Vanderbilt Business

Tag: fall2008

Honours Courses

Robert Barrett, left, and Rob Shults founded Honours Golf in 1998.

When the Scottish first pioneered the game of golf all those centuries ago, it’s safe to say that they had no idea what a worldwide phenomenon it would become. Of course the sport has changed considerably since then; some of the modern rules and conventions would be unrecognizable to those ancient Scots. Yet for all the changes, golf today remains rooted in sportsmanship and camaraderie, and it’s these ideals that help to explain its enduring popularity.

Certainly Rob Shults, MBA’96, can attest to this. As the President of Honours Golf, the leading golf course management company in the Southeastern United States, he’s built a business around the idea that the game is as much about instilling core values and forging friendships as it is about competition. This is reflected not just in the company’s name, which hearkens back to the origins of the sport with its British spelling. It’s an inherent part of everything that Honours Golf does to create memorable experiences for its members and guests. From course conditioning to customer service, Shults and his team go the extra mile to uphold the long and noble tradition of the game.

Practice Swings

Though Shults didn’t realize it at the time, the philosophy behind Honours Golf took shape when he was just a school kid growing up in Little Rock, Ark. His father taught him how to play golf at an early age, but it wasn’t only the rules that he learned. The game brought Shults happiness on so many different levels that he came to view it as a life pursuit rather than a simple diversion.

“Golf was a game that I had talent in, and I just fell in love with being outdoors, spending time with good friends and working on a skill over and over,” he says.

Shults’ talent for golf led him to play competitively in high school and at the U.S. Military Academy at West Point, where he earned a B.S. in Management and Systems Engineering. After serving as an Officer in the U.S. Army for four years, he began looking for a way to transition from the military to the business world. The Owen School offered him just such an opportunity. While earning his MBA, he picked up basic business tools that continue to serve him well to this day.

“Owen gets you ready to handle a lot of different tasks simultaneously. It’s good preparation for getting out there in the real world and trying to figure out what direction you’re headed in life and how successful you’re going to be,” he says.

The Drive

Shults’ direction in life didn’t become entirely clear to him until a couple of years after Owen. While working for Wachovia Bank in Atlanta, he started to get the itch to do something that he’d always wanted to do—start his own company before he turned 30. The problem was, he didn’t know what that company would be. At the time, golf wasn’t on his radar screen, except as a hobby. “Frankly, I had never thought about making money or going to work in the golf business,” he admits. But a chance meeting with one of the sport’s premier developers changed all that.

That developer was Robert Barrett, a native of Augusta, Ga. who had been working in the golf industry since the ’70s. Barrett had made a name for himself planning and managing golf operations for a number of well-regarded clubs across the country, including La Quinta Country Club in California, the site of several Skins games during the ’90s.

Despite their different backgrounds, Shults and Barrett hit it off immediately. They found they shared not only similar personalities but also a similar appreciation for the game.

“He was a golf operations guy through and through, and I brought a financial perspective to the table. But we had the same vision for what we wanted to do,” says Shults.

That vision—creating courses that provide something more than just an ordinary round of golf—took root when they decided to form Honours Golf together in 1998. From the very beginning Shults and Barrett found that their partnership was all the more effective because of their different, yet complementary, skill sets. Their roles within the company point to this. As CEO, Barrett handles golf course development and operations out of the Birmingham, Ala. office. Shults, meanwhile, heads up strategic direction and business development in Atlanta.

The Approach

Shults and Barrett’s first business deal was with Highland Park Golf Course in Alabama—the oldest course in that state. Since then, the two have steadily added to their portfolio, which now includes a total of 12 courses located throughout Alabama, Florida, Georgia and Mississippi. Some of these properties were signed through golf course management contracts, as in the case of Highland Park, while others came about through development deals, in which Honours Golf assisted with the design and construction. Shults and Barrett have purchased several golf courses as well.

Whether through management, development or whole ownership, Honours Golf always takes the same disciplined approach. “Every one of our projects, by its nature, has its own unique brand,” says Shults. “That takes a whole host of disciplines. It takes leadership, of course, and it takes putting a good team in place, whether it’s the right team to build the golf course or the right team to run the golf course. And then it takes putting a culture of success in place with good systems and good training.”

Minding the Hazards

Good teams and good systems are especially needed in today’s business climate. The recent downturn in the economy poses a challenge to golf course owners since the sport is a discretionary expense for consumers. There’s also the added pressure of rising fuel costs, which affect everything from the transportation of fertilizer products to the price of food served in their clubs. And to make matters even worse, the industry is already dealing with growing pains brought about by overexpansion during the late ’90s and early ’00s. Today fewer golf courses are being built, and many are being closed.

And yet Honours Golf has reason to be optimistic. As Shults points out, there are an estimated 25 million people in the United States who play the game. Of those, 8.5 million are considered to be core golfers. They spend about 80 percent of the money in the sport and are not likely to give it up, even during times of recession or inflation.

Shults also sees an opportunity for his company in golf’s consolidating market. “Owners and financiers are realizing that golf course management companies are part of the necessary solution to get the golf industry back to health from a supply and demand standpoint, as well as from an operating standpoint. Existing golf courses that are undermanaged are our biggest opportunity,” he explains.

The Bottom of the Cup

Perhaps most importantly, though, Shults knows that the golf industry as a whole is in good hands. There’s a reason, he says, why you never hear of people being forced into his line of work by their fathers: It just doesn’t happen. “People are in the business because they want to be in it,” he says. “So everybody is passionate. It’s an industry that is competitive, but for the most part everyone takes the attitude of ‘Let’s grow this game together.’”

Serving as President of Honours Golf may be a job, but to hear Shults talk, you might just think otherwise. Every day at the office brings challenges, for sure, but there are plenty of rewards, too. Shults has found great satisfaction in sharing his goals and principles with like-minded people, such as Rob Barrett and others on his team, and in the process, he’s made friendships and memories that will last a lifetime.

As Shults puts it, “At the end of the day, pursue something you love. Because if you’re doing something you love, you’ll never feel like you had to work a day in your life.”

