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Current Glucksman Fellowship Program Student Research Reports

 
The Glucksman Institute for Research in Securities Markets awards fellowships each year to outstanding second year Stern MBA students to work on independent research projects under a faculty member's supervision. Four research projects completed by the Glucksman Fellows of 2013-2014 appear in a special Working Paper published by the Glucksman Institute. These papers focus on important topics in empirical financial economics.

Thomas M. Hamnett, under the supervision of Richard Levich, examines the returns from venture-capital-backed US initial public offerings between 1993 and 2012, and describes their performance for public investors. Hyung Min Lee, under the direction of Ingo Walter, investigates how the diversification strategies employed by banks affect their economic values during financial crises. Connor Lynagh, under the supervision of Yakov Amihud, examines whether the earnings per share (EPS) impact of mergers and acquisitions affects acquirers’ stock performance. Ines Orozco, under the supervision of Paul Wachtel, analyzes the structure and historical performance of the banking systems of Chile, Colombia and Peru in the context of the economic and financial integration initiatives being pursued in Latin America. These papers, reflecting the research effort of four outstanding Stern MBA students, are summarized in more detail below. You may download any of these research papers, as well as those of previous years, by clicking here.

William L. Silber, Director

2013-2014 Abstracts

Venture-backed IPOs: Performance from the Public Investor Perspective
Thomas M. Hamnett

This paper examines the cumulative returns from venture-capital-backed US initial public offerings (IPOs) over the time frame 1993-2012, and compares their performance for public investors with other types of IPOs. The research compares two investment strategies – an “equal buy-in” strategy that looks at buying IPOs and holding for a set time frame, and a “rebalanced portfolio” strategy that invests a set amount of capital and rebalances based on the number of IPOs in the sample. The results show that for the “equal buy-in” strategy, VC-backed IPOs perform well in the short-term but under-perform in the long-term. In the “rebalanced portfolio” strategy, VC-backed IPOs outperform both the market and other IPO types across all time periods studied. This suggests for public investors a portfolio of VC-backed IPOs that rebalances over time may outperform the market

The Impact of Financial Crises on the Economic Values of Financial Conglomerates
Hyung Min Lee

This paper discusses how the diversification strategies employed by banks affected their economic values during financial crises. The results from an analysis of 5,158 observations of U.S. banks covering a sample period between 1998 and 2012 show a consistent discount on economic values of diversified banks and a positive relationship between the depth of the discount and the degree of diversification. The results also show weak evidence of a price premium on diversified banks during crises, but the premium is unstable across crises and is not sufficient to compensate for the initial discount on those banks.

Does the Market Reward Accretive Deals? An Investigation of Acquirer Performance and Earnings per Share Accretion
Connor Lynagh

This study investigates whether the earnings per share (EPS) impact of mergers and acquisitions affects acquirers’ stock performance. In theory, the EPS impact of a deal is irrelevant, and the market should not be concerned with the “cosmetics” of EPS accretion or dilution. Interestingly, accretion is found to be positively and statistically significantly related to acquirer performance around deal announcements prior to 2000. However, this effect reverses after 2000: accretion is found to be negatively and statistically significantly related to acquirer returns in this later period. It appears that attention paid to the issue of earnings accretion is unwarranted, and may in fact cause acquirers to engage in value-destructive deals in order to maximize EPS impacts.

An Analysis of the Banking System Structure in Chile, Colombia and Peru in Light of the Creation of the Integrated Latin American Market – MILA Market
Ines Orozco

This study analyzes the structure and historical performance of the banking systems of Chile, Colombia and Peru in the context of the economic and financial integration initiatives being pursued in Latin America. In spite of the different timing of their financial reforms, we find many similarities across their banking systems that will help with the integration initiatives. We conclude that that there are opportunities for the Chilean banks to capture higher margins in Colombia and Peru as certain inefficiencies still prevail. We also find that the banking systems have very similar structures, are resilient, and well capitalized to deal with the integration.