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Chicago Booth in the News, Autumn 2011, Vol. 3

(Covering October 14 to November 7, 2011)

Here are highlights of the latest Chicago Booth news coverage. The digest below represents only a portion of recent coverage.

Section 1: News coverage of Chicago Booth.

  • FINANCIAL TIMES. Booth’s Executive MBA Program ranked fifth in the 2011 ranking of the world’s best executive MBA programs published October 24. Last year Booth was also fifth. The typical Booth EMBA student experienced a 70 percent increase in salary between the time they entered the program and three years after graduation, according to the newspaper’s survey of 2008 graduates. The top 10 programs this year were 1) Kellogg/Hong Kong University of Science and Technology joint program, 2) Trium: HEC Paris/London School of Economics/NYU joint program, 3) Columbia/London Business School joint program, 4) Insead, 5) Booth, 6) Duke, 7) Wharton, 8) IE Business School in Spain, 9) UCLA/National University of Singapore joint program, 10) London Business School. View ranking
  • FINANCIAL TIMES. A feature article about Booth and its Executive MBA Program was published October 24 in the section with the EMBA rankings (see item above). Students in our Executive MBA Program “get the full flavor of our educational experience – the emphasis on fundamentals complemented by practical courses and the insistence on rigor at all levels,” said Dean Sunil Kumar. Part of the goal of the program is to “broaden the horizons” of EMBA students, he said. Read article
  • MARKETWATCH.COM. The latest Chicago Booth/Kellogg School Financial Trust Index shows that only 23 percent of Americans trust the financial system compared with 25 percent in June, according to an article published October 23. “The findings reflect what’s been reported in the news and demonstrate the fragility of trust many Americans still have in the institutions where they invest their money,” said Professor Luigi Zingales, co-author of the index. Read article
  • REUTERS. Booth’s Deutsche Bank Speaker Series on Risk and Regulation in the Financial Markets made news November 2 when Agustin Carstens, governor of the Bank of Mexico, spoke at Harper Center. He said the Mexican peso “has depreciated probably too much,” given the country’s strong economic fundamentals. Read article

Section 2: News coverage quoting Chicago Booth faculty.

