By: Paul M. Healy and Krishna G. Palepu

Keywords: Risk and Uncertainty; Business Earnings; Change; Stocks

June 2006
Article

Large Blocks of Stock: Prevalence, Size, and Measurement

By: Jennifer Lauren Dlugosz, Rudiger Fahlenbrach, Paul Gompers and Andrew Metrick

Keywords: Stocks; Measurement and Metrics; Size