Texas Roundtable on: The Future of Graduate Business School Education

A small group of academics and practitioners discuss the challenges now facing today's business schools. First and foremost is the challenge now being mounted by “online” courses to the traditional methods of classroom lecture and discussion, supplemented in some cases by apprenticeships and other kinds of “experiential” learning. How will traditional universities burdened with high and rising fixed costs for buildings and faculty compete with very low‐cost competitors—programs that reportedly have enabled star lecturers to reach audiences that, in some cases, have exceeded 100,000 students? In assessing the seriousness of the challenge, the panelists start by attempting to articulate what is valuable in current business school education—valuable enough to enable the best business schools to command as much as $175,000 for two‐year (or shorter) programs that confer MBAs. Much of the discussion focuses on establishing the relative importance of the disciplines, or body of knowledge, that are taught in business schools, as compared to the development of “collaborative” habits and interpersonal skills aimed at enabling students to make more effective use of their knowledge within large organizations. Some of the panelists, notably Jeff Sandefer, founder of the (now ten‐year old) Acton School of Business, argue that far too much of today's business school curriculum is devoted to the classroom and conventional learning. And many of the changes in the top business schools during the past decade appear to reflect Sandefer's charges. But, to the extent there is a consensus among the other panelists, it is that the best business schools will continue to try to accomplish both of these goals, though with varying degrees of effectiveness, while most schools attempt to maintain their specialized capabilities, and carve out distinctive niches based on them. For some schools, such specialization is likely to mean continued emphasis on theory and classroom learning—though almost certainly with more attention to practical application and collaborative decision‐making. For other schools, the main focus will continue to be the development of general management and leadership skills.     

University of Rochester Roundtable on Corporate M&A and Shareholder Value

Robert Bruner's new book, Deals from Hell , serves as the point of departure for a wide-ranging discussion of the effect of mergers and acquisitions on shareholder value and the general economy. Despite the book's title, Bruner's message is at bottom a positive one: Corporate M&A increases efficiency and value, on average, and enriches the shareholders of not only the selling firms, but the buyers as well.
But if the average transaction is value-increasing for acquirers, many acquisitions of publicly traded companies by other public companies are value-destroying for the buyers, in large part because of "control rights" that U.S. laws and regulations have effectively conferred on target company managements. One proposed solution is a return to the legal and regulatory climate of the 1980s, a time when companies that reduced their own values by making bad acquisitions thereby raised the odds that they would become the next takeover targets.     

University of Texas Roundtable on Recent Trends in U.S. Venture Capital

At a recent private equity conference hosted by the McCombs School of Business at the University of Texas in Austin, four venture capitalists representing the East and West Coasts provided testimony to the spread of the VC industry far beyond Silicon Valley to places like New York, London, and Berlin—as well as Austin itself. The result, in the words of one panelist, has been “a shift from Silicon Valley as the epicenter of so much innovation and growth to something more like a globally distributed network of capital, talent, and opportunity.” Along with this geographic expansion of the industry, perhaps the most notable change is the tendency of today's VCs to delay the IPOs of their portfolio companies and, by keeping them private longer, capture more of their growth in value. Whereas 20 years ago 90% or more of the value appreciation came after the IPO of a highly successful company (think about Micro‐Soft or Amazon.com ), a much larger share of the overall value creation now appears to be taking place before the IPO, thanks to the growing use of a funding vehicle known as private initial public offerings, or PIPOs. The use of PIPOs has enabled VC‐backed companies to attract large amounts of capital from large institutional investors like Fidelity—which in the past would not have invested in the company until the IPO—while retaining what the panelists view as significant advantages of private ownership and governance.     

资本市场流动性与股东积极主义的扩展式博弈研究

通过应用扩展式博弈分析方法,研究市场流动性与股东积极主义之间的关系,并探讨不同股东积极主义形式问的选择.研究发现:市场流动性与股东积极性之间并不存在简单的线性关系.而在不同的股东积极主义形式的选取上,单位成功几率成本低的股东积极主义形式更有可能被大股东所采用,但市场流动性的提高会减弱大股东对单位成功几率成本低的策略的偏好.     