  • FINANCIAL TIMES. Professor Raghuram Rajan published an op-ed titled “Central banks need a bigger and bolder mandate,” October 24. “A small group of systemically-significant central banks should meet regularly,” he wrote. “This group would assess the implications of their policies for global liquidity, leverage, and exposures. It would also discuss the appropriateness of their joint monetary and credit policies for maintaining global price, output and financial stability.” The op-ed was co-written with professors at the University of California at Berkeley and Cornell University. Read article
  • BLOOMBERG BUSINESSWEEK. Professor Tobias Moskowitz published an op-ed titled “A Blended Investment Strategy for All Markets,” November. 3. “In the current economic and financial climate, investors seem to be struggling to find a new strategy that can yield consistent positive returns,” he wrote. “Yet, before seeking something new, there are two proven long-term approaches that investors might want to consider: value and momentum. What’s more, when combined, these strategies produce an even more potent investment vehicle and can be applied much more broadly across asset classes.” Read article
  • BLOOMBERG NEWS. Professor Steven Kaplan published an op-ed titled “Persistence Is Best Predictor of CEO Success,” October 26. A study of more than 300 CEO candidates found that executive-related skills were the most important. “The most successful CEOs were those who were persistent, efficient and proactive. Persistent leaders don’t give us. They stick with assignments until they are done. Efficient CEOs get a lot done in a short period of time. And proactive ones are self-directed and regularly bring in new ideas.” Read article
  • SHANGHAI DAILY. Professor Raghuram Rajan published an op-ed titled “U.S. housing drop-off slashes employment,” November 1. “The lesson for policy makers is clear,” he wrote. “Instead of constantly trying to boost spending and potentially creating problems for the future, a more sustainable way to improve job growth is to facilitate the ‘reskilling’ of the unemployed, especially those who were in construction-related jobs. Eventually, better labor-force supply will create healthier and more sustainable demand.”
  • CHICAGO TRIBUNE. Clinical Professor James Schrager published a commentary about billionaire Chicago businessman Robert Pritzker, who died October 27. “He built the low-profile Marmon Group into a major part of the family fortune,” Professor Schrager wrote. “Through Marmon may not have a scintillating set of recognizable brands, the manner in which the companies were acquired, organized and operated makes it clear that Bob was willing to argue with prevailing management theories.” Professor Schrager previously worked for and consulted with the Marmon Group for nearly 20 years, the November 6 column noted. Read article
  • THE WALL STREET JOURNAL. A Q&A with Professor Austan Goolsbee appeared on the business education page November 3. Unlike most academics who left a job in politics, “my class is not very political,” he said. “I teach a telecom, media and technology class.” Professor Goolsbee left his position as chairman of the White House Council of Economic Advisers earlier this year to return to Booth. Washington is “not an easy place, and it’s not an easy time to be in that place,” he said. Read article
  • THE ECONOMIST. Research by Professor Steven Davis was featured in the Economics Focus column October 29. He found that being laid off costs a typical male worker 11 percent of his future earnings, in present-value dollars. During a recession, when longer spells of unemployment lead to more loss of human capital, that rises to 19 percent. Professor Davis conducted the research with a Columbia business school professor. Read article
  • NBA.COM. A Q&A with Professor Kevin Murphy headlined “Renowned economist Murphy lends smarts to NBPA’s cause,” was published October 27. He is working with the National Basketball Association players union during the lockout by the team owners. “If there’s a deal here, it’s going to be a deal that nobody likes,” Professor Murphy said. “That’s what deals are. Nobody walks out feeling like they got a complete victory. That’s initially. But then you get back to playing and you realize, geez, I can live with this.” Read article
  • THE WALL STREET JOURNAL. Research by Professors Lubos Pastor and Pietro Veronesi was cited in an article headlined “How to Play Political Risk,” published November 5. Stock prices might already reflect the heightened political risks, they found. During good economic times, the equity-risk premium is compensating investors almost entirely for economic risks because government policy is unlikely to change. But during bad times, political risks comprise more than half of the equity-risk premium, the study found. “In poor economic conditions, we expect the government to step in but we don’t know exactly what they will do,” Professor Pastor said. “At these times, political news moves prices even if it has nothing to do with the economics of the problem.” Read article
  • THE WALL STREET JOURNAL. Professor Luigi Zingales’ latest commentary published in City Journal was cited in The Wall Street Journal’s “Secondary Sources” column November 2. In his commentary Professor Zingales looks at the decline of the U.S. meritocratic ideal. “If the drifting continues, the result could be a breakdown of popular support for free markets and the demise of America’s unique version of capitalism,” he wrote. Read article
  • THE NEW YORK TIMES. Professor Steven Kaplan was quoted in an article headlined “The IPO Markets, an Engine of Job Growth, Stalls.” In good times, an open door for stock market debuts can start a snowball of benefits, he said in the October 24 article. “There’s a feedback effect.” 
  • FINANCIAL TIMES. Research by Professor Nicholas Epley was featured in the “Something for the weekend” column October 28. The research found that tight social connections can encourage group members to view outsiders as “subhuman.” And the tighter the social connections, such as within the military or athletic teams, the more inclined group members can be to view outsiders negatively. 
    Read article
  • THE WALL STREET JOURNAL. Research by Professor Amir Sufi was featured in a front page story headlined “Spenders Become Savers, Hurting Recovery,” October 22. Professor Sufi found that households with the most debt were the likeliest to cut spending on big-ticket items. The current U.S. belt-tightening might have an unusually big impact because the last borrowing bubble was so big, the article said. Read article
  • CNBC. Professor Randall Kroszner discussed the U.S. economy and inflation during an appearance on The Kudlow Report October 20. Inflation, including volatile food and energy prices, should start to come down a bit in the coming months, he said. Watch video
  • THE WALL STREET JOURNAL. Research by Associate Professor Amit Seru was featured in an op-ed titled “The Mortgage Crisis: Some Inside Views.” Professor Seru’s paper “The Failure of Models that Predict Failure,” was cited in the op-ed written by Charles Calomiris, a professor at Columbia. The October 27 article called Professor Seru’s work with two co-authors “a painstaking forensic analysis of the sources of increased mortgage risk during the 2000s.” Read article
  • THE WALL STREET JOURNAL. Professor Raghuram Rajan was quoted in an article headlined “Overseas Allies Reluctant to Try U.S. Debt Diet,” October 21. “Credit has been booming” in China, Brazil and India, he said. Cutting back too quickly could batter the economy, but doing too little could feed asset bubbles. “The question is: Does this one end in tears? Unfortunately, history tell us you never manage it well.” Read article
