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At the Forefront of Their Fields

At Columbia Business School, our faculty members are at the forefront of research in their respective fields, offering innovative ideas that directly impact the practice of business today. A quick glance at our publication on faculty research, CBS Insights, will give you a sense of the breadth and immediacy of the insight our professors provide.

As a student at the School, this will greatly enrich your education. In Columbia classrooms, you are at the cutting-edge of industry, studying the practices that others will later adopt and teach. As any business leader will tell you, in a competitive environment, being first puts you at a distinct advantage over your peers. Learn economic development from Ray Fisman, the Lambert Family Professor of Social Enterprise and a rising star in the field, or real estate from Chris Mayer, the Paul Milstein Professor of Real Estate, a renowned expert and frequent commentator on complex housing issues. This way, when you complete your degree, you'll be set up to succeed.

The Columbia Advantage

Columbia Business School in conjunction with the Office of the Dean provides its faculty, PhD students, and other research staff with resources and cutting edge tools and technology to help push the boundaries of business research.

Specifically, our goal is to seamlessly help faculty set up and execute their research programs. This includes, but is not limited to:

  • Highly skilled staff of full-time predoctoral fellows, summer research interns, and part-time research assistants
  • Access to centralized funding from the Dean's office and external grants to support research activities
  • Providing a state-of-the-art high-performance grid computing environment
  • Acquisition of proprietary data sets and access to various databases
  • Leading library which provides faculty with latest tools and techniques to enable digital scholarship

All these activities help to facilitate and streamline faculty research, and that of the doctoral students working with them.

 

Research at CBS

Filters
Type
Working Paper
Date

Credit Information in Earnings Calls

Author
Mamaysky, Harry, Yiwen Shen, and Hongyu Wu

We develop a novel technique to extract credit-relevant information from the text of quarterly earnings calls. This information is not spanned by fundamental or market variables and forecasts future credit spread changes. One reason for such forecastability is that our text-based measure predicts future credit spread risk and firm profitability. More firm- and call-level complexity increase the forecasting power of our measure for spread changes. Out-of-sample portfolio tests show the information in our measure is valuable for investors.

Type
Newspaper/Magazine Article
Date
Publication
Harvard Business Review

Your Family Business Needs a Board

A board should be at the helm of any family business, steering the business in the right direction. If you wish to have a business that is resilient and has a positive impact on all stakeholders (e.g., employees, customers, vendors, and society) you must make sure your board is intact and functioning optimally. This article offers some questions to consider as you develop best practices for your own board, such as who should be on the board, whether you need an independent director, and how often your board should meet.

Type
Working Paper
Date

Is Physical Climate Risk Priced? Evidence from Regional Variation in Exposure to Heat Stress

Author
Acharya, Viral V, Tim Johnson, M. Suresh Sundaresan, and Tuomas Tomunen

We exploit regional variations in exposure to heat stress to study if physical climate risk is priced in municipal and corporate bonds as well as in equity markets. We find that local exposure to damages related to heat stress equaling 1% of GDP is associated with municipal bond yield spreads that are higher by around 15 basis points per annum (bps), the effect being larger for longer-term, revenue-only and lower-rated bonds, and arising mainly from the expected increase in energy expenditures and decrease in labor productivity.

Type
Journal Article
Date

Does ESG Negative Screening Work?

Author
Rajgopal, Shivaram, Jing Xie, and Robert G. Eccles

We revisit the firm value and pricing implications of the negative screening of sin stocks. Unlike prior work, we find that institutional ownership and valuations related to sin stocks are not different from those of other stocks after controlling for differences in fundamentals between sin and non-sin stocks. Sin stocks do not differ in the likelihood of exiting the public market, the cost of raising new equity, and in the announcement returns around negative ESG news relative to non-sin stocks, casting further doubt on whether negative screening hurts sin stocks.

