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Booth in the News, Spring 2010, Vol. 3

(Covering April 16 to April 30, 2010)

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

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

  • FINANCIAL TIMES. John Watson, MBA ’80 was profiled in a story headlined “The unassuming oil giant,” published April 26. He is CEO of Chevron. “I am not bashful about asking questions,” Watson said. “I have learned over time to try to ask the right questions. I encourage others to do the same thing in the company.” Watson joined Chevron as a financial analyst immediately after graduating from Booth. Read more
  • WBBM-TV Chicago. Bob Gillespie, a current Evening MBA Program student, appeared on “Monsters and Money in the Morning,” April 27. He is CEO of In Context Solutions, a company he started while enrolled at Booth. To view the interview, click on “Computer Software Helps Make Choices,” on this page:
  • MACWORLD. A company founded by Philip Leslie, MBA ’09, received a very favorable review from this magazine April 19. “ProOnGo Expense from ProOnGo is a very handy app for anyone who needs to track their expenses from a mobile device,” the article said. The app received a rating 4.5 on a 5 point scale. “You can say goodbye to typing up those pesky expense reports,” the review said. ProOnGo was a finalist in Booth’s 2008 Edward L. Kaplan New Venture Challenge. Read more
  • CleanEnergySector.com. Power2Switch, a new business venture developed by Oluseyi Fabode, MBA ’10, was chosen as one of “7 green ideas that could strike gold and save the planet,” according to an article published April 21. Fabode and teammates Philip Nevels, MBA ’10 and Timothy Hughes, MBA ’10 took part in the Rice University Business Plan Competition. Power2Switch enables small and medium-sized businesses to compare and switch between electricity suppliers through a web site. The firms can save money on their electricity costs or access renewable energy. Read more
  • INVESTMENT WEEKLY NEWS. Roderic Prat, MBA ’93, was named global head of derivatives for BNY Mellon, according to an article published April 24. Previously Prat held derivatives-related positions with Goldman Sachs, Deutsche Bank and HSBC, according to the article.
  • THE SEATTLE TIMES. Robert Malte, MBA ’82, was named CEO of Evergreen Hospital in Kirkland, Washington, according to an article published April 21. Previously he was CEO of a hospital in Wheat Ridge, Colorado, the article said.

Section 2: News coverage quoting Chicago Booth faculty.