  • THE WALL STREET JOURNAL. Professor Steven Davis was quoted in an article headlined “U.S. Monthly Employment Report Not The Final Word On Jobs,” published November 4. The report often contains quirks, the article said. “Investors need to be aware of the pitfalls of the report and ask, ‘How do I interpret it?’” Read article
  • REUTERS. Professor Randall Kroszner was quoted in an article headlined “Nightmare scenario: U.S. deflation risks rising,” published October 26. A high jobless rate and slowing inflation could look worrisome, especially if inflation expectations decline further, the article said. “That would provide more of a foundation for action,” Professor Kroszner said. Read article
  • THE ATLANTIC. Research by Professor Steven Kaplan was featured in an article headlined “The 1% Ain’t What It Used To Be,” posted October 21. His empirical work shows that the share of total income taken by the top one percent of the income distribution and the top 0.1 percent has declined in recent years. Read article
  • FINANCIAL TIMES. A Q&A interview with Clinical Professor Linda Ginzel was published November 1. When asked “what advice would you give to women in business” she responded “I do not think that my advice is any different for women than for men in business. I tell all my students to be sure that they have a strong sense of their own priorities so that they do not end up making choices based on the priorities of others. I believe that who we become depends on the everyday choices that we make, and we must choose wisely. As Steve Jobs said in his Stanford commencement speech: ‘Your time is limited, so don’t waste it living someone else’s life.’” Read article
  • BLOOMBERG TELEVISION. Professor Randall Kroszner discussed U.S. tax policies, President Obama’s plan to help borrowers refinance their home mortgages, and the European sovereign debt crisis during an appearance on “In the Loop,” October 24. Watch video
  • THE CHRONICLE OF HIGHER EDUCATION. Research by Professor Marianne Bertrand was featured in an article headlined “School Suspensions Among Boys May Be Linked to Lower College Attendance.” Family life plays a larger role in predicting the behavioral problems of boys than it does of girls, which helps explains why boys have lower college-going and graduation rates, the research found. The article was published October 31. Read article
  • FOX BUSINESS. Professor Randall Kroszner said he does not see a double-dip recession heading to the U.S. “This is not a strong recovery, but I don’t see contraction in the cards,” he said during an interview broadcast October 20. Watch video
  • WBEZ RADIO (Chicago). Professor Erik Hurst was featured in a story about whether small businesses can rebuild the U.S. economy. Most small businesses don’t contribute to job growth, his research found. “When people talk about small businesses they think about the business that starts small and gets really big, like Google or Wal-Mart,” he said. “But most small businesses don’t do that.” The story was broadcast October 20. Listen to broadcast
  • CHICAGO TRIBUNE. Research by Professor Steven Kaplan was cited in a commentary headlined “What Occupy Wall Street is getting totally wrong: The parallel fortunes of the 1 percent and the 99 percent.” While the recession has hit the middle class hard, the rich have seen their take shrink as well, the November 6 article said. Between 2007 and 2009, the share of all income going to the richest 1 percent of Americans fell by a full quarter, Professor Kaplan’s research found. Read article
  • BLOOMBERG RADIO. Professor Randall Kroszner said he would make tax code reform “front and center” to revive economic growth, during an appearance on the Bloomberg Surveillance program October 24.
  • CHICAGO TRIBUNE. Professor Steven Kaplan was featured in a Q&A about the expected initial public offering of Groupon stock and the lower valuation placed on the offering. Scaling back the size of the IPO “is a normal action that companies take when they’re going public and they hit a market that is volatile, which this is,” he said in the article published October 23. Groupon’s stock made its public debut on November 4. Read article
  • CHICAGO TRIBUNE. Clinical Professor Linda Darragh is co-founder of Impact Engine, a new business accelerator aimed at growing companies with a social mission, according to an article published November 3. Participants will receive $20,000 in capital in exchange for equity, the article said. “It’s the perfect storm,” said Professor Darragh. “You’ve got … young people who want to build companies and be social entrepreneurs, and you have the baby boomers who could be the social investors.” Read article
  • ALL ABOUT ALPHA. Research on the predictability of tail risk by Assistant Professor Bryan Kelly was featured in an article June 21st. “Tail risk, by nature, is an elusive quantity, which presents economists with the difficult task of explaining market behavior with rarely observed phenomena,” he said.
  • BLOOMBERG BUSINESSWEEK. Research by Assistant Professor Ralph Koijen was featured in an article headlined “Dividend Swaps Signal No U.S. Recession As European Crisis Boils.” Dividend-swaps contracts offer a forecasting alternative to the so-called Treasury yield curve, which requires an adjustment for distortions caused by the Federal Reserve holding its benchmark interest rate at a record low zero to 0.25 percent since December 2008, Professor Koijen said in the article published November 3. The research was conducted with several co-authors. Read article
  • REUTERS. Professor Steven Kaplan was quoted in an article headlined “MF Global collapse may cost Flowers $48 million.” A roughly $7 billion fund raised in 2006 by J. Christopher Flowers, a private equity investor, and used to invest in MF Global has lost more than 60 percent of its value, the article said. “The performance is just horrific,” said Professor Kaplan. The article was published November 1. Read article
  • CRAIN’S CHICAGO BUSINESS. Clinical Associate Professor Ira Weiss was quoted in an article about the decline in venture capital investments in Chicago-area startups during the third quarter of the year. One explanation is that many venture-capital funds are almost at the end of their investing life cycles and may need to raise more money before committing to additional investments, he said in the article published October 21. Read article
  • TORONTO STAR. Research by Professor Erik Hurst was featured in an article headlined “For Small Business, the Romance is Over; Dismal failure rate means they kill about as many jobs as they create,” published October 21. Most small businesspeople are not interested in growing their firms and increasing their workforces, the research found. Only three per cent of companies studied that launched between 2004 and 2008 added more than 10 employees in that time, Professor Hurst found.
  • CNBC.COM. Research by Assistant Professor Sarah Zechman was featured in an article headlined “Investors Should Beware of Optimistic Executives.” Professor Zechman and her co-author looked at 49 firms sanctioned by the SEC for financial misreporting. What they found is that only a quarter of the misstatements involve executives intentionally committing corporate fraud. The other three-quarters were mistakes that began as small and possibly unintentional errors that stemmed from an optimistic bias, the October 14 article said. Watch video
  • BLOOMBERG NEWS. Visiting Professor Axel Weber urged a restricting of Greek sovereign debt that results in losses for investors and banks, which would then require additional capital. During a speech at the Federal Reserve Bank of Philadelphia, Professor Weber proposed a swap in which bondholders would exchange claims on low-rated Greek debt for a wider claim on the euro area. Banks would forgo some principal for better debt, he said.