November 10, 2008
25 Years of Perspective

This piece is adapted from a speech that Neil Ramsey delivered during Owen’s Alumni Weekend in April.

Looking back at my graduation 25 years ago from Owen, I’m amazed at how much my perspective has changed. Perhaps I could have learned most of what I’m going to describe here by reading, but there’s no way that knowledge would mean anything to me today without the experiences to back it up.

So what have I learned since graduating from Owen?

I’ve learned that most of the lessons my parents taught me were the keys to a happy life. When my dad used to tell me that I would grow up to be exactly the kind of person that I was as a boy, he was right. Ralph Waldo Emerson said, “The only person you are destined to be is the person you decide to be.”

I’ve learned that how I handle my problems is a lot more important than avoiding the inevitable problems that pop up. Unfortunately I haven’t fully learned what Teddy Roosevelt said best: “Nine-tenths of wisdom is being wise in time.”

I’ve learned that it is okay to say what you think, but it is better to do it tactfully. I did not understand this when I was younger. I felt that if what I was saying was true and I meant no harm, it was okay to say it. It took many hurt feelings to learn this one, and I’m still working to be more considerate in my delivery.

I’ve also learned, as a friend of mine said 20 years ago, that “there are no throw-away comments.” The irony of this quote is that when I recently reminded him of the comment a couple of weeks ago, he was surprised I had remembered it. Everything you say and do can touch people in a positive or negative way, and you may never even know it.

I’ve learned to go as far as I can to show people I love what they mean to me. If you find yourself wanting to record your feelings in words, do it.

I’ve learned that substance may be all that matters, but you may not be listen-ed to if you do not pay attention to form. Substance without form serves little purpose.

I’ve learned that having ambitions is much more important than being ambitious. I’m one-tenth as ambitious today as I was 10 years ago, but my ambitions are 10 times greater.

I’ve learned that perseverance is the key to success. Accumulated knowledge and experiences are our most valuable assets.

I’ve learned that you can change the way the world treats you simply by opening your heart, looking for good, and showing more kindness and patience. I haven’t mastered this, but I am better than I used to be, and the world treats me better because of it.

I’ve learned that I would rather be respected than liked. I would prefer both, but given the choice, I’d pick respect.

I’ve learned that the need for my parents’ approval never goes away.

I’ve learned that I could not be successful in my own business until I decided I was just another employee with specific responsibilities.

I’ve learned that my favorite people are very smart, have a good sense of humor, and don’t take themselves too seriously.

I’ve learned to demand much less of most people but demand much more from the people who can handle it.

I’ve learned that my greatest comfort comes from watching my kids find their own way. Nothing makes me prouder than when someone I really respect says something nice about one of my kids.

I’ve learned that nothing makes me happier than having a special moment with one of my children when it is completely obvious they love and appreciate me.

I’ve learned that I should have no faith in objects, little faith in institutions, faith in people I care about, a lot of faith in myself, and complete faith in God.

I’ve learned that one of my biggest sources of frustration and angst is the guilt associated with unreturned phone calls.

I’ve learned that having money is much more important for mental freedom than I ever imagined. I live scared. That is my motivation.

I’ve learned that intelligence can’t be measured accurately. I think maybe intelligence is like what Supreme Court Justice Potter Stewart said about pornography: “I don’t know how to define it, but I sure know it when I see it.”

I’ve learned that intellect and talent sometimes don’t translate from one field or endeavor to another. As an undergraduate, I had very good grades, but the two courses I did poorly in were economics and an engineering science “calculator” module. At Owen I had a difficult time in Professor Blanton’s computer course and Professor Blackburn’s stats course. Now here I am running a statistics-based, research-oriented quantitative hedge fund utilizing econometric models. In my business we always have to say “past performance may not be indicative of future performance.” I guess there’s a reason for that.

I’ve learned not to compete head-to-head with people smarter than me. I try to compete where my strengths are unique.

My wife has been trying to teach me for 25 years that when people seem odd or mean, they are probably just going through something tough. I am beginning to get this one.

I’ve learned that the world would be a much safer place if we all lived below our means.

Along these lines, I’ve learned not to laugh at old men with no hair on their ankles. I am now one of those old men. This is a pretty minor issue but shows that we should be more understanding and compassionate.

I’ve learned that the world would be a much safer place if we all lived below our means.

I’ve learned that inexperienced geniuses are dangerous.

I’ve learned that “value” is very difficult to surmise.

I’ve learned that the stock market is a tricky place to make money.

I’ve learned that most people and almost all politicians take the benefits of economic activity for granted. They forget that this is the core of morality and self-worth and opportunity for society.

I’ve learned that most arguments between people could have been avoided with some initial definitions and that all of the Ten Commandments make sense.

I’ve learned that making things as simple as they should be is very difficult. As Einstein said, “Make everything as simple as possible, but not simpler.”

I’ve learned that perseverance is the key to success. Accumulated knowledge and experiences are our most valuable assets. One of my favorite quotes is from Winston Churchill. He said, “When you are going through hell, keep going.” Conversely I’ve learned that if what I’m doing is not working, I better do something else. Separating hindsight from new insight gained from a setback is the key to perseverance.

I’ve learned that answers and new opportunities wondrously appear when I seem to need them.

I’ve learned that I should be striving more for goodness than greatness.

I’ve learned that when something hurts me or angers me, it’s not a good idea to get philosophical and accept it too quickly. And more importantly, it’s even worse to lose control of my emotions and do damage.

I’ve learned that we have no idea what tomorrow will bring.

While I have no idea what I will learn in the next 25 years, I’m guessing that I will not learn some of the simplest and most basic lessons well enough:

Take care of my family.

Connect to other people.

Treat people kindly.

Be thankful for what I have.

Recognize that my current situation is just a snapshot.

