Some small-business owners in need of accounting help to balance their books and guide them out of a financial black hole are renting CFOs rather than hiring them. The strategy comes at a time when the deep recession has forced small companies to look for money-saving alternatives that can yield good returns yet avoid substantial overhead costs. Germain Böer, Professor of Accounting and Director of the Owen Entrepreneurship Center, says business owners often want such a service when their company’s finances are getting more complex and need someone with more financial expertise.

The Wall Street Journal, Sept. 22

How to Manage Your Negotiating Team

Ray Friedman, Brownlee O. Currey Professor of Management, co-authored an article in the Harvard Business Review that discusses how negotiating teams frequently sabotage their own efforts. Friedman argues that a team must first negotiate internally to align its members’ interests and develop a disciplined bargaining strategy.

Harvard Business Review, Sept. 9

Disappearing Foreign MBAs

International applications were down at business schools across the country this year, challenging admissions officers to meet diversity goals and posing questions for the future. John Roeder, Director of Admissions, says the Owen School plans to do more international outreach this fall than ever before. Owen is unusual in that it had a banner year attracting international students. Roeder expects international enrollment to hit 26 percent this year, up 6 percentage points over last year.

BusinessWeek, Aug. 5

Lagging Health Care

A roundup of notable papers and articles includes a brief review of “Why Does the Quality of Health Care Continue to Lag? Insights from Management Research” co-authored by Rangaraj Ramanujam, Associate Professor of Management, and published in Academy of Management Perspectives.

The Economist, June 30

Painful Payments

Covering the estimated 46 million people nationwide without medical insurance won’t come cheap. One recent analysis puts the cost at $1.5 trillion over 10 years. Larry Van Horn, Associate Professor of Health Care Management, says taxing all health care benefits would save the government about $250 billion a year. “Just as importantly, it will result in changes to the design of health plans and reduction in demand for health care services,” he says. “At the end of the day, we can’t afford what we’re consuming now, so we need to consume less.”

The Tennessean, June 15

Antitrust Showdown

A merger between concert promoters Ticketmaster and Live Nation awaits approval by federal antitrust regulators. Critics say the merger could lead to a monopoly within the entertainment industry; proponents say it would enable greater efficiencies. What’s there to like about this merger? The combined company will effectively cut out middlemen, such as independent concert promoters, business managers, lawyers, agents and venue owners who want a piece of the pie, and allow artists to deliver services “quicker, faster, better and cheaper” to their fans, says Luke Froeb, William C. Oehmig Associate Professor in Entrepreneurship and Free Enterprise.

Time, June 10

An Uncertain Future

Individual investors are rapidly losing sources of analysis and advice, as money set aside for independent research dries up and Wall Street firms slash budgets. “When [people] have to start paying for equity research, [they] could come to the conclusion it’s not worth all that much to them at the margins,” says Craig Lewis, Madison S. Wigginton Professor of Management in Finance.

Newsweek, May 5

Premium organic grocer Whole Foods Market Inc. has settled an antitrust battle with U.S. regulators by agreeing to sell the Wild Oats brand, 13 functioning stores, and the leases and assets for 19 closed stores. Luke Froeb, William C. Oehmig Associate Professor in Entrepreneurship and Free Enterprise, seems skeptical that it would be easy to find appropriate purchasers for the stores. “It’s high-end retailers that have gotten killed in this downturn,” he says, calling the FTC’s decision to revive the Wild Oats brand “unprecedented.” 
Reuters, March 9

Dim Outlook

Economists in the latest forecasting survey from The Wall Street Journal still mostly project growth in U.S. gross domestic product by the third quarter, but they largely agree that a 2009 “second-half recovery”—a widely shared scenario until now—is looking much less likely. Dewey Daane, Frank Houston Professor of Finance, Emeritus, is quoted. 
The Wall Street Journal, Feb. 13

Raising the Gates

Numerous money-losing hedge funds have curtailed investor withdrawals over the past few months as redemption requests piled up. But “raising the gates,” as it is known in the industry, can cost investors dearly, according to a recent study from Vanderbilt and Columbia universities. “Given that most hedge funds require significant investment levels to begin with, the resulting costs of liquidity restrictions—whether existing or newly imposed—can potentially be staggering for investors,” says Nicolas Bollen, E. Bronson Ingram Associate Professor in Finance.
The New York Times DealBook, Jan. 7