University of Texas Roundtable on The State of the U.S. Private Equity Market

In this discussion that took place at the 2017 University of Texas Private Equity conference, the moderator began by noting that since 2000, the fraction of the U.S. GDP produced by companies that are owned or controlled by global private equity firms has increased from 7% to 15%. What's more, today's PE firms have raised an estimated $1.5 trillion of capital that is now available for investing. And thanks in part to this abundance of capital, the prices of PE transactions have increased sharply, with EBITDA pricing multiples rising from about 8.8X in 2012 to 11.5X at the beginning of 2017. Partly as a consequence of such abundant capital and high transaction prices, the aggregate returns to U.S. private equity funds during this four‐year period have fallen below the returns to the stockholders of U.S. public companies. Nevertheless, the good news for private equity investors is that the best‐performing PE firms have continued their long history of outperforming the market. And the consistency of their performance goes a long way toward explaining why the overwhelming majority of the capital contributed by limited partners continues to be allocated to funds put together by these top‐tier PE firms. In this roundtable, a representative of one of these top‐tier firms joins the founder of a relatively new firm with a middle‐market focus in discussing the core competencies and approaches that have enabled the best PE firms to increase the productivity and value of their portfolio companies. Effective financial management—the ability to manage leveraged capital structures and the process of readying their companies for sale to potential strategic or financial investors—is clearly part of the story. But more fundamental and critical to their success has been their ability to find undervalued or undermanaged assets—and either retain or recruit operating managements that, when effectively monitored and motivated, are able to realize the potential value of those assets through changes in strategy and increases in operating efficiency.     

Statement of the Financial Economists Roundtable on the International Competitiveness of U.S. Capital Markets

The Committee on Capital Markets Regulation issued an Interim Report (known as the “Paulson Report”) near the end of 2006 that concluded that the U.S. “is losing its leading competitive position as compared to stock markets and financial centers abroad.” This report was quickly followed by a study, which reached similar conclusions, that was commissioned by New York Mayor Michael Bloomberg and Senator Charles Schumer and prepared by McKinsey & Co. At its July 2007 annual meeting, the Financial Economists Roundtable (FER) — a group of senior financial economists at universities and other organizations recognized as having made significant contributions to the finance literature—discussed the issues raised by the Report and decided to publish its own report. The report makes the following four policy recommendations:

• 1 Securities class action suits —Abolish enterprise liability under rule 10b‐5 in situations arising out of security purchases and sales in the secondary trading market among outside shareholders, while retaining managerial and firm liability where the company itself or its insiders (officers and directors) transact to their own benefit. Imposing massive liability on a company that is not a party to the securities transactions and does not benefit from the fraud does not serve a deterrence function since it is the continuing shareholders of the corporation who bear the burden of what the company must pay if found guilty, either directly or indirectly through insurance premiums.
• 2 Shareholder rights—Require all corporations to obtain shareholder approval to adopt a poison pill, regardless of whether a company has a staggered board. This requirement would conform to the broad principle that the board of any company should not be able to deny its shareholders the opportunity to decide on the merits of a takeover bid, and it would help restore the market for corporate control as an effective disciplinary mechanism for poorly performing boards and managers.
• 3 Compliance costs associated with SOX §404—Adopt a statutory amendment that makes it optional for a company to adopt the §404 procedures for a management assessment and auditor attestation of the effectiveness of its internal controls, with the requirement that if the company chooses not to comply it must explain why in its financial statements. Thus, in effect, the FER effectively recommends that the market be allowed to determine the value of §404 compliance. If a company chooses not to comply, the market will assess its explanation for non‐compliance and will value the company accordingly.
• 4 Maintaining open markets—Allow both foreign and U.S. firms to choose to report in conformity with either IFRS or U.S. GAAP. The FER recognizes both IFRS and U.S. GAAP as high‐quality accounting standards that provide reasonable foundations for financial reporting for investors. Allowing both foreign and U.S. firms to adopt whichever of these standards they believe to be the most cost‐effective provides an opportunity for the market and investors themselves to sort out which reporting standard best serves their interests.