November 10, 2008
Untangling the Knot: Logistics in China

China is undergoing an infrastructure building campaign unrivaled in recent history. When the country first opened its doors to the outside world in fits and starts in the ’80s and ’90s, large transportation providers, like DHL, UPS, FedEx and Exel, began vying for a toehold on the mainland through joint ventures with the various government transportation groups, like Sinotrans, and newly-privatized enterprises. It was as if China had re-awakened when Deng Xiaoping, the late leader of the Communist Party of China, proclaimed, “To get rich is glorious!” during his famed Southern Tour in 1992.

A view of the famous Bund district in Shanghai.

Today the east coast highway and port system has reached or surpassed international standards around the centers of commerce in Beijing, Shanghai and the Pearl River Delta in Guangdong Province, and the government has slowly allowed international firms to operate independently of their joint venture partners. With China’s entry into the World Trade Organization in 2004, restrictions on foreign direct investment were officially loosened, but multi-nationals were still functionally required to navigate the bureaucracy of multiple layers of government.

According to Datamonitor, the Chinese logistics market is projected to grow in the low teens through 2010 after posting a remarkable 22.6 percent compounded annual growth rate from 2001 to 2005. Today China has 16 major ports and a shipping capacity of 50 million tons per year. It also has a network of over 30,000 kilometers of highways, second only to the United States in total kilometers. Despite this phenomenal growth, logistics costs remain high—representing 20 percent of GDP in China versus 11 percent in Japan—when compared to overall production.

Market Remains Fractured

One would expect rapid consolidation among logistics providers seeking to capitalize on China’s growth. Yet in the trucking world, a single provider has yet to emerge with a comprehensive network. There are over 5 million trucking companies, with each owning an average of 1.8 trucks. The top 100 logistics providers only comprise 5 percent of the total logistics market.

These smaller trucking firms are often the lowest cost provider with low overhead and expertise within a single area. Their expertise includes relationships with toll collectors and inspectors that give them an advantage over a trucking firm from another region. With such low barriers to entry and local protectionism, it is hard for larger players to compete. In the case of bulk commodities like cotton, factories will often manage the supply chain between the mill and the port because they can get the lowest prices with their existing carriers.

Level of Automation Remains Low

Although many logistics providers that move high-value merchandise have invested in the latest tracking systems, many of the bulk commodity shippers are not using available technology to provide shipment visibility. Much of the tracking is still done the old-fashioned way with a clipboard and a marker. If cost is the primary buying motivation and labor costs are low, there is not a short-term payoff for investing in automation. Why would you buy a forklift if you can hire a team to stuff a container by hand for a fraction of the cost?

Overloading Persists

In China it is common practice for truckers to overload their trucks by two to three times the legal limit to maximize their asset usage and eke out a profit in a fiercely competitive market. The central government has issued tougher laws to ensure the safety of drivers and reduce damage to roads, but they are lax in the enforcement of these regulations because they know many small truckers would go under if they adhered to the weight limits. Meanwhile the local government has an incentive to allow overloading to continue as tolls are collected on the total weight of the load and they are not responsible for road repairs. This practice reminds one of the Chinese saying, “The hills are high and Beijing is far away.”

What to Do?

There is no “one size fits all” solution. Instead of a China logistics strategy, have a unique strategy or partner for each region. Find logistics providers who have worked with firms that you trust.

Also keep in mind this is not the West. Proceed with caution and realize that corruption is widespread, contracts are hard to enforce, and management talent is scarce.

As in any business, logistics is a game of relationships. This is even more appropriate in China where a long-term relationship may mean the difference in your product being held up in port rather than getting delivered to a factory on time. Invest in a long-term relationship with a company that is willing to establish a mutually beneficial partnership.

Oscar Atkinson traveled with 19 classmates to China as part of Professor Ray Friedman’s Doing Business in China course. The highlight of the week-long trip was a visit to international logistics firm Mallory Alexander with Michael O’Brien, MBA’08, Jen Smith, MBA’08, and Scott Hall, MBA’08. Atkinson now works for SEACAP Financial, an investment bank in Memphis, Tenn. specializing in the sale and acquisition of family-owned companies. Atkinson can be reached at oscar.atkinson@seacapfinancial.com.

November 10, 2008
Headhunter’s Advice: Manage What You Measure

In his book Topgrading: How Leading Companies Win by Hiring, Coaching and Keeping the Best People, author Bradford D. Smart concludes, “With an average base salary of $114,000, the average total cost associated with a ‘typical’ mis-hire is $2,709,000—greater than 24 times the person’s base compensation.”

To rationalize these amounts, think about the opportunity costs that can result from substandard service, inadequate research, missed deadlines, failed marketing campaigns, missed sales targets, flawed accounting or investment strategies and more. Additionally you may directly absorb considerable recruiting expense, invest in orientation and training, or put up with mediocre performance and results for some period of time. And, adding insult to injury, you may have to pay a severance to get the employee to leave. Finally you may also incur hard executive recruiting costs for the replacement employee and absorb various additional costs to train that person.

CEOs agree that hiring and retaining high-quality executive leadership is crucial to achieving strategic business goals. However, very few CEOs have accurate data to openly discuss the true cost of a bad hiring decision. Yet when it does happen, it’s too personal and too painful to study under a financial microscope. But it’s not a question of guilt or blame. The real question is: How could it have been avoided and how can you reduce making mis-hires in the future?

You’re Thinking These Costs Are Overstated?

With more than 12 years in the executive search industry, I believe these numbers are close to the mark. But go ahead and cut these costs in half. Change 24 times salary to 12 times salary. Or if you’re really a skeptic, go ahead and cut them in half again. Even at a mere 25 percent of the researched amount, you’re still looking at a $684,000 cost for a bad hiring decision involving a $114,000-per-year employee. For a $200,000 executive, you’re looking at a $1,200,000 cost for a bad hiring decision. The numbers are too large to ignore.

Over the years I’ve had the opportunity to work with VC- and PE-backed health care companies to Fortune 25 organizations. I’ve found that many corporations avoid the calculation by simply not agreeing on an appropriate formula, despite the fact imperfect information exists in all decision-making processes. It’s too easily dismissed as just another “cost of doing business.” Across industries it’s reported that internal corporate executives consistently recruit and retain the “right” manager or executive for 12 months or longer less than 55 percent of the time. This seems low.