MBA Pay

New research commissioned by BusinessWeek suggests that when it comes
to the post-MBA earnings accrued by graduates of top business schools over the span of their careers, not all schools are created equal. The Owen School ranks 30th, with the 21st overall highest salary average.
BusinessWeek, Feb. 10

The Obama Effect

Research led by Ray Friedman, Brownlee O. Currey Professor of Management, documents a so-called “Obama Effect,” showing that a performance gap between African Americans and whites on a 20-question test administered before Obama’s nomination all but disappeared when the exam was administered after his acceptance speech and again after the presidential election. 
The New York Times, Jan. 23

Rigged Games

In the 1990s Bernard Madoff led a group of NASDAQ market makers who wanted a piece of the NYSE’s very profitable game. They argued they could give investors a better deal by bypassing the established exchanges and matching buyers and sellers more rapidly on their own computers. There was only one problem: The market makers were gaming the system, too. Market makers “had a cushy existence in the ’90s,” says Bill Christie, Frances Hampton Currey Professor of Management, who exposed the spread manipulation in an influential 1994 paper.
Forbes, Jan. 9

Fear Factor

The most popular proxy for market fear is the Chicago Board Options Exchange’s Volatility Index, or VIX, developed by Robert Whaley, Valere Blair Potter Professor of Finance. It reached nearly 81 about two weeks ago, roughly four times its historical average of about 20. 
The Wall Street Journal, Dec. 1

Yesterday’s stock market tumble is the direct result of the deregulation of the financial system during the ’70s, experts say. “It was another example of an asset bubble that appears periodically. An economy will disregard risk, and when people see another investor making money by investing in an asset, others will throw caution to the wind,” explains Nicolas Bollen, a finance professor at Vanderbilt University’s Owen School.

McClatchy News Service, Sept. 16

Trade Off

International trade remains an evergreen fissure running through U.S. politics. While John McCain has been firm in his defense of the North American Free Trade Agreement (NAFTA), the Democrats have promised, albeit without specifics, to renegotiate treaties to protect U.S. workers. Luke Froeb, a free enterprise expert at Vanderbilt University, identifies this as a key ideological gap. He argues: “Renegotiating NAFTA would make our economy a lot less flexible. It would reduce income and make us all worse off.”

The Guardian (U.K.), Aug. 31

Clinical Trial and Error

Many institutional review boards do an exemplary job, keeping scientists on the ethical up-and-up, but “hyperprotectionism,” according to the Journal of the American Medical Association, “can have a stifling effect on research productivity.” One measure of that might be the number of new compounds approved by the Food and Drug Administration. It averaged an abysmal 19 last year—the fewest since the early 1980s. Or you can measure it by how long it takes a clinical trial for cancer to get off the ground: 171 days of red tape, finds David Dilts of the Owen School.

Newsweek, Aug. 11

Striking Gold

Olympic advertisers will spend more than $1 billion for U.S. airtime alone, although some say they will not get their money’s worth. In a time when it’s harder to win by simply offering a better product, the goal of a lot of advertising is to arouse positive feelings that forge lasting bonds with consumers, says Jennifer Escalas, a Vanderbilt professor. This year’s Olympic ads fit squarely with that goal. McDonald’s, for example, isn’t trying to sell a specific burger but to “build a relationship,” Escalas says. “If you feel good about the Olympics, that good feeling should spill over to the brand.”

MSN.com, Aug. 7

Full Disclosure?

Researchers have found that the Security Exchange Commission’s Regulation Fair Disclosure rule (Reg FD) has curtailed the amount of information that companies disclose to the public. Baljit Sidhu from the Australian School of Business, Tom Smith from Australian National University, and Robert Whaley and Richard Willis from the Owen School studied the effect of Reg FD by comparing cost components of the bid-ask spreads of Nasdaq-listed stocks in the months before and after Reg FD went into effect. “While Reg FD gave everyone the same info at the same time, what it’s done is it has made firms release less information, and it’s driven up the cost of trading,” says Whaley.

CFO.com, Aug. 1

On the Margins

The collapse of SemGroup LP, which filed for bankruptcy after losing $2.4 billion on energy contracts, has focused attention on margin requirements. Financial-market experts point out that while trading firms may struggle with margin requirements, increased margin doesn’t become an issue unless the trade is a loser to start with. “It’s a standard argument” when traders “get into trouble,” says Hans Stoll, a finance professor at Vanderbilt.

The Wall Street Journal, July 29