  • THE WALL STREET JOURNAL. A column devoted entirely to Professor Raghuram Rajan’s research on the financial crisis was published April 21. The column, written by the newspaper’s economics editor David Wessel, said “One lesson from the crisis: When nine of 10 experts say everything is fine, the press should devote more than 10% of its coverage to those who say it isn’t fine. I should have paid more attention to Mr. Rajan, who famously ruined a 2005 Federal Reserve celebration of Alan Greenspan’s career by suggesting that big banks might be steering the world economy off the cliff.” The column previewed arguments Professor Rajan will make in his forthcoming book “Fault Lines: How Hidden Fractures Still Threaten the World Economy.” The book will be published in July. Read more Professor Rajan’s book is discussed in this video on wsj.com: Read more
  • THE WALL STREET JOURNAL. Research on the Internet by Professor Matthew Gentzkow and Assistant Professor Jesse Shapiro was featured in an article published April 19. “For all the remarkable power of the Internet, some journalists and scholars have worried that it is polarizing society because it’s so easy for Americans to confirm their prejudices be relying on Web sites that share their viewpoints,” the article said. “A couple of economists from the University of Chicago’s Booth School of Business, Matthew Gentzkow and Jesse Shapiro, say that worry is overdone.” Read more
  • THE NEW YORK TIMES. Research by Professor Matthew Gentzkow and Assistant Professor Jesse Shapiro (see item above) was featured in the April 20th edition. “They took methodologies that have been used to identify racial segregation, and they tracked how people of different political views move around the Web,” the article said. Read more
  • PBS-TV. Professor Luigi Zingales appeared on the Newshour April 20 in a story about homeowners who default on their mortgage even though they can afford to pay. “People who know other people who walk away are more willing to walk away, so this points in the direction of a contagion,” Professor Zingales said. “If most of the people who are underwater walk away, then house prices will drop even more, and then that will induce more people to walk away. So, we can have vicious circles in a lot of local real estate markets.” Strategic defaults now account for a third of all foreclosures in the U.S., Professor Zingales said. Read more
  • THE WALL STREET JOURNAL. Research on mortgage defaults by Professor Luigi Zingales was featured in an article headlined “More Homeowners Consider Strategic Defaults,” published April 29. About 31 percent of foreclosures in March were considered “strategic defaults,” in which homeowners walk away when the value of a mortgage exceeds the house value – even if they can afford the mortgage, Professor Zingales found. That’s up from 22 percent in March 2009. The findings were part of the latest Chicago Booth/Kellogg School Financial Trust Index.
  • THE WALL STREET JOURNAL. Research by Professor Richard Thaler was cited in an article headlined “Why the NFL Draft Drives Economists Crazy,” published April 22. In a draft system, there’s no way of knowing what a player is actually worth on the open market, the article said. A 2007 study by Professor Thaler suggested that the first pick of the NFL draft is the least valuable of the first round. The research was co-authored with Cade Massey, a 2003 graduate of the Booth Ph.D. program. Read more
  • SAN DIEGO UNION-TRIBUNE. Professor Richard Thaler was featured in an article headlined “A lesson in NFL draft economics: Aim low,” published April 21. “If I owned a team and I had that (#1) pick, I would be peddling it like crazy … until they change the rookie salary scale,” he said. “It’s wildly overvalued.” Read more
  • THE NEW YORK TIMES. An article written by Assistant Professor Emily Oster, “Are ‘Feminine Problems Keeping Poor Girls Out of School?” was posted on the newspaper’s Economix blog April 27. “Throughout the developing world, girls are less likely than boys to be enrolled in school, and these differences are particularly large after puberty,” Professor Oster wrote. “One possible solution – one which has received particular attention in the last few years – is providing better sanitary products for use during menstruation.” New evidence from a recent study Professor Oster undertook of adolescent girls in Nepal, however, calls this assumption into “serious question.” Read more
  • BLOOMBERG TELEVISION. Professor Randall Kroszner discussed the latest statement issued by the Federal Open Market Committee during an appearance April 28. The Fed kept rates near zero, a move that “makes sense,” according to Professor Kroszner. “Right now we see no evidence of inflation or inflation expectations moving,” he said during the live, six minute interview. It makes sense to maintain a very low interest rate policy “until the unemployment rate really starts to come down and is on a clear trajectory downward,” he said. Current interest rates are also proper since there is low inflation and low inflation expectations, he added. Professor Kroszner was a governor of the Federal Reserve from 2006 to 2009.
  • AUSTRALIAN FINANCIAL REVIEW (Melbourne). An op-ed by Professor Luigi Zingales titled “Credit default swaps vital to burst bubbles,” was published April 21. “The lawsuit filed by the U.S. Securities and Exchange Commission against Goldman Sachs for securities fraud, charging the bank with misrepresenting the way a collateralized debt obligation (CDO) had been formed has revived public disgust at credit default swaps (CDS), the instrument used to bet against these CDOs,” Professor Zingales wrote. “Far from being the spawn of the devil, CDSs are a useful financial instrument that can improve not only financial stability, but also the way that companies and countries are run.” The full commentary can be seen on the Project Syndicate website. Read more
  • THE ECONOMIST. Research by Professor Steven Kaplan was cited in an article headlined “Recovery, very early stage: Venture capitalists are licking their wounds – and their lips,” published April 29. While some experts worry that regulatory and fiscal issues, such as a proposal to change how venture capitalists’ profits are taxed, could further damage the industry’s prospects, Professor Kaplan is more optimistic. In a recent paper, Professor Kaplan and co-author Josh Lerner of Harvard “rightly point out that venture funds raised when capital is scarce have outperformed those put together when venture firms were flush with cash,” the article said. Read more
  • CNN.COM. Research by Professor Steven Kaplan was cited in an article headlined “The real outrage is how CEOs are paid, not how much,” published April 22. “The bad-boy headlines will misleadingly suggest that CEO pay levels overall are a problem,” the article said. “They’re not. For hundreds of big-company CEOs, pay came down in the 2001 recession, rose in the expansion, and has come down again in this recession, just as you’d hope, according to research by the University of Chicago’s Steven Kaplan.” Read more
