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.
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:
All these activities help to facilitate and streamline faculty research, and that of the doctoral students working with them.
The article offers the authors' views on expatriate management programs and the benefits from executives interacting with the people and institutions of the host country. The idea that international experience or interaction between foreign managers and local people will help managers become more creative, entrepreneurial, and successful is discussed. The concept of integrative complexity in bi-cultural managers which enhances job performance is mentioned.
The Kidney Case is multi-person exercise that involves the allocation of a single kidney. Students read profiles of eight candidates for the kidney and make a first allocation decision. Each candidate was designed to be high on some allocation principles but low or unknown on others (e.g., best, match, time in cue, age, personal responsibility for disease, future benefits to society, etc.). Then, students are put into groups and assigned to advocate for one of the candidates. Each group will prepare and give a 3-minute presentation on why their candidate should receive the kidney.
Emissions abatement alone cannot address the consequences of global warming for weather disasters. We model how society adapts to manage disaster risks to capital stock. Optimal adaptation — a mix of firm-level efforts and public spending — varies as society learns about the adverse consequences of global warming for disaster arrivals. Taxes on capital are needed alongside those on carbon to achieve the first best.
What are the sources of the returns to education? We study the allocation of higher education graduates from public institutions in Ohio across firms. We present three results. First, we confirm findings in the earlier literature of large pay differences across degrees. Second, we show that up to one quarter of pay premiums for higher degrees are explained by between-firm pay differences. Third, higher education degrees are associated with greater representation at the best-paying firms.
This article focuses on the role of threats in negotiations. Broadly speaking, a threat is a proposition that issues demands and warns of the costs of noncompliance. Even if neither party resorts to them, potential threats shadow most negotiations. Researchers have found that people actually evaluate their counterparts more favorably when they combine promises with threats rather than extend promises alone. Whereas promises encourage exploitation, the threat of punishment motivates cooperation.
Under securitization, agents perform functions (for fees) that would alternatively be performed by a vertically integrated lender with ownership of a whole loan. We examine how outsourcing impacts performance using data on 357 commercial mortgage-backed securities deals with over 46,000 individual loans. To alleviate agency conflicts in managing troubled loans, underwriters often sell the first-loss position to the special servicer, the party who is charged with handling delinquencies and defaults.
Robert Zoellick, the likely new president of the World Bank, will face a long to-do list, but at or near the top will be the dire economic conditions in much of sub-Saharan Africa. As a seasoned diplomat, Mr Zoellick will seek counsel from many sources. But the best advice may be in the history books.
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The pricing of corporate debt is still a challenging and active research area in corporate finance. Starting with Merton (1974), many authors proposed a structural approach in which the value of the assets of the firm is modeled by a stochastic process, and all other variables are derived from this basic process. These structural models have become more complex over time in order to capture more realistic aspects of bankruptcy proceedings.
Following a successful idea generation exercise, a company might easily be left with hundreds of ideas, generated by experts, employees, or consumers. The next step is to screen these ideas, and identify those with the highest potential. In this paper we propose a practical approach to involving consumers in idea screening. Although the number of ideas may potentially be very large, it would be unreasonable to ask each consumer to evaluate more than a few ideas. This raises the challenge of efficiently selecting the ideas to be evaluated by each consumer.
I quantitatively measure the interactions between the media and the stock market using daily content from a popular Wall Street Journal column. I find that high media pessimism predicts downward pressure on market prices followed by a reversion to fundamentals, and unusually high or low pessimism predicts high market trading volume.
The Financial Accounting Standards Committee of the American Accounting Association (the Committee) is charged with responding to requests for comment from standard setters on issues related to financial reporting. This paper summarizes the Committee's response to the Financial Accounting Standards Board's Exposure Draft, "Employers' Accounting for Defined Benefit Pension and Other Post-retirement Plans: An Amendment of FASB Statements No. 87, 88, 106, and 132(R)."
The Financial Accounting Standards Committee of the American Accounting Association (the Committee) is charged with responding to requests for comment from standard setters on issues related to financial reporting. The Committee is pleased to respond to the Financial Accounting and Standards Board (FASB) Exposure Draft, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115," issued in January 2006.
This paper addresses the issues that confront the FASB and IASB in developing a new conceptual framework document. First, we suggest characteristics that a conceptual framework ought to exhibit. Most of these suggestions are based on our critique of the existing framework and the FASB-IASB work in progress. Second, we present a model framework that exhibits these characteristics. We emphasize up front that this framework is quite explicit. It goes to the heart of what a framework document should do: it places specific restrictions on what constitutes admissible accounting standards.
This paper analyzes the determinants of buyout funds' investment decisions. In a model in which the supply of capital is "sticky" in the short run, we link the timing of funds' investment decisions, their risk-taking behavior, and the returns they subsequently earn on their buyouts to changes in the demand for private equity, conditions in the credit market, and funds' ability to influence their perceived talent in the market. Using a proprietary dataset of 207 buyout funds that invested in 2,274 buyout targets over the last two decades, we then investigate the implications of the model.
