Columbia Business Magazine
When Dean Costis Maglaras, the David and Lyn Silfen Professor of Business, stepped into his role as dean in 2019, he identified a five-pillar framework designed to focus and define the future of business research and teaching at CBS, and thereby inform the future of business practice around the world.
These core pillars — climate and sustainability, the digital future, 21st century finance, entrepreneurship and innovation, and business and society — continue to advance the School’s mission to lead business practice into the future.
Here is a breakdown of several of the events, initiatives, and areas of research that recently took place in these pillars.
1. Climate and Sustainability
As last spring’s 2022 Climate Business and Investment Conference made clear, when it comes to climate change, green shoots of progress are emerging from the world of business. Industry participants joined faculty members for the one-day event, where they explored business leadership on the path to net zero, including corporate leadership in sustainability, and the role of climate change and social responsibility in decision-making at firms.
The Tamer Center for Social Enterprise’s 2022 conference, Capital for Good, took place in October. Attendees explored the ways in which businesses and organizations source capital and examined sustainable solutions to global, systemic challenges.
The Brazil Climate Summit, a two-day event held at CBS, brought together nearly 70 diverse speakers for 16 panels across two days, with 550 live attendees — more than half of them from Brazil — and over 4,000 livestream viewers. The summit included panels on technology and disruption, policy changes and incentives to achieve net zero, climate justice, and the potential of the carbon credit economy.
CBS Dean Costis Maglaras, Alex Halliday, founding dean of Columbia’s Climate School, and CBS professors Gernot Wagner and Bruce Usher, joined dozens of alumni working across climate and sustainability in November at the United Nations Climate Change Conference COP27 in Sharm el-Sheikh, Egypt. CBS events at COP27 looked at critical topics, such as how emerging climate solutions can rapidly attract the financing they need to scale and how to develop the next generation of climate leaders.
We are generating new insights and research on climate solutions, corporate climate change initiatives, prediction markets, carbon reduction pledges, consumer psychology and behavioral nudging, and clean growth and climate change.
2. 21st Century Finance
Last fall, the Heilbrunn Center for Graham and Dodd Investing held the first Annual Kawaja Growth Stock Pitch Challenge. Established by Carl Kawaja ’91, chairman of Capital Research and Management Company, the event provided students an opportunity to pitch companies with growth potential to a panel of judges from top firms, including Kawaja; Kelly Granat, co-CIO of Lone Pine Capital; Jeff Nedelman, senior managing director at Certares Management LLC; and Niraj Shah, CEO and co-founder at Wayfair. The winner was Shalin Doshi ’23, who pitched Contemporary Amperex Technology Co. (CATL), a battery manufacturer and technology firm that specializes in manufacturing lithium-ion batteries for electric vehicles and energy storage and battery management systems.
The Paul Milstein Center for Real Estate’s 15th annual Alumni Real Estate Symposium featured real estate finance sessions ranging from “Real Estate Debt in the Time of Rising Rates and Volatility,” “Global Uncertainty, Real Estate Investments, and Energy Transition,” “Sustainability and Real Estate Investments,” and “Making Choices in Uncertain Environments.” Keynote speakers at the event were CBS alumnus David Simon ’85, chairman, CEO, and president of Simon Property Group, the largest US publicly traded real estate company, and Kim Y. Lew, CEO of Columbia Investment Management Company, which manages the endowment of Columbia University.
In September, CBS Professor Tano Santos, Meredith Trivedi, managing director of the Heilbrunn Center for Graham and Dodd Investing, and board member Thomas A. Russo took part in the center’s annual dinner for the 5x5x5 Russo Student Investment Fund. Each year, students pitch new investments and add five new picks to the fund, gaining realworld experience in value investing, connecting closely with leaders in the field, and generating scholarship money for others at the school.
Stijn G. Van Nieuwerburgh, the Earle W. Kazis and Benjamin Schore Professor of Real Estate, developed the pioneering class Real Estate Analytics. Using real estate data drawn from his research, Van Nieuwerburgh teaches MBA and master‘s degree students to code and run sophisticated problems in the programming language Python to better understand how to formulate and answer critical questions using data.
Belief Dynamics CBS’s Kent Daniel, the Jean-Marie Eveillard/First Eagle Investment Management Professor of Business, with co-author Alexander Klos, is studying how disagreement in financial markets evolves in response to information shocks. In their paper, “The Dynamics of Disagreement,” in Review of Financial Studies, they find optimists stick with constrained, or limited stock winners an average of about five years, even after a shock, leading to strong persistent negative returns over a five-year horizon. In contrast, pessimists lose faith in the stock relatively shortly after the shock, leading to strong but less persistent negative returns for constrained losers. These patterns in constrained help to explain the return predictability observed in unconstrained stocks.
The research of CBS’s Suresh Sundaresan, Chase Manhattan Bank Foundation Professor of Financial Institutions, and Kelly School’s Zhenyu Wang shows that banks respond to capital requirements by strategically choosing their liability structure, while taking into account the endogenous deposit insurance. In their paper, “Strategic Bank Liability Structure Under Capital Requirements,” the researchers provide key insight into how banks strategically respond to capital requirements imposed by regulators and how their response affects their cost of deposit and non-deposit debt.