  • PBS-TV. Professors Gary Becker, John Cochrane, Eugene Fama and Richard Thaler were featured in the NOVA program “Mind Over Money,” broadcast April 27. The program explored the question: Can markets be rational when humans aren’t? The entire program will be available for viewing online soon here: Read more
  • THE WALL STREET JOURNAL. Assistant Professor Emily Oster was described as one of “12 leading social scientists” who spoke at a Harvard conference on “Hard Problems in Social Science,” in an article published April 16. Each speaker was given 15 minutes to present whatever hard problem they wanted to talk about. Professor Oster argued that getting people to improve their health behaviors is a hard problem. She gave examples using diabetics.< Read more
  • BLOOMBERG BUSINESSWEEK. Professor Steven Kaplan was quoted in an article headlined “Elevation Gets Bailed Out of Palm Investment by Hewlett-Packard,” published April 29. Elevation Partners LP will earn a 5.4 percent gain on its investment, the article said. That’s not the kind of gain that investors in private-equity firms expect, according to Professor Kaplan. “They placed a very big bet on this one. Getting your money back is OK, but it’s sure not the outcome they had hoped for when they made the investment,” he added. Read more
  • BLOOMBERG RADIO. Professor Raghuram Rajan was the guest on “Bloomberg on the Economy,” April 26. “The central issue coming from the crisis as far as regulation goes is how do we make these big banks face up to the full costs of the risk they have taken?” he said. The 18-minute interview also covered key issues facing the International Monetary Fund. Professor Rajan was chief economist of the IMF from 2003 to early 2007.
  • PENSIONS AND INVESTMENTS. Research by Professor Steven Kaplan was featured in an article headlined “Profs say nothing to fix with venture capital model,” published April 28. U.S. institutional investors are shunning venture capital at exactly the wrong time, Professor Kaplan’s research showed. Venture capital funds raised in 2009 and 2010 are likely to be strong performers, according to his findings. Read more
  • INSIDE JOB, a documentary movie. Professor Raghuram Rajan appears on-screen in this theatrical release about the recent financial crisis, distributed by Sony Pictures Classics. Inside Job “is the first film to provide a comprehensive analysis of the global financial crisis of 2008,” according to a Sony news release. The film is scheduled to premier at the Cannes Film Festival in mid-May. It is narrated by Academy Award-winner Matt Damon.
  • FINANCIAL TIMES. Research by Professor Christian Leuz was cited in an article about the debate over creation of a single international accounting standard and a decision on who will regulate the global rules, published April 19. He says true convergence in reporting practices requires a broad convergence of countries’ institutional frameworks – in capital markets, securities regulation, investor protection and economic development – which he says is unrealistic in the near future and perhaps not desirable in all cases. His proposal is to create a “global player segment,” in which all companies that join are required to use the same set of reporting rules as each other. They would all face the same regulation and, as a consequence of more transparent reporting, could enhance their attractiveness to investors, the article said. Read more
  • REUTERS. Professor Raghuram Rajan was quoted in an article headlined “G20 growth forecasts don’t add up,” published April 25. High unemployment and even higher government debt … will drag on demand in most advanced economies, and they are all looking to growth abroad to take up the slack, the article said. “What the IMF is worried about is how it all adds up,” Professor Rajan said. “Everybody expects to grow and many of them expect to grow through exports. Read more
  • PENSIONS & INVESTMENTS. Professor Steven Kaplan was quoted in an article about private equity investment in clean-technology firms. “I’m not a big, huge fan of clean tech for venture capital,” he said. Too many of the investments are capital intensive and feature significant regulatory risk, according to Professor Kaplan. The article was published April 19. Read more
  • HUFFINGTON POST. Professor Anil Kashyap was quoted in an article about charges by the Securities and Exchange Commission that Goldman Sachs defrauded investors in the sale of securities tied to subprime mortgages. “For the average investor, many aspects of investing require trusting rules and institutions to protect people,” Professor Kashyap said in the April 20 article. “The allegations suggest that these protections failed and in the process some of the largest other players in the financial system were taken advantage of. If this is proved it will further erode people’s trust in the financial system.” Read more
  • CHICAGO TRIBUNE. Professor Raghuram Rajan’s forthcoming book, “Fault Lines: How Hidden Fractures Still Threaten the World Economy,” was featured in a column published April 22. Big banks exploited an “edge” that government “was only too willing to provide” for the sake of easy credit, the book says. Going forward, the government should get away from creating short-term booms and focus on a long-term solution by improving education and job opportunities, Professor Rajan said. Read more
  • FT ALPHAVILLE.COM. Research by Professor Christian Leuz was cited in an article headlined “From Level 1 to Level III, the myth of fair value,” posted April 15. Much of the article was drawn from Professor Leuz’s study of whether fair-value accounting contributed to the financial crisis. His answer is no, “but not for the reasons you might think,” the article said. Read more
  • THE EVENING STANDARD (London). Research by Associate Professor Tanya Menon was featured in an article headlined “Beware the Greeneyed Monster; Envy Can Destroy Office Karma,” published April 26. Professor Menon proposed three steps for stopping the downward spiral caused by envy. Read more
  • THE NEW YORK TIMES. Research by Professor Marianne Bertrand was cited in an article headlined “Take your husband’s surname? It may cost you,” posted April 14 to the Economix blog. Professor Bertrand wrote a “seminal paper” on the impact names have on job seekers, according to the article. Read more
  • COMPUTERWORLD. Research by Professor Ronald Burt on networking was cited in an article headlined “Assumptions About Contacts Can Hinder a Job Search,” published April 27. Professor Burt found that the structure of one’s network – that is, whether or not the individuals in one’s network know each other – may be more important than the size of the network, the article said. It’s best if your contacts don’t know each other because then you’ll have a wider network. Read more
  • voxEU.ORG. Research on subprime mortgages by Associate Professor Atif Mian and Amir Sufi was featured in a column written by them and posted April 29. “U.S. congressional committees are now grilling bankers on the complex instruments that provided subprime mortgages with a veil of security,” they wrote. “This column presents new evidence that subprime mortgages had more serious consequences – they were a key factor in the U.S. housing-price boom.” Read more