     

Columbia Law School Roundtable on The Future Of Capitalism

In this discussion that took place at Columbia Law School's Millstein Center last October (and thus well before the appearance of the coronavirus), two distinguished English academics, a Pulitzer Prize‐winning journalist, and the executive chairman of a large American investment house discussed the role of corporations in addressing the crises that periodically beset the capitalist system. Sir Paul Collier opened with the comment that, although capitalism had shown itself to be the only effective system for mass human improvement in the past 10,000 years, it was now experiencing its “third serious derailment.” In each of the first two—the first in Northern England in the 1840s and the second during the Great Depression of the 1930s—capitalism was preserved in significant part by the “moral load‐bearing” performed by private companies and citizens. For capitalism to survive this third derailment, the public and private sectors must join forces to address what Collier to sees as the most formidable economic challenge: finding ways to transport urban jobs and capabilities to rural areas still reeling from two major blows—the first, a century ago to agriculture, and the second, for the past two or three decades, to large‐scale manufacturing. Collier's Oxford colleague Colin Mayer follows by calling on public companies to formulate and state a corporate social purpose that goes beyond maximizing their own long‐run shareholder values. And to encourage and support such a practice, Mayer urges the large universal owners that own large stakes in all the world's large listed companies not only to support and applaud such statements, but to find ways to ensure that companies are living up to them. Alan Schwartz, Executive Chairman of Guggenheim Partners, responds by noting that capitalism has been forced to make major adjustments throughout its history. And consistent with Collier's observations, Schwartz argues that the global economic order should have been preparing for the past 30 or 40 years for its biggest challenge: creating a global economy dynamic enough to provide jobs for some two or three billion new unskilled workers spawned by the globalization of the world economy. The American private sector, after having lost much of its efficiency and value in the 1970s, has since used continuous restructuring to produce enormous productivity gains and value. And although generally supportive of the thinking behind the Business Roundtable's recent statement, Schwartz deplores the confusion that continues to surround the message. Those corporate leaders now endorsing the pursuit of social goals are by no means asking their shareholders to accept below‐market returns on investment. In well‐run companies focused on long‐run efficiency and value, there is no inherent conflict between the interests of shareholders and the long‐run interests of other major stakeholders. In such companies, customers, employees, suppliers, and local communities all end up better served.     

The Impact of Illegal Business Practice on Shareholder Returns

Data regarding illegal firm behavior were obtained for the period 1980–1990. Using the single index market model, the study finds that public announcements of indictments for major corporate crimes have a significant and long-term negative impact upon shareholder wealth, particularly for firms found guilty of the indictment. The results indicate that indictments of larger firms have a proportionally smaller impact on excess returns. Furthermore, indictments handed down since the Levine/Boesky scandal appear to have had a more adverse impact.     

Taking Shareholder Protection Seriously? Corporate Governance in the U.S. and Germany

This article provides a comparative study of four major dimensions of corporate governance in the U.S. and Germany: (1) the laws affecting corporate governance, particularly those designed to protect minority shareholders; (2) the prescribed role and actual conduct of corporate boards; (3) the market for corporate control (including hostile takeovers); and (4) incentive compensation. The authors pose the question: If the primary purpose of the corporate governance system is to serve the interests of minority shareholders, how do the U.S. and German governance systems rank on each of these four dimensions ? Their conclusion is that although the U.S. system is more shareholder friendly in many respects than the German, both systems have major shortcomings, particularly in the market for corporate control. The authors conclude with a list of proposed changes to both systems that would amount to “taking shareholders seriously.”     