3. Digital Future
The Digital Future Initiative, announced last fall, will connect hundreds of faculty members from Columbia Business School and Columbia University with corporate leaders from across industries to help organizations, governments, and communities optimize and accelerate technological advances of the future. Established by a generous gift from alumnus Jake Reynolds ’97, with support from Devon Briger ’99 and Pete Briger, the initiative focuses the School’s research and teaching on the ways technology is altering all industries and the fabric of daily life. Specialized research labs, such as the Briger Family Digital Finance Lab, address key topics, such as algorithmic economy, digital platforms, retailing and digital supply chains, AI and automation, and media.
Conventional Accounting & Digital Technology How much money does a tech company make? That’s a difficult question because the biggest outlay, R&D, is expensed. In their paper “Do Digital Technology Firms Earn Excess Profits? Alternative Perspectives,” published in The Accounting Review, Shivaram Rajgopal, the Kester and Byrnes Professor of Accounting and Auditing, with co-authors Anup Srivastava and Rong Zhao, explores measures of financial performance in digital tech firms. Employing IRR, or internal rate of return, which they define as the discount rate that equates investments with related cash paybacks over a given period of time, they mitigate the problem of mismatched payoffs and investments, providing an alternative perspective on the performance of tech giants. Their finding? The industry that earns the highest IRR over time is not tech, but healthcare.
Decisions Over Decimals
In their new book, Decisions Over Decimals: Striking the Balance Between Intuition and Information, Oded Netzer, the Arthur J. Samberg Professor of Business and vice dean for research, along with co-authors Christopher J. Frank and Paul F. Magnone, Adjunct Professors of Business, assert that uniting data intelligence with human judgment is the key to agile decision-making. Their Quantitative Intuition (QI) approach raises the power of thinking beyond big data, without neglecting data, in an effort to provide ready tools for decision-making moments.
Listen to Frank, Magnone and Netzer discuss their new book.
4. Entrepreneurship and Innovation
The Eugene Lang Center’s CBS Startups Week celebrated entrepreneurship and innovation at CBS. The week featured a series of panels and virtual talks including “Entrepreneurship, Sustainability, and the Fashion Industry,” “Diversity and Investing,” and “Best Practices for Reforming the Healthcare Industry.” CBS Startup Alley, which took place during TechDay at New York’s Javits Center, allowed CBS entrepreneurs to join 300-plus exhibitors to exhibit their concepts and highlight their products currently in development.
Cutting the Innovation Engine
CBS’s Assistant Professor of Business Tania Babina and her co-authors Alex Xi He, Sabrina T. Howell, Elisabeth Perlman, and Joseph Staudt of the US Census Bureau have been exploring ways that federal funding impacts innovation at universities. In their paper, “Cutting the Innovation Engine: How Federal Funding Shocks Affect University Patenting, Entrepreneurship, and Publications,” the researchers find that large, idiosyncratic, and temporary cuts to federal funding in a researcher’s pre-existing narrow field of study reduce high-tech entrepreneurship and publications, but increase patenting. These federal funding cuts shift university research funding from federal to private sources and lead to innovation outputs that are less openly accessible and more often appropriated by corporate funders.
5. Business and Society
Business and Society is the inaugural theme of The Hub, Columbia Business School’s think tank. Three cross-disciplinary initiatives have been formed:
The Future of Capitalism Led by Glenn Hubbard, dean emeritus and the Russell L. Carson Professor of Finance and Economics, this program will unite business professionals, philanthropic leaders, academics, and journalists to examine whether our current systems for generating innovation and prosperity are still the right ones, and what roles business and government should play in a modern, late stage capitalist economy.
Business, AI, and Democracy (BAID)
Led by Bruce Kogut, the Sanford C. Bernstein & Co. Professor of Leadership and Ethics, in collaboration with CBS professors Ann Bartel, Gita Johar, Andrea Prat, and Andrey Simonov, this initiative will explore whether democracy is in crisis. What is the impact of social and traditional media, government regulation, misinformation, and new and emerging technologies on democracies today?
Think Bigger Innovations
Large businesses and companies recognize and acknowledge the need to innovate, but often struggle with corporate entrepreneurship at scale. Think Bigger Innovations will address this issue, particularly around innovation and how it impacts business and society. Sheena Iyengar, the S.T. Lee Professor of Business, will work in collaboration with Shiva Rajgopal, the Kester and Byrnes Professor of Accounting and Auditing, to run the Think Bigger Summit, an annual (or bi-annual) forum.
Donna Hitscherich, senior lecturer of finance and director of the Private Equity Program, and Greta E. Larson of the CBS Private Equity Program joined EY Private Equity in a study of whether PE firms focused on purpose-driven investing will focus on purpose-driven hiring. In their research, “Can PE Firms Focused on Purpose-Driven Investing Do the Same for Hiring?” they find that as competition in the PE space increases and firms expand into new strategies, recruiting top talent is moving to the forefront.
The Spillover Effect
Christian Moser, assistant professor of business, along with Niklas Engbom of NYU, found that since 1994 in Brazil, a doubling of the minimum wage has spurred a large decline in earnings inequality. Their paper, “Earnings Inequality and the Minimum Wage: Evidence from Brazil,” shows that minimum wage policies can create more equality in the workplace without significant disemployment effects.