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

  • FINANCIAL TIMES. John Watson, MBA ’80 was profiled in a story headlined “The unassuming oil giant,” published April 26. He is CEO of Chevron. “I am not bashful about asking questions,” Watson said. “I have learned over time to try to ask the right questions. I encourage others to do the same thing in the company.” Watson joined Chevron as a financial analyst immediately after graduating from Booth. Read more
  • WBBM-TV Chicago. Bob Gillespie, a current Evening MBA Program student, appeared on “Monsters and Money in the Morning,” April 27. He is CEO of In Context Solutions, a company he started while enrolled at Booth. To view the interview, click on “Computer Software Helps Make Choices,” on this page:
  • MACWORLD. A company founded by Philip Leslie, MBA ’09, received a very favorable review from this magazine April 19. “ProOnGo Expense from ProOnGo is a very handy app for anyone who needs to track their expenses from a mobile device,” the article said. The app received a rating 4.5 on a 5 point scale. “You can say goodbye to typing up those pesky expense reports,” the review said. ProOnGo was a finalist in Booth’s 2008 Edward L. Kaplan New Venture Challenge. Read more
  • CleanEnergySector.com. Power2Switch, a new business venture developed by Oluseyi Fabode, MBA ’10, was chosen as one of “7 green ideas that could strike gold and save the planet,” according to an article published April 21. Fabode and teammates Philip Nevels, MBA ’10 and Timothy Hughes, MBA ’10 took part in the Rice University Business Plan Competition. Power2Switch enables small and medium-sized businesses to compare and switch between electricity suppliers through a web site. The firms can save money on their electricity costs or access renewable energy. Read more
  • INVESTMENT WEEKLY NEWS. Roderic Prat, MBA ’93, was named global head of derivatives for BNY Mellon, according to an article published April 24. Previously Prat held derivatives-related positions with Goldman Sachs, Deutsche Bank and HSBC, according to the article.
  • THE SEATTLE TIMES. Robert Malte, MBA ’82, was named CEO of Evergreen Hospital in Kirkland, Washington, according to an article published April 21. Previously he was CEO of a hospital in Wheat Ridge, Colorado, the article said.