I’m convinced long-term candidate retention can be improved and that mis-hire costs can be materially reduced.

Three Ways to Improve Your Executive Recruiting Outcomes:

1. Recruiting firms are not always the right solution to hiring key leaders. Retained search firms are excellent resources at the right time. However, internal candidates, board members and industry colleagues can be valuable resources. These individuals may be candidates individually; they may be able to open their rolodex; they may provide comments about desired candidate characteristics; and they may recommend retained executive recruiting firms for you to talk with. If you use a retained executive recruiting firm, do appropriate diligence on more than one search firm.

2. Plan a thoughtful and well-prepared interview process. Each interviewer in your company’s process must have a clear understanding of his or her role in the assessment process. The absence of interview structure will be recognized by the candidate and may lead you directly down the path to a costly mis-hire.

3. Ensuring that the new executive is successful requires communication between the hiring executive, the successful candidate and specific, internal colleagues. Managing the individual’s integration into your company for the first 90 days will provide a foundation for long-term retention. Following the first 90 days, ongoing communication develops relationships, provides clear strategic direction and reinforces cross-functional interaction and discussion.

At an average cost of $2,709,000 per mis-hire, I encourage all business leaders to take a closer look at their executive recruiting processes, determine where and how these processes lead to false economies and then take steps to better manage these processes. A bad hiring decision can be a significant drain on the bottom line.

Paul Frankenberg is CEO, President and Co-Founder of Kraft Search Associates. In both 2006 and 2007, Modern Healthcare magazine ranked Kraft Search Associates one of the nation’s Top 25 Healthcare Retained Executive Search Firms. Frankenberg can be reached directly through www.kraftsearch.com.

November 10, 2008
Consumer Price Index: Unreliable Measure of Inflation

When inflation is considered, those who possess a more sanguine outlook relating to pricing pressures have pointed to the Consumer Price Index (CPI) to bolster their view that inflation is not a problem.

The problem with the CPI is that consumer prices themselves transmit all sorts of information unrelated to currency strength. So while rising prices can be a symptom of inflation, they can also result from all manner of things that have nothing to do with the value of the currency.

If hotel rooms in New York City become very expensive, some would consider this an inflationary event despite simple logic showing otherwise. Put simply, if New York hotel rooms suddenly cost $200 per night more than they once did, the broad impact on the price level would be zero owing to the fact that consumers would have $200 less to spend on previously attainable goods.

Furthermore, to the extent that there is a monetary devaluation, it shouldn’t be assumed that a weaker unit of account will immediately be reflected in all consumer prices. This is because there’s a way to increase the cost of a good without increasing the nominal price of that same good. As a recent USA Today story showed, ice cream makers, suffering under rising dairy costs, have in many cases reduced the size of standard ice-cream containers to 1.5 quarts from 1.75 quarts. Frito Lay and Dial have done much the same with bags of potato chips and bars of soap.

Ultimately it has to be recognized that the only true measure of inflation does not involve prices, but instead is transmitted through the value of the dollar itself.

And when we consider the dollar, the most reliable benchmark is not the greenback’s value versus the euro, yen or pound, but the dollar’s value in terms of gold. When the price of gold moves, this is not a signal that gold’s price has changed, but instead tells us that the dollar’s value is rising or falling.

Gold has risen 255 percent against the dollar since June 2001. Whereas a dollar used to buy 1/253 of an ounce of gold, as of this writing it buys 1/900 of an ounce. For those wondering why all manner of commodities, from gasoline to corn to meat have become so expensive of late, look no further than the dollar’s debasement.

And to the extent that some have great faith in CPI-like measures, they need only look at countries outside the United States to see that our version of CPI is greatly understating true inflation. Despite the fact that the euro and pound have crushed the dollar in recent years, government inflation statistics in both show it at 16- and 18-year highs respectively.

So while inflation problems around the world confirm that our government measures of inflation are faulty, the bigger story is what a rising dollar price of gold means for the average American. When gold rises, paychecks are emasculated; investment in innovative, job-creating enterprises subsides; and money flows to the relative safety of the “real.”

Rather than clinging to the CPI as false evidence of light inflation, and worse, targeting consumer prices, monetary authorities should instead target a stable gold price with an eye on bringing it down substantially.

John Tamny is Editor of RealClearMarkets, a Senior Economist with H.C. Wainwright Economics, and a Senior Economic Advisor to Toreador Research and Trading. He can be reached at jtamny@realclearmarkets.com.

November 10, 2008
Money Talks

The role of corporate lobbying in politics is a hotly debated topic these days. Perhaps nothing frames the difference in opinions better than the recent presidential campaigns of Hillary Clinton and Barack Obama. During the Democratic primaries, the two presented sharply contrasting views on lobbyists.

At the 2007 Yearly Kos convention in Chicago, Clinton said, “A lot of those lobbyists, whether you like it or not, represent real Americans. They actually do. They represent nurses. They represent social workers. They represent—yes, they represent corporations that employ a lot of people.”

Firms lobby not only to defend themselves from harmful policies but also to profit from tax advantages, regulation loopholes and government budget appropriations.

Obama, however, offered a different argument. “I disagree with the notion that lobbyists don’t have disproportionate influence,” he said. “Look, the insurance and the drug companies spent $1 billion in lobbying over the last 10 years. … They are not spending that just because they are contributing to the public interest. They have an agenda.”

Interestingly their views seem to correspond to the two academic theories of lobbying. On the one hand Gene Grossman, an Economist at Princeton University, and Elhanan Helpman, an Economist at Harvard University, emphasize the “information” role of lobbying. In their well-cited book Special Interest Politics, they consider lobbying as primarily a mechanism to transfer information and knowledge from certain interest groups to policymakers. Grossman and Helpman argue that this improves the efficiency of society, in a sense.