Section 3: Chicago Booth students and alumni in the news.

  • MINNEAPOLIS STAR-TRIBUNE. Michael Klingensmith, MBA ’76, was named publisher of the year by the trade journal Editor and Publisher, according to article published October 27. Klingensmith is publisher of the Star-Tribune. Previously he was publisher of Entertainment Weekly and Sports Illustrated. Read article
  • ADVERTISING AGE. Brian Niccol, MBA ’03, was named chief marketing and innovation officer at Yum Brands’ Taco Bell. Previously he was chief marketing officer at Pizza Hut, also a Yum Brands company, according to the article published October 13. Read article
  • MARKET WATCH. M. Carl Johnson III, MBA ’72, was named executive vice president, brands, at Del Monte Foods. He joined Del Monte from Campbell Soup Company where he was senior vice president and chief strategy officer. The article was published October 26.
  • CRAIN’S CHICAGO BUSINESS. Bryan Johnson, MBA ’07 (XP-76) and founder of Braintree Inc., has turned over the reins of the company to an executive from Accel Partners, the Silicon Valley venture fund that recently invested $34 million in the Chicago start-up, according to an October 19 article. Johnson remains chairman. “I’ll be a very active chairman and will focus on long term vision and key strategic issues,” said Johnson, who founded Braintree while he was a student at Booth. Read article
  • CLUB MBA.COM. Jose Olalla, MBA ’99, chief information officer of Spain’s BBVA Bank was featured in a Q&A published November 11. Read article in Spanish
  • EXPANSION (Spain). Jaime Sanchez-Laulhe, a first-year student, was cited in an article about recruiting in Spain by Booth and other top international business schools. The article was published October 14. Read article in Spanish
  • CHANNEL NEWS ASIA. Arun Kelshiker, MBA ’11 (EXP-15) discussed the Greek debt crisis during broadcasts that aired October 8 to 11. He is head of investment research for Oclaner Asset Management, Singapore.
  • DIVERSITY JOURNAL. Adis Vila, MBA ’97, was named one of the Women to Watch in 2012 by this magazine. She is chief diversity officer for the United States Air Force Academy.