Archive for December, 2012

Research Notes: Prof. Geoffrey Parker

Saturday, December 22nd, 2012

Geoff ParkerGeoffrey Parker’s paper “Integration and Cospecialization of Emerging Complementary Technologies by Startups” has been accepted for publication in Production and Operations Management. The paper, co-authored with Edward G. Anderson Jr., associate professor of Information, Risk, and Operations Management at the University of Texas at Austin, analyzes the market entry problem faced by startups that must integrate their service or product with one or more complementary technologies. The authors seek to extend the entrepreneurship literature by modeling startups’ entry decisions for markets in which complementary technologies exhibit strong learning effects. Parker is a professor of management science at Tulane University’s A. B. Freeman School of Business.

 


Research Notes: Prof. Robert Prilmeier

Tuesday, December 18th, 2012

Robert PrilmeierRobert Prilmeier’s paper “This Time Is the Same: Using Bank Performance in 1998 to Explain Bank Performance during the Recent Financial Crisis” was published in the December 2012 issue of the Journal of Finance. The paper, co-authored with Rüdiger Fahlenbrach and René M. Stulz, shows that a bank’s stock return performance during the 1998 crisis strongly predicts its stock return performance and probability of failure during the recent financial crisis. These findings are consistent with persistence in a bank’s risk culture and/or aspects of its business model that make its performance sensitive to crises. Banks that relied more on short‐term funding, had more leverage, and grew more are more likely to be banks that performed poorly in both crises. Prilmeier is an assistant professor of finance at Tulane University’s A. B. Freeman School of Business.

 


Three Freeman staffers make Silicon Bayou 100

Friday, December 14th, 2012

John Elstrott, Ralph Maurer and Lina Alfieri Stern, the leadership team behind the Freeman School’s Levy-Rosenblum Institute for Entrepreneurship, are among the local movers and shakers to make the 2012 Silicon Bayou 100.

The staff of the Freeman School’s Levy-Rosenblum Institute for Entrepreneurship. From left to right, Lina Alfieri Stern, John Elstrott, Terry McGuckin, Ralph Maurer and Rosalind Butler.

Silicon Bayou News, a website dedicated to covering the state’s rapidly growing startup scene, selects the Silicon Bayou 100 each year to recognize the most active and influential people in technology and entrepreneurship in Louisiana. This year’s honorees were announced on Dec. 12 at a release party at Eiffel Society in New Orleans.

Elstrott is emeritus executive director of the Levy-Rosenblum Institute (LRI), the center he founded in 1991 to coordinate entrepreneurship programs and initiatives at the Freeman School. Under Elstrott’s guidance, the Freeman School has consistently ranked among the top graduate programs in the nation for entrepreneurship. Prior to his retirement in July 2012, Elstrott provided instruction, mentorship and advice to hundreds of entrepreneurs and prospective entrepreneurs over the course of a 25-year career at the Freeman School. As emeritus executive director, Elstrott remains involved with the institute as a consultant and fundraiser, and he continues to teach entrepreneurship courses at the Freeman School.

Maurer is executive director of the Levy-Rosenblum Institute, and he also serves as executive director of the Tulane Family Business Center, a program of LRI. A professor of practice in the area of strategy & entrepreneurship, Maurer focuses his teaching and research on innovation and strategy in highly dynamic markets, with an emphasis on both technology and the cultural industries. His work and consulting experience includes time with Apple, Daimler-Benz, Chrysler, Deluxe and multiple internet startups. In addition to his role at the Freeman School, Maurer serves as a consultant with EMH Strategy in New Orleans.

Alfieri Stern has been with the Levy-Ronsenblum Institute since its founding, and she has served as director of the institute since 2008. In that role, she plans and implements projects relating to entrepreneurial studies, urban economic development and social entrepreneurship. In addition, she places and mentors volunteer students in consulting projects for disadvantaged businesses and not-for-profit organizations. As staff adviser to the Tulane Entrepreneurs Association, Alfieri Stern also plays a major role in organizing the annual Tulane Business Plan Competition and the Domain Cos. New Orleans Entrepreneur Challenge, which each year award more than $70,000 in cash and prizes to promising startup ventures.

Tulane University was well represented on this year’s Silicon Bayou 100. In addition to Elstrott, Maurer and Alfieri Stern, the list features dozens of entrepreneurs, mentors, investors, organizers and services providers with Tulane connections.