Nobel Laureate and University of Chicago Economist George Stigler, however, suggests industries are often able to acquire regulations that protect them rather than harm them. Their need for such regulations and the regulators’ willingness to provide them create the demand and supply of a “market for politics.” Firms contact politicians and government agencies through various channels and try to convince them of the necessity to pass “friendly” policies or deter “hostile” ones. In return for the favor granted by the regulators, firms compensate them with votes and resources such as political contributions.

The popular press seems to give more support to the latter view. The Washington Post recently quoted one top lobbyist as saying: “People in industry better have good lobbyists or they’re going to get rolled over.” Even companies that try to resist political involvement for various reasons usually end up joining the game. For example, Google was reluctant to lobby until it was under severe pressure for issues related to user privacy and operations in China. It then decided to hire high-profile Washington lobbyists and invest heavily in lobbying, as reported in The New York Times. Google’s story was hardly new; Microsoft went through the same process in 1996 when it was entangled in antitrust problems.

Firms lobby not only reactively to defend themselves from potentially harmful policies but also actively to profit from tax advantages, regulation loopholes and government budget appropriations. The benefits of lobbying are seemingly huge: The Washington Post reported a $100 return on $1 of investment in lobbying for corporations. Similarly BusinessWeek conservatively estimated that firms received an average of $28 in awarded federal earmark spending per dollar spent on lobbying. The benefits of these efforts can come through various channels. The defense industry lobbies for more government contracts; the hi-tech industry lobbies for issues related to patent; and of course, everybody lobbies for lower taxes.

To check whether these claims withstand statistical scrutiny, we compiled a database of corporate lobbying activities made possible by the Lobbying Disclosure Act of 1995. Prior to the Act there was no public data available on how much firms spent on federal lobbying, as lobbying organizations and professional lobbyists were not required to register or disclose their lobbying activities.

In brief, we found that spending on lobbying pays off handsomely. We looked at financial performance as reported in firms’ financial statements, as well as stock market returns. To gauge stock market performance, we constructed portfolios of companies based on their lobbying intensities (that is, by how much they lobby relative to their size). Based on these rankings, we discovered that firms in the top portfolio generated annual returns 8 percent higher than similar firms that do not lobby. Moreover, it was only these firms with the highest lobbying intensities that systematically outperformed their benchmarks. Thus, contrary to the impression gleaned from the financial press, not all lobbying yields huge rewards.

That said, the chance to tilt the odds in their favor probably explains why American corporations spend so much on lobbying. For example, in the 1997-1998 election cycle, corporations, their trade associations, and other business-related interest groups accounted for roughly 90 percent of the total lobbying spending, dominating that of any ideological or single-issue organizations. (See Figure 1 for the list of top lobbying spenders from 1998 to 2008, as reported by the Center for Responsive Politics.)

At the end of the day, the need for petitioning government and influencing public policy will never go away, and eliminating official channels of lobbying will only result in a secretive and corrupt system.

So was Hillary Clinton wrong in saying that lobbying represents the interests of everyday Americans? Not necessarily. Corporations lobby to inform policymakers of the impact of regulation and legislation; individuals are impacted in their roles as consumers, as employees and as shareholders. The presence of corporations in the list of top spenders on lobbying is just an example of a collective action problem. Only those groups or firms with the most to gain or lose have an incentive to participate.

One solution to this problem is to ensure a clean and transparent process. The Lobbying Disclosure Act of 1995 intends to at least partially serve that purpose. All lobbyists and organizations that lobby must register and file with the government, and report semi-annually how much they spend on lobbying, for what purpose, etc. At the end of the day, the need for petitioning government and influencing public policy will never go away, and eliminating official channels of lobbying will only result in a secretive and corrupt system. The principle of transparency is arguably one of the key advantages of the American political system and must be viewed as an important contributor to its current and future economic health. What is needed is more disclosure, not less lobbying.

Hui Chen is an Assistant Professor at the University of Colorado’s Leeds School of Business. David Parsley is a Professor of Management at the Owen School. Their paper “Corporate Lobbying and Financial Performance” was co-written with Ya-Wen Yang of the University of Miami.

November 10, 2008
Fun and Game Theory

Shor was selected by the MBA Class of 2008 to receive the James A. Webb Excellence in Teaching Award.

You probably should think twice before watching a movie with Mike Shor, Assistant Professor of Management. That is, unless you don’t mind getting nudged every time an example of game theory pops up. Game theory is a method of using mathematical analysis to choose the best available strategy.

“I can’t watch a movie without thinking through the incentives that somebody is creating for others. It drives my wife crazy,” laughs Shor.

Take, for instance, The Princess Bride. Shor points to the scene in which the hero Westley and kidnapper Vizzini match wits over a poisoned glass of wine: “It’s so much more profound than people realize. People think it’s a cute little bit, when it’s really the most excellent example of what Robert Aumann won the Nobel Prize for, which was clarifying this notion of common knowledge.”

The grumblings of his wife aside, Shor’s ability to discern game theoretic themes in the unlikeliest of places is a boon for others interested in the field. He’s amassed an impressive collection of pop culture references and other educational resources at his Web site www.gametheory.net.

“I see game theory in way too many places, but I try to bring a lot of that to the classroom so that students can appreciate it as well.”

November 10, 2008
A Place for Everything

Hyer was selected by the Executive MBA Class of 2008 to receive the Excellence in Teaching Award.

To say that Nancy Lea Hyer is organized is an understatement. The Associate Professor of Management is well-known in Owen circles for her methodical approach to teaching, and that, not surprisingly, has led to some good-natured ribbing from her students.

She recalls the time when a group of them put on a skit that portrayed her using a flip chart to plan her family’s weekend activities. It would have been clever had it not been so close to the truth. “They thought they were doing this absolutely hysterical piece, but we really do that,” she says with a grin.

While this may seem extreme to some, it’s fair to say that she comes by it honestly. After all, she’s an expert in cellular manufacturing and project management. She figures if manufacturing can be made more efficient by improving processes, why can’t it work at home, too?

“Teaching process design and improvement has probably made me more organized than is good for a sane person, but at least I know what goes where. There’s a place for everything, and everything is in its place.”