* Is a companion volume to the textbook, Managing Marketing in the 21st Century (mm21c).
* Provides a structured approach to developing a market strategy and implementation programs.
* Is constructed from marketing planning exercises that have a very long pedigree.
* Has been used by many well-known domestic and multinational firms to develop actionable marketing plans.
* Is available as a hard-copy book or electronic files. In either case, purchasers receive access to the complete set of templates in PowerPoint.
Strategic requests for advice can transform disputes into amiable problem-solving ventures.
Several individual, social-setting, and choice-set factors have been shown to be related to satisfaction. This article argues that these factors operate through a set of choice goals. Using panel data on purchasers of consumer electronics, the authors examine how five goals (justifiability, confidence, anticipated regret, evaluation costs, and final negative affect) drive decision and consumption satisfaction, which in turn determine loyalty, product recommendations, and the amount and valence of word of mouth.
This paper develops numerical approximations for pricing collateralized debt obligations (CDOs) and other portfolio credit derivatives in the multifactor Normal Copula model. A key aspect of pricing portfolio credit derivatives is capturing dependence between the defaults of the elements of the portfolio. But, compared with an independent-obligor model, pricing in a model with correlated defaults is more challenging. Our approach strikes a balance by reducing the problem of pricing in a model with correlated defaults to calculations involving only independent defaults.
Surveys do! We examine the forecasting power of four alternative methods of forecasting U.S. inflation out-of-sample: time-series ARIMA models; regressions using real activity measures motivated from the Phillips curve; term structure models that include linear, non-linear, and arbitrage-free specifications; and survey-based measures. We also investigate several methods of combining forecasts. Our results show that surveys outperform the other forecasting methods and that the term structure specifications perform relatively poorly.
This paper uses a unique dataset from Denmark to investigate the impact of family characteristics in corporate decision making and the consequences of these decisions on firm performance. We focus on the decision to appoint either a family or external chief executive officer (CEO). The paper uses variation in CEO succession decisions that result from the gender of a departing CEO's firstborn child.
Although the vast majority of real options models assume that investment opportunities are permanently available, many real-world investment opportunities are sporadic. Options to invest can suddenly become blacked-out, only to be followed by a re-opening in the future. For example, the option to develop real estate may open or close depending upon zoning and growth control decisions, competitive entry, or input (labor or material) availability. Similar factors influence complex R&D options. We term such randomly recurring investment opportunities as options on illiquid projects.
This paper lays out a decomposition of book-to-price (B/P) that derives from the accounting for book value and that articulates precisely how B/P "absorbs" leverage. The B/P ratio can be decomposed into an enterprise book-to-price (that pertains to operations and potentially reflects operating risk) and a leverage component (that reflects financing risk).
This paper furnishes robust evidence that the WTO has had a strong positive impact on trade, amounting to about 120 percent of additional world trade (or US$ 8 trillion in 2000 alone). The impact has, however, been uneven. This, in many ways, is consistent with theoretical models of the GATT/WTO. The theory suggests that the impact of a country's membership in the GATT/WTO depends on what the country does with its membership, with whom it negotiates, and which products the negotiation covers.
Previous research concludes that options are mispriced based on the high average returns, CAPM alphas, and Sharpe ratios of various put selling strategies. One criticism of these conclusions is that these benchmarks are ill-suited to handle the extreme statistical nature of option returns generated by nonlinear payoffs. We propose an alternative way to evaluate the statistical significance of option returns by comparing historical statistics to those generated by well-accepted option pricing models.
Our goal in this chapter is to review for social psychologists some of the interesting research done in consumer behavior and marketing.
In this paper I explore the lessons learned from the redevelopment of Times Square at 42nd Street, where 13 acres of prime, if blighted, land was assembled by the customary method of condemnation. This experience vividly argues for a more efficient strategy, though in such large-scale redevelopment project where issues of overall control and the redefinition of land uses are often paramount, land readjustment schemes may be difficult to apply.
This paper develops a pure simulation-based approach for computing maximum likelihood estimates in latent state variable models using Markov Chain Monte Carlo methods (MCMC). Our MCMC algorithm simultaneously evaluates and optimizes the likelihood function without resorting to gradient methods. The approach relies on data augmentation, with insights similar to simulated annealing and evolutionary Monte Carlo algorithms. We prove a limit theorem in the degree of data augmentation and use this to provide standard errors and convergence diagnostics.
BACKGROUND: Delays for appointments are prevalent, resulting in patient dissatisfaction, higher costs, and possible adverse clinical consequences. A "just-in-time" approach to patient scheduling, called advanced access, has been effective in reducing delays in multiple clinical settings. Offering most patients appointments on the same day requires achieving an appropriate balance between supply of and demand for appointments, but no methods have been previously proposed to determine what this balance should be.