Columbia Law School Roundtable on Public Aspects of Private Equity

The mandate of the broader private equity “ecosystem” goes well beyond earning competitive returns for the limited partners and their beneficiaries. After noting that PE investing is encountering ever larger “headline” and social risks, the panelists were in complete agreement that LPs should exert greater pressure on PE sponsors to take account of and try to address negative externalities when buying and operating their portfolio companies. Bain Capital's Double Impact Fund, for example, while always looking for ways of increasing profits and reducing risk, sets out to have a positive influence on its non‐investor stakeholders, including employees. To that end, Bain develops and tracks company‐specific metrics linked to positive outcomes, and then links those metrics to management compensation. And the director of ESG programs at the International Limited Partners Association points to ILPA's programs for diversity and inclusion as a promising model.     

Columbia Law School Roundtable on A Governance Research Agenda for the Academy

Since Jensen and Meckling's formulation of the theory of “agency costs” in 1976, corporate finance and governance scholars have produced a large body of research that attempts to identify the most important features and practices of effective corporate governance systems. But for all the research that has been done in the past 40 years, many practitioners continue to see a disconnect between theory and practice, between the questions researched and the questions that need to be answered. In this roundtable, Martijn Cremers begins by challenging the conventional view that limiting “agency costs” is the main challenge confronted by boards of directors in representing shareholder interests and, hence, the proper focus of most governance scholarship. Especially in today's economy, with the high values assigned to growth companies, the most important function of corporate governance may instead be to overcome the problem of American “short termism” that he attributes to “inadequate shareholder commitment to long‐term cooperation.” And he buttresses his argument with the findings of his own recent research suggesting that obstacles to the workings of the corporate control market like staggered boards and supermajority voting requirements may actually improve long‐run corporate performance by lengthening the decision‐making horizon of boards and the managements they supervise. Vik Khanna discusses Indian Corporate Social Responsibility (CSR) spending and its effects in light of a recent law requiring Indian companies of a certain size to devote at least 2% of their after‐tax profit to CSR initiatives. One unintended effect of this mandate, which took effect in 2010, was that all Indian companies that were spending more than the prescribed 2% of profits cut their expenditure back to that minimum, suggesting that CSR and advertising are substitutes to some extent, and that such legal mandates can discourage CSR spending by early adapters or “leaders.” Nevertheless, Khanna also found evidence of social norms developing in support of CSR, including a spreading perception that such spending can help some companies achieve strategic goals. Jeff Gordon closes by arguing that, to the extent investors are short‐sighted, their short‐sightedness is likely to be justified by their recognition that public company directors have neither the information nor the incentives to do an effective job of monitoring corporate managements. The best solution to the problems with U.S. corporate governance is to replace today's “thinly informed” directors with “activist” directors who more closely resemble the directors of private‐equity owned firms. Such directors would spend far more time with, and be much more knowledgeable about, corporate management and operations—and they would have much more of their personal wealth at stake in the form of company stock.     

美国证监会和小企业—小企业筹资及相应联邦证券法规指南

解答小企业疑问的几条途径 SEC试图通过它(所制定)的规则和监管来满足小企业的要求。它也会通过电话、信件或者电子邮件来回答小企业的问题，提供非正式的指导。SEC提供了很多渠道，以方便小企业……     

战后美国经济周期再考察

二战后美国经济周期波动发生显著变化。相比二战之前,美国经济周期扩张期拉长,衰退期缩短,二者之间形成剪刀差。经济周期长度、扩张期跨度和紧缩期跨度的离散度远远大于战前。二战后至今,美国经济中周期出现(朱格拉周期)呈拉长的趋势,扩张期远远长于衰退期,中周期(朱格拉周期)和短周期(基钦周期)的波幅经历了从小到大的阶段性变化。     

Pension Funds and the U.K. Economy

Abstract

The paper considers the impact of U.K. defined benefit (DB) pension plan unding and investment on the U.K. economy. It suggests that many conventional theories are based on incomplete or inconsistent economics. In particular, the author suggests that:

? An economy cannot really gain competitive advantage from high returns on the domestic assets in which pension funds invest.