Type
Journal Article
Date

Issues Revisited from Rumelt’s (1974) “Diversification, Strategy & Performance”

Performance expectations are revisited pertaining to particular corporate strategies that were highlighted by Rumelt (1974). In particular, suggestions regarding expectations about conglomerate enterprises, vertical integration, and mature- or declining-demand businesses are offered in light of additional information about research findings and observed industry phenomena that are at odds with information available when Rumelt's (1974) study of diversification was performed.

Type
Working Paper
Date

The End of Tourist Traps: A Natural Experiment on the Impact of Tripadvisor on Quality Upgrading

Author

Asymmetric information can distort market outcomes. I study how the online disclosure of information affects consumers’ behavior and firms’ incentives to upgrade product quality in markets where information is traditionally limited. I first build a model of consumer search with firms’ endogenous quality decisions. In this model, lower search costs reallocate demand toward higher-quality producers, raising firms’ incentives to upgrade quality, and more so for firms selling ex-ante lower-quality products.

Type
Working Paper
Date

Man vs. Machine: Quantitative and Discretionary Equity Management

Author

In modern asset markets, man and machine compete for profits. How does each fare? I build a learning model in which quantitative investors (reliant on computer models) have more learning capacity but less flexibility to adapt to market conditions than discretionary investors (reliant on human judgment). I use machine learning to categorize US active equity mutual funds as quantitative or discretionary. Consistent with the model's predictions, I find that quantitative funds hold more stocks, specialize in stock picking, and engage in more overcrowded trades.

Type
Newspaper/Magazine Article
Date
Publication
Wealth Management.com

In Tax We Trust?

Most private wealth advisors (including trusts and estates lawyers, accountants and investment advisors) assume that a primary goal of their work is to reduce their clients’ taxes as much as possible, including to the point of elimination. The level of sophistication around tax reduction has grown substantially over the past few decades. This is especially true for family-owned businesses but also for all clients with substantial resources.

Type
Journal Article
Date

Principles of Strategy: A Practice-Based View

The SMR was pleased to conduct a set of launch conferences before its first published issue in 2020. One launch conference occurred at Columbia Business School in the summer of 2019 at which James Gorman, Chairman and CEO of Morgan Stanley served as the keynote speaker. An edited excerpt of part of his address appears below, in which he describes essential elements of his conception of strategy, or his principles of strategy. Kathryn Rudie Harrigan, Henry R.

Type
Working Paper
Date

Risk-Sensitive Optimal Execution via a Conditional Value-at-Risk Objective

Author
Min, Seungki, Ciamac Moallemi, and Costis Maglaras

We consider a liquidation problem in which a risk-averse trader tries to liquidate a fixed quantity of an asset in the presence of market impact and random price fluctuations. When deciding the liquidation strategy, the trader encounters a trade-off between the transaction costs incurred due to market impact and the volatility risk of holding the position.

Type
Working Paper
Date

Monetary Policy Transmission in Segmented Markets

Author
Eisenschmidt, Jens, Yiming Ma, and Anthony Lee Zhang

We show that dealer market power impedes the pass-through of monetary policy in repo markets, which is an important first stage of monetary policy transmission. In the European repo market, most participants do not have access to trade on centralized exchanges. Rather, they rely on OTC intermediation by a small number of dealers that exhibit significant market power. As a result, the passthrough of the ECB's policy rate to repo markets is inefficient and unequal.

Type
Working Paper
Date

Valuing Financial Data

Author
Farboodi, Maryam, Dhruv Singal, Laura Veldkamp, and Venky Venkateswaran

How should an investor value financial data? The answer is complicated as it not only depends on the investor himself but also on the characteristics of all other investors. Portfolio size, risk aversions, trading horizon, and investment style affect an investor's willingness to pay for data and the equilibrium value of data. Directly measuring all these characteristics of all investors is hopeless. Thus, we outline a simple model that gives rise to sufficient statistics that make an investor's private value of data measurable.