“It’s an honor to be recognized as a leader in your field, but I think what’s even more impressive is the tremendous diversity of talent highlighted on the list,” says Maurer. “It’s been exciting to work with many of the people on the list over the last couple of years, and John, Lina and I look forward to working with them in the future to make the Freeman School an even bigger part of the New Orleans entrepreneurial community.”

For more information about the 2012 Silicon Bayou 100, visit Silicon Bayou News.

 


Business School Council adds three new members

Wednesday, December 12th, 2012

The Business School Council, the primary external advisory board of the A. B. Freeman School of Business at Tulane University, has recently added three new members.

Ozgur Karaosmanoglu

Ozgur Karaosmanoglu

Ozgur Karaosmanoglu (A&S ’84, MBA ’87) is senior vice president, investments, and managing director at Raymond James Financial Inc. Prior to joining Raymond James in 1993, Karaosmanoglu served as an investment executive at Legg Mason and as an account executive and operations managers at Dean Witter. Karaosmanoglu is founder of the Global Wealth Management Group at Raymond James, which serves both retail and institutional clients with total assets of approximately $250 million. He served on the Raymond James Executive Council and is a member of the firm’s Chairman’s Council. In 2006, he was named Broker of the Year by Registered Rep. magazine in honor of his dedication and service to his clients.

Dana Mcilwain

Dana McIlwain

Dana Mcilwain (BSM ’84) is a vice chairman and leader of the U.S. Advisory Practice at PricewaterhouseCoopers, where he provides strategy and direction for over 9,000 PwC professionals focused on helping clients through three areas of focus: Consulting, Deals and Forensics. Prior to being named leader of the U.S. Advisory Practice, Mcilwain served as a member of the U.S. firm’s Board of Partners and Principals, and was the New York Metro Advisory Regional Leader and East Region Advisory Leader. He joined PwC in 1984 in New Orleans, is currently based in New York and has served a wide variety of clients.

Matt Schwartz

Matt Schwartz

Matt Schwartz (BSM ’99) is a co-founder and principal of the Domain Cos., a real estate development and management firm headquartered in New Orleans and New York. Domain specializes in large-scale community development with a focus on mixed-income and mixed-use development. Since its inception in 2004, Domain has been involved in the acquisition and development of more than 3,000 housing units and 250,000 square feet of retail space in markets ranging from small cities and major established urban areas to pioneering and redeveloping urban environments. Prior to launching Domain, Schwartz was a vice president of Related Capital, then the largest multifamily owner and financial services provider in the country.

With more than 50 members spanning the United States and China, the Business School Council serves as the primary external advisory board of the A. B. Freeman School of Business at Tulane University. In addition to leading fundraising activities and promoting the Freeman School externally, the Business School Council advises and assists the dean in the areas of strategy, curriculum and program development, marketing, admissions and placement.

 


Research Notes: Prof. Jennifer Merluzzi

Wednesday, December 12th, 2012

Jennifer Merluzzi’s paper “Social Capital in Asia: Investigating Returns to Brokerage in Collectivistic National Cultures” has been accepted for publication in Social Science Research. Merluzzi is an assistant professor of management at Tulane University’s A. B. Freeman School of Business.

To see more Freeman School research, visit the Faculty Publications page.


The high cost of high-frequency trading

Monday, December 10th, 2012

On May 6, 2010, the Dow Jones Industrial Average plunged nearly 600 points in five frantic minutes only to regain most of that loss minutes later. The origin of the so-called Flash Crash remains a mystery to this day, but David Lesmond, associate professor of finance at the A. B. Freeman School of Business, has a strong suspicion of the underlying cause: high-frequency trading.

“These high-frequency traders are hitting the market with such rapidity that the markets have to react to them,” says Lesmond, who has been studying the phenomenon for the past three years. “Then other algorithms take over and they sell as well, so you see a contagion effect.”

Associate Professor of Finance David Lesmond says high-frequency trading is largely to blame for increased volatility in the stock market.

High-frequency traders utilize powerful computers and complex algorithms to take advantage of slight price imbalances in the market. HFT firms typically place thousands of orders too small to appear in the consolidated feed of stock transactions, enabling the traders to fly under the radar of Wall Street and quietly gather information about the market. The vast majority of those orders — up to 98 percent — are never executed. Instead, they’re placed solely to probe the market and then cancelled within the blink of an eye. If a market maker tries to fill an order, the high-frequency trader might conclude that a large buyer is present and quickly purchase shares to sell back to the buyer at a slightly higher price. Speed is everything.

“It’s gotten to the point that the high-frequency traders worry about the length of cord that connects the computers,” Lesmond says. “You’re thinking milliseconds at this point.”

