Finance Professor Laura Lindsey and her co-authors say that they are the first — to the best of their knowledge — to formalize an empirical model for testing economic theories concerning the formation of ties between firms. The findings can potentially help entrepreneurs identify which attributes to consider when evaluating a VC firm.
Jim Davidson, co-founder, managing partner and managing director of Silver Lake, is the 2014 Executive of the Year.
Named one of "America’s 50 Most Powerful Women" by Fortune magazine, Cristina Morgan has represented her firm on more than 100 IPOs for such familiar names as Adobe, Google, Pixar and Netscape. Recently she was inducted into the W. P. Carey School’s Alumni Hall of Fame. Here, Morgan talks about the role of the investment banker, and weighs in with some advice for individuals interested in making their own stock picks.
The sports betting world may seem like an unlikely laboratory to test theories of investment-strategy psychology, but a team of finance scholars has done just that. In fact, the researchers say, the market for investments and the market for sports wagering are similar in several important ways, including the role of information, expert opinion, sentiment and middlemen in each. The researchers used data from the sports betting market to test a key investment-psychology theory, and discovered that in the real world, sports bettors did not behave the way the theory predicted they would.
Long considered an elite investment for high net-worth individuals, smaller private banks and certain institutional investors, the hedge fund market has grown up from a multimillion-dollar cottage industry into one where assets total more than $1 trillion. And the bulk of the growth in the past five years has been attributable to the entrance of institutional investors. Experts say the flood of capital has caused overcapacity in some hedge fund strategies, which, in turn, has caused deteriorating market conditions. Overall, pension fund managers are not at risk when investments are made in hedge funds or other alternative investments, says Herbert Kauffman, finance professor at the W. P. Carey School of Business. "But," he adds, "they are more at risk than they were when they didn’t risk any of it in these alternative investments. To the extent alternative investment allocations keep expanding, however, there may come a time when increased alternative investment allocations can become very worrisome."
The allure of a star is nearly irresistible, and mutual fund investors are not immune. Investors are drawn to mutual fund families that boast a stellar performer, and the less luminous funds in the family benefit from a spillover effect resulting from their proximity to the headliner. This benefits fund managers, who are compensated based on assets under management, but the presence of a star in the portfolio does not necessarily mean that all of the funds in the family will do well for investors. Research by a W. P. Carey School of Business finance professor concludes that an investing strategy that consists simply of hitching onto stars is naive.