November 10, 2008
Faculty Honors and Awards

Joseph D. Blackburn, James A. Speyer Professor of Production Management, was honored as a Fellow of the Production and Operations Management Society in recognition of his research contributions to the field.

Mark A. Cohen, Justin Potter Professor of American Competitive Enterprise (Strategy and Economics), was appointed Vice President for Research at Resources for the Future (RFF), a nonprofit and nonpartisan organization that conducts independent research on environmental, energy and natural resource issues.

Bruce Cooil, Dean Samuel B. and Evelyn R. Richmond Professor of Management (Statistics), received the 2007 Marketing Science Institute/H. Paul Root Award and Outstanding Paper Award for his research into the fallacy of the Net Promoter customer loyalty metric.

Salvatore T. March, David K. Wilson Professor of Management (Information Technology), was honored with the Design Science Lifetime Achievement Award, presented at the 2008 International Conference on Design Science Research in Information Systems and Technology (DESRIST).

Ronald W. Masulis, Frank K. Houston Professor of Management (Finance), received the 2007 Hana Bank Outstanding Paper Award at the Second Annual International Conference on Asia-Pacific Financial Markets in South Korea for his work titled “Agency Problems at Dual-Class Companies.”

Richard L. Oliver, Professor of Management (Marketing), was the recipient of the 2007 Sheth Foundation/Journal of Marketing Award, which honored his 1999 paper “Whence Customer Loyalty” as having made the most significant long-term contributions to marketing theory and practice.

Hans Stoll, The Anne Marie and Thomas B. Walker Professor of Finance and Director of the Financial Markets Research Center, was awarded an honorary degree by Goethe University Frankfurt, the leading German university in the area of financial markets.

Research and Teaching Awards

Dean’s Award for Research Impact

Dawn Iacobucci, E. Bronson Ingram Professor in Marketing

An expert on social networks, customer satisfaction and service marketing, Iacobucci has authored 47 papers in refereed journals including Marketing Science, Harvard Business Review, Journal of Marketing and Journal of Marketing Research. She also co-authored Marketing Research: Methodological Foundations, the leading marketing research text in the industry and has authored and edited several additional books on services and integrated marketing.

Dean’s Award for Research Productivity

Steve Hoeffler, Associate Professor of Management (Marketing)

Hoeffler’s research on such topics as positioning multiple category products, marketing radically new products and the advantages of strong brands have appeared in such journals as Journal of Marketing Research, Journal of Consumer Psychology and Journal of Product Innovation Management. Hoeffler also has served as Chair for the Consumer Behavior Track of the American Marketing Association Summer Marketing Educators’ Conference.

James A. Webb Excellence in Teaching Award

Mikhael Shor, Assistant Professor of Management (Strategy and Economics)

Shor teaches Game Theory and Business Strategy, as well as Pricing Strategies—two highly regarded courses in the MBA program. His expertise is in the fields of game theory, experimental economics and industrial organization, and his theoretical work on the effects of mergers in auction markets is accompanied by experimental research into human decision making.

Executive MBA Excellence in Teaching Award

Nancy Lea Hyer, Associate Professor of Management (Operations)

Hyer teaches Operations Management to the Executive MBA students and was cited for the energy, intellect, respect and enthusiasm she shows in the classroom. Before joining the Owen faculty, Hyer served as Operations Research Manager for the Hewlett-Packard Network Measurements Division in Santa Rosa, Calif. Her work in the academic and business communities has focused on cellular manufacturing, process redesign and project management.

November 10, 2008
New Faculty Appointments

Sen. William H. Frist, M.D.

University Distinguished Professor

Professor Frist joins the faculty of the Owen School as part of a joint appointment with the Vanderbilt University Medical School (VUMC). Drawing upon his vast knowledge of and storied career in both medicine and politics, Frist will teach a new course that brings together Vanderbilt Health Care MBA students and fourth-year medical students to examine the financing, delivery and quality of health care in the United States and around the globe. Board certified in both general and cardiothoracic surgery, Frist has performed over 150 heart and lung transplants, including the first lung transplant and first pediatric heart transplant in Tennessee and the first successful combined heart-lung transplant in the South. In 1986 Frist became Director of VUMC’s Heart and Lung Transplantation Program and later founded the Southeast’s first multi-organ, multidisciplinary transplant center at Vanderbilt, which quickly became recognized as one of the premier transplant facilities in the nation. He is the author of over 100 peer-reviewed medical articles, over 400 newspaper articles and five books on topics such as bioterrorism and transplantation. In 1994 Frist embarked on a career in public office and won election to the U.S. Senate for the state of Tennessee, becoming the first practicing physician to be elected to that body since 1928. In 2006 his colleagues unanimously chose him to serve as the 16th Majority Leader of the U.S. Senate. Prior to his retirement from the Senate in 2007 after his pledged two terms of service, he was a member of the Foreign Relations Committee, where he served as the Congressional Representative to the United Nations General Assembly in the 107th Congress. Frist also currently serves as Partner and Chairman of the Executive Board of Cressey & Company LP, and was the 2007-2008 Frederick H. Schultz Professor of International Economic Policy at Princeton University’s Woodrow Wilson School of Public and International Affairs. In addition to leading annual medical mission trips to Africa as part of World Medical Mission, Frist serves as Co-Chair of the ONE Campaign’s presidential initiative (ONE Vote ’08) and Save the Children’s “Survive to Five” Campaign, and as Chair of Hope through Healing Hands, which promotes improved quality of life for communities around the world. His other current board service includes Africare, the U.S. Holocaust Museum’s Committee on Conscience, the Smithsonian Museum of Natural History, the Center for Strategic and International Studies, the Millennium Challenge Corporation, Harvard Medical School Board of Fellows, and the Mountain Gorilla Veterinary Project.