While supporters argue that high-frequency traders reduce transaction costs and provide liquidity to the market, Lesmond has a different perspective.

“It’s price manipulation,” Lesmond says. “That’s the principal worry that everybody has about these high-frequency traders. Because if the price doesn’t reflect information, you have no transparency in the market, and if you don’t have transparency in the market, who gets the short end of the stick? The investors.”

According to some estimates, high-frequency trading comprises about 70 percent of all equities trading volume, but Lesmond says it’s difficult to quantify the volume because those trades don’t appear on the consolidated feed of stock transactions. As part of his current research, Lesmond hopes to generate a more accurate estimate of HFT volume and also get a clearer picture of its effects on the market, including whether or not the prices high-frequency traders buy and sell at reflect information.

“My feeling is that the prices do not reflect information in the market, and that’s just catastrophic,” Lesmond says. “If prices can be dictated by these off-exchange things, then we have no hope. That’s by definition what market manipulation is.”

Steps may already be underway to address the problem. Reuters recently reported that U.S. equities markets and regulators have agreed to add trades of less than 100 shares, referred to as odd lot trades, to a feed of real-time market data in an effort to boost transparency.

But according to Lesmond, the real source of the problem remains the low cost of trading. In the wake of the stock market’s conversion to decimalization in 2001, bid/ask spreads dropped to a penny or less,  essentially eliminating cost barriers to trading. High-frequency trading, Lesmond says, was an unintended consequence of the conversion.

Regulators are now considering a tax to be placed on each order to force high-frequency traders to incur some cost for their activities, a reform that Lesmond says could greatly reduce their negative impacts on the market.

“I think regulators mostly want to inhibit high-frequency traders from submitting false trades—the trades that are submitted and then immediately retracted,” says Lesmond. “By instituting a tax on trades, however small, they hope to lessen the frequency of trade and that in turn may help stabilize the market, not to mention government coffers.”

 

 


Service takes the spotlight on MBA trip to Argentina

Monday, December 10th, 2012

It started out modestly, as a way to offer volunteer opportunities to students during one of their international trips, but in the last three years, public service has grown to become a focal point of the annual MBA Global Leadership trip to Argentina.

MBA students spent a day planting vegetable gardens at an orphanage in Buenos Aires as part of this year’s Global Leadership trip to Argentina.

“There’s a real desire on the part of students to give something back and contribute positively to the places they visit,” says Stephen Estrada, director of professional education, who helps coordinate the program. “With the Global Leadership trip to Buenos Aires, we saw an opportunity to take Tulane’s model of public service and expand it internationally.”

The Argentina trip is part of the MBA course Global Leadership III, taught by Visiting Assistant Professor of Management Eduardo Guzman and focused on the business environment of Latin America. While this year’s trip included a two-day academic program on doing business in Latin America, the highlights of the trip were a day of public service at a local orphanage and a service learning project that matched MBA students with four nongovernmental organizations in Argentina. In keeping with Tulane’s model of service learning, the consulting project was designed to enable students to use knowledge and skills learned in the classroom to help solve real-world problems.

The project kicked off in August when MBA student teams were matched with one of the four organizations: EMA, which works to improve quality of life for people with multiple sclerosis; Fundación Leon, which promotes social justice; Los Naranjos, which mentors and supports at-risk youth by teaching them the craft of pottery; and Fundación Claritas, which offers educational programs for employees and administrators of NGOs.

MBA students with representatives of Fundación Leon, one of four NGOs in Argentina that students worked with as part of this year’s MBA Service Learning Project.

Working with translators, the students met and interacted with the clients through a series of video conferences and developed consulting reports tailored to meet the specific needs of each organization. Some clients sought marketing assistance or advice on a business plan; others were interested in financial analysis or managerial recommendations.

During November’s trip to Argentina, the students presented their reports to the clients in person, highlighting their findings and answering any questions the clients might have had.

“The thing I’ll remember the most is seeing how excited they were about our report and presentation,” says Reid Pennebaker (MBA ’13), whose team developed ideas to generate additional revenues for Fundación Claritas. “That moment when you see your work will impact someone in a positive way is something you can’t recreate.”

While time constraints and language barriers made the project one of the more difficult ones he’s worked on as an MBA student, Pennebaker says it was also one of the more rewarding.

“All of us wished we’d had more time to interact with the clients and hone in even better on our suggestions, but at the end of the day the client was very happy and we were very happy. Overall, it was a wonderful experience.”

 

 



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