? DB liabilities are essentially similar for most schemes and can be closely matched with bonds.

? Funding pension liabilities has no primary impact on individuals’ consumption and saving or on firms’ capital investment.

? Pension funds are not natural investors in the equity of new ventures.

The conclusion of the paper is that the most significant impact of pension funds on the U.K. economy relates to the costs imposed by extreme mismatching between their financial assets and liabilities. The author argues that such risks can, in essence, “crowd out” entrepreneurial risk. He asserts that the U.K. economy would gain from greater focus on the matching of these assets and liabilities, and that the best way to stimulate enterprise is by eliminating the frictional costs in the economy arising from current practices.     

Costs and regulation in the U.K. telecommunications industry

This article is written in the belief that it is important to encourage research into accounting for regulated industries. It seeks to illustrate this by considering as an exemplar the use of Accounting Separation (using regulated industry nomenclature) and hierarchical costing systems in the U.K. telecommunications industry concentrating on their use by BT and the telecommunications regulator. Accounting Separation seeks to use accounting means to partition the organization into elements as independent as possible from other parts of the organization. The published output of this system is meant to inform competitors of BT's costs for the regulated network components they use. These costs are also used in setting interconnection charges. These are charges that other operators pay for connecting with and using the BT system. This is not the accounting system used in decision making by BT. Nor does it represent the only accounting information obtained by the regulator. The focus of this article is upon how far the BT accounting system satisfies the accounting conditions required to allow the incremental costs and stand alone costs of the partitioned elements of the organization to be determined in a setting using a hierarchical accounting system. Methods of overcoming some of the identified problems are suggested. The importance of correct approaches to joint costs is highlighted concentrating on the treatment of joint costs in regulation. The accounting ideas discussed here would seem to have application well beyond regulated firms but seem neglected generally in management accounting.     

Contemporaneous Spillover Effects between the U.S. and the U.K. Equity Markets

We use high frequency data and the “identification through heteroskedasticity” approach of Rigobon (2003) to capture the contemporaneous volatility spillover effects between the U.S. and U.K. equity markets. We demonstrate the relevance of taking into account the information present during simultaneous trading hours by comparing the results generated by our structural vector autoregression with those of a traditional reduced-form vector autoregression. Our findings clearly demonstrate that contemporaneous relations matter and that ignoring them leads to inappropriate conclusions regarding the magnitude and direction of volatility spillover.     

中美两国经济周期同步性研究

改革开放三十年以来,中芙两国经贸往来日益密切.从两国经济周期的同步程度来看,这三十年中,两国经济周期同步波动主要出现在2000年以后,我国进出口、投资等指标与美国消费之间的高度相关以及美国进出口与我国投资的高度相关是这种同步性得以实现的主要原因之一.中关两国经济周期的同步运动,主要源于美国经济周期对中国经济的影响.     

借鉴美国经验 完善我国债券结算代理业务

我国债券结算代理业务发展迅速,但也逐渐暴露出结算机制不够完善、客户服务意识不强、产品单一等问题。借鉴美国经验,本文建议建立以中央对手方（CCP）和净额结算为基础的债券结算机制,完善证券托管清算机构组织模式,培育独立评级机构,发展机构投资者,发挥行业自律组织的作用,建立以客户为中心的服务体系。     

Seasonality in Stock Price Mean Reversion: Evidence from the U.S. and the U.K.

The evidence of slowly mean-reverting components in stock prices has been controversial. The hypothesis of stock price mean-reversion is tested using a regression model that yields the highest asymptotic power among a class of regression tests. Although the evidence that the equally weighted index of stocks exhibits mean-reversion is significant in the period 1926–1988, this phenomenon is entirely concentrated in January. In the post-war period both the equally weighted and the value-weighted indices exhibit seasonal mean-reversion in January. A similar phenomenon is also observed for the equally weighted index of stocks traded on the London Stock Exchange.