David Owens

Clinical Professor of Management (Leadership and Innovation)
Assistant to the Provost for Strategic Process Innovation

David Owens returns to the Owen faculty—where he previously served for more than a decade—after his tenure as Chief Executive Officer of Nashville-based Griffin Technology, the largest developer of accessories for iPods, iPhones and portable MP3 players. Beyond teaching in the MBA program and serving as a Faculty Director for the Executive Development Institute at Vanderbilt, Owens will serve as Assistant to the Provost for Strategy and Innovation at Vanderbilt University, where he works to develop a holistic and innovative approach to the university’s strategic planning. Among Owens’ areas of expertise are business strategy, product development and strategic innovation. He delivers executive education programs and consulting services on these topics to a wide range of clients around the world, and his research has been published in several leading academic journals and featured in The New York Times, The Wall Street Journal, The Guardian (U.K.), The San Jose Mercury News and Marketplace Radio, among other media outlets. He is also the recipient of numerous teaching awards and consistently high ratings from students in his courses, programs and executive seminars. His recent education and consulting work in the area of business strategy, innovation process and product development have included engagements with such organizations as NASA, LEGO, Gibson Guitar, Bristol-Meyers Squibb, Bridgestone Firestone, Sygen International, OrangeUK, Alcatel, Tetra Pak, and the Tennessee Valley Authority, among others. He has also performed product design consulting work for a variety of firms including Daimler Benz, Apple Computer, Coleman Camping, Corning World Kitchen, Steelcase and IDEO. Owens was a Co-Founder of Nova Bionics, a medical device start-up now part of Micro International, and he served as Global Director of Product Development for SeriousPlay, a LEGO Group company, during its start-up phase. He also worked as a Product Design Engineer at IDEO, a leading product development consulting company in Palo Alto, Calif. In a prior career, Owens became registered as a Professional Electrical Engineer while designing power distribution systems at the San Francisco International Airport.

Rangaraj “Ranga” Ramanujam

Associate Professor of Management (Organizational Studies)

Ranga Ramanujam is a leading researcher and consultant on the organizational causes and consequences of errors in high-risk work settings. His research has been published in leading journals such as the Academy of Management Journal, Organization Science, Medical Care, Journal of Patient Safety and Journal of Organizational Behavior. Among his current research interests are leadership, organizational change and design in the context of patient safety in hospitals and operational risk in financial institutions. Prior to joining Owen, Ramanujam served as Assistant Professor of Management at Purdue University’s Krannert School of Management, where he received several teaching awards and served as a research fellow at the Regenstrief Center for Healthcare Engineering. He has also served as a Research Scientist at the Center of Excellence for Implementation of Evidence-Based Practice at the Roudebush VA Medical Center in Indianapolis and Area Marketing Manager for Standard Chartered Bank in India. He has consulted for a wide range of organizations, such as the Pittsburgh Regional Healthcare Initiative, Clarian Health Partners, the Indiana State Patient Safety Center, International Association of Holiday Inns and Sennheiser Corporation. In addition his work has been presented at meetings of the Academy of Management, Society of Industrial and Organizational Psychology and the Production and Operations Management Society. Ramanujam is currently an editorial board member of the Journal of Organizational Behaviors and the Stanford University Press book series on high reliability organizations. He also served as Chair of the Academy of Management’s Board of Governors’ taskforce that reviewed the Institute of Medicine Report on Performance Measurement in Healthcare.

James L. Schorr

Clinical Professor of Management (Ethics, Social Responsibility and Entrepreneurship)

Jim Schorr has 15 years of experience working at the intersection of business and society, and is among the nation’s leading experts on issues of social enterprise and entrepreneurship. In 1993 he co-founded Net Impact, a global network which has since enabled more than 25,000 graduate business students and professionals on five continents to integrate social and environmental priorities into their educations and careers. From 2000 to 2007 Schorr was CEO of Juma Ventures, one of the most well-known and admired social enterprises in the world. During his tenure Juma Ventures was profiled in Harvard Business Review as a model organization in this field. His career has also included leadership and consulting positions with major corporations, start-up companies and government agencies, giving Schorr insights into the role of business in society from a variety of perspectives. Other organizations in which he has served include: Cobra Golf, Windermere Associates, Ecom Brands and Florida Leisure Corp. Prior to joining Owen, Schorr was a faculty member at the Haas School of Business at the University of California, Berkeley, where he developed and taught coursework on social enterprise and entrepreneurship within the school’s Center for Responsible Business. He continues to serve as Board Chair of Net Impact, and is on the Board of Directors for the Social Enterprise Alliance, Global Social Venture Competition and Juma Ventures. Schorr’s perspectives on social enterprise have been published in the Stanford Social Innovation Review, and he has been a featured speaker at numerous conferences and events, including the 2008 Social Enterprise World Forum in Edinburgh, Scotland.

November 10, 2008
Paying It Forward

This past February we were approached by Jim Bradford, Dean of the Owen School, and asked to serve as the Co-Chairs of the Class of 2008 Class Gift. We were both initially surprised by the e-mail but quickly realized what an honor it was to be asked to serve our class in this capacity. Without even speaking to each other, we knew that we would have to work as a team to organize and motivate the class to ensure that we left a positive and lasting mark on Owen, just as we’d done during our two years as MBA candidates.

The first item on our to-do list was to meet with Dean Bradford, Associate Dean of Development and Alumni Relations Tricia Carswell, Alumni Program Coordinator Melinda Phillips, and Director of Alumni Relations Marshall Turnbull. Jim began the meeting by heaping praise upon the Class of 2008, telling us that he believed we were truly a special Owen class. He said that our accomplishments and student-led initiatives arguably surpassed those of any class that preceded us. Now you may think that this is the speech that he gives to class representatives every year, but we sensed that he genuinely meant it.

Class Co-Chairs Erin Hofmann and Matthew Garrett helped establish the Student Initiative Fund at Owen.

Tricia followed Jim’s praise for our class with more of the same but added a little fundraising theory to the mix. The underlying idea of the class gift is to form in our alumni the habit of giving back to Owen. When a person donates time or money to a cause or institution, that person has a stake in that cause. In the case of Owen, the greater the stake there is in the school’s success, the more involvement our alumni base will seek. High levels of alumni involvement, both financial and otherwise, are hallmarks of top B-schools across the country. Involved alumni enrich the experiences of faculty, staff, MBA candidates, prospective students, and the Owen community as a whole.