The Financial Accounting Standards Committee of the American Accounting Association (the Committee) is charged with responding to requests for comment from standard setters on issues related to financial reporting. This paper summarizes the Committee's response to the Financial Accounting Standards Board’s (FASB) exposure draft, "Accounting for Uncertain Tax Positions: An Interpretation of FASB Statement No. 109."
Our two-stage framework predicts that, during impression formation, individuals who hold ambivalent attitudes toward an issue are influenced by other sources regardless of their perceived reliability on the target issue. Less ambivalent individuals are presumed likely to check the reliability of the message's source before accepting it. Experiment 1 finds that highly ambivalent participants do not differentiate between a more versus less reliable source when forming impressions of a political candidate, whereas less ambivalent participants do.
In the present research, the authors hypothesized that additive counterfactual thinking mind-sets, activated by adding new antecedent elements to reconstruct reality, promote an expansive processing style that broadens conceptual attention and facilitates performance on creative generation tasks, whereas subtractive counter-factual thinking mind-sets, activated by removing antecedent elements to reconstruct reality, promote a relational processing style that enhances tendencies to consider relationships and associations and facilitates performance on analytical problem-solving tasks.
Contrary to the common perception that operating cash flows are better than accounting earnings at explaining equity valuations, recent studies suggest that valuations derived from industry multiples based on reported earnings are closer to traded prices than those based on reported operating cash flows.
This study investigates the determinants of the expected stock-price volatility assumption that firms use in estimating ESO values and thus option expense. We find that, consistent with the guidance of FAS 123, firms use both historical and implied volatility in deriving the expected volatility parameter. We also find, however, that the importance of each of the two variables in explaining disclosed volatility relates inversely to their values, which results in a reduction in expected volatility and thus option value.
We consider importance sampling simulation for estimating rare event probabilities in the presence of heavy-tailed distributions that have polynomial-like tails. In particular, we prove the following negative result: there does not exist an asymptotically optimal state-independent change-of-measure for estimating the probability that a random walk (respectively, queue length for a single server queue) exceeds a "high" threshold before going below zero (respectively, becoming empty).
Public/private partnerships have become a favored strategy for implementing complex urban developments in the United States and Western Europe, but the large volume of literature on the topic falls short of providing city planners, development experts, and policy analysts the knowledge needed for either teaching or practice. In the late 1970s, the blurring of lines between public and private action spurred significant intellectual debate in the U.S.
Three experiments investigate the emotions that arise from buying or not buying at an unintended purchase opportunity and how they color evaluations of affective advertising appeals that are viewed subsequently. We demonstrate that buying can cause happiness tempered with guilt, while not buying causes pride. Consistent with the felt affect, respondents who had bought at time 1 subsequently prefer happiness appeals to pride appeals, while those who had refrained prefer pride appeals.
Standard valuation methods do not lend themselves to bank holding companies. Banks create value through the types of assets and liabilities they create (e.g., lending and deposit taking relationships). Bank income streams reflect heterogeneous sources of income which differ in their margins of profitability and persistence.
Three studies support the proposal that need for closure (NFC) involves a desire for consensual validation that leads to cultural conformity. Individual differences in NFC interact with cultural group variables to determine East Asian versus Western differences in conflict style and procedural preferences (Study 1), information gathering in disputes (Study 2), and fairness judgment in reward allocations (Study 3).
Interest rate swap pricing theory traditionally views swaps as portfolios of forward contracts with net swap payments discounted using the LIBOR curve. Current market practices of marking-to-market and collateralization question this view. Collateralization and marking-to-market affects discounting of swap payments (through altered default characteristics) and introduces intermediate cash-flows. This paper provides a theory of swap valuation under collateralization and we find evidence supporting the presence of costly collateral.
We propose and test a new approach for modeling consumer heterogeneity in conjoint estimation based on convex optimization and statistical machine learning. We develop methods both for metric and choice data. Like hierarchical Bayes (HB), our methods shrink individual-level partworth estimates towards a population mean. However, while HB samples from a posterior distribution that is influenced by exogenous parameters (the parameters of the second-stage priors), we minimize a convex loss function that depends only on endogenous parameters.
In this paper, we propose a method of accounting for stock options that tracks the effect of the options on shareholder value. The accounting approach we outline can be applied not only to employee stock options but to all claims that are effectively convertible into common shares, including convertible preferred stock, warrants, and call and put options on the firm's own stock. Our proposal also aims to make accounting consistent with stock prices, since the market surely takes account of the (potential) valuation effects of these claims when setting stock prices.
We investigate and compare two dual formulations of the American option pricing problem based on two decompositions of supermartingales: the additive dual of Haugh and Kogan (Oper. Res. 52:258-270, 2004) and Rogers (Math. Finance 12:271-286, 2002) and the multiplicative dual of Jamshidian (Minimax optimality of Bermudan and American claims and their Monte-Carlo upper bound approximation. NIB Capital, The Hague, 2003).