After Tricia’s remarks we began to discuss the gift itself. Rumblings about much-needed updates to Owen’s physical environment had not fallen on deaf ears, but Jim wanted to steer us in a different direction. We knew we would have to come up with a concept that truly represented our class’s accomplishments.

Our thoughts immediately turned to the impending building expansion. As most classes express, Owen creates a family environment that lasts. How could we contribute? Gathering space? Work areas? A lounge?

Millions of dollars must be raised over the next few years for a new building and updates to the old building through a capital campaign. Anything added or improved in our current building would be temporary at best. We also wanted our gift to take hold immediately.

While we began to brainstorm about our big gift, we formulated our strategy and built our team. We chose a diverse group of our classmates who represented leadership in all areas and were well-respected within the Owen community. We now had our committee, but we still lacked our Great Idea.

We couldn’t help but remember the praise offered by Jim, Tricia, Marshall, and Melinda. Our class, through both the seeds planted by classes before us and our own innovations, had accomplished quite a bit. Owen Bloggers, the Leadership Development Program, Project Pyramid, Leadership in Action, and the Human Capital Case Competition all came into their own during our time at Owen, and several projects, such as 100% Owen, blossomed under Class of 2008 leadership. Not too shabby.

Our class gift started to develop: Our opportunities came from those before us through mentoring, ideas and finally, alumni and capital campaign donors. We wanted that tradition to continue. Physical gifts represent stagnancy and the past; we needed a dynamic gift that points to the future.

Recent class gifts included a student travel fund and the online community OwenConnect—both concepts that allow for future opportunities. We wanted to ensure future classes would have the same opportunities we were fortunate enough to have, and so, with some deliberation, we established the Student Initiative Fund. With Associate Dean of Students Jon Lehman as guardian, the fund would provide seed money to any group wishing to start a project that would benefit the student body or the school as a whole. These initiatives could take the form of guest lectures, student-run projects or anything future classes deem worthwhile. The gift would also give us the chance to come back to Owen to help out in other capacities by offering our advice, our guidance and our time to these projects.

Our Class Gift Committee stepped up more than we ever could have imagined, putting forth both their confidence in Owen and their financial backing, despite the fact that some were still job searching. Through diligent pestering, nostalgic storytelling and more than a few Starbucks cards, we discovered that most of our classmates felt the way we did: They wanted to pay it forward to the classes to come.

All in all, the Class of 2008 raised $200,001 (don’t think we didn’t count every dollar!), and the inaugural MAcc class showed up with 100 percent participation. As new graduates we feel our experience at Owen was greater than we could have imagined, and we hope, as you think back on your own time at Owen, that you will remember the future classes who will answer the door when opportunity knocks. Thank you for your support!

Matthew Garrett and Erin Hofmann graduated from the Owen School in May.

November 10, 2008
New Members Named to Owen’s Board of Visitors

The Owen School has announced that six prominent business leaders from an array of industries have been named to its prestigious Board of Visitors, an advisory group established in 2006 to strengthen the school’s connection with and relevance to the national and international business communities.

The new members—representing the health care, financial services, consulting, executive recruiting, technology and beverage industries—are George S. Barrett, Vice Chairman of Cardinal Health and CEO of its Healthcare Supply Chain Services sector; Carin M. Barth, MBA ’86, President of LB Capital, Inc. and Commissioner of the Texas Department of Public Safety; Bruce L. Crockett, Chairman of Funds Board, AIM Mutual Funds and Chairman of Crockett Technology Associates (CTA); Robert H. McNabb, Executive Vice President, Korn/Ferry International and CEO of Futurestep; Mark A. Tillinger, BA ’81, MBA ’82, Partner at Accenture; and J. Smoke Wallin, MBA ’93, CEO of Taliera Holdings and Founder, Chairman and CEO of eSkye Solutions. Three of these new members—Carin Marcy Barth, Mark Tillinger and Smoke Wallin—are also graduates of the Owen School.

“These accomplished individuals, who join our existing 27 members of the Board of Visitors, bring extraordinary wisdom and experience to our school and its students, faculty and programs,” says Jim Bradford, Dean of the Owen School. “They will play an important role as we continue to shape the next generation of business leaders.”

Representing diverse industries, geographic locations and management expertise, the Owen Board of Visitors was established by Dean Bradford to function as a strategic partner to the school, providing insights on curricular issues in relation to the needs of business, participating as guest speakers, and opening new doors and career opportunities for students. The board is guided by David Ingram, Chairman and CEO of Ingram Entertainment, with each member serving a three-year term.

The Owen School has several other advisory bodies to support its world-class educational programs, including the Owen Alumni Board and Alumni Council; a Health Care Advisory Board comprised of leading health care industry executives; and the Master of Accountancy (MAcc) Advisory Board.

November 10, 2008
New Master of Management in Health Care

There’s more to great health care than medicine. While physicians, nurses and hospital administrators are experts at patient care, they often lack the business skills needed to be effective managers. The new Vanderbilt Master of Management in Health Care is a one-year degree program designed to arm physicians and other clinical professionals with the business fundamentals and decision-making skills needed to manage people, programs and processes successfully.

Unlike other management programs, the Vanderbilt MM Health Care provides a business education specifically tailored to the medical field. The Owen School collaborated with top health care experts and an extensive health care management faculty to ensure an educational experience that offers immediate, tangible benefits to both students and their employers. The program marries business and management fundamentals with the complexities of the health care industry. Students attend classes one night a week and one weekend a month over the course of a year.

“The cost, quality and access problems facing the U.S. health care system are monumental. The clinician who understands the science of medicine and the science of business is in a position to create more value for our health care system,” says Larry Van Horn, Director of the Health Care MBA program.

Medical organizations will gain value from this one-of-a-kind program by sponsoring clinicians, physicians and nurse managers who have management responsibility but need additional business skills to be more effective. Health care organizations can also get help with existing issues through a team capstone project in which students apply business concepts to a real problem, initiative or opportunity identified by their sponsoring employer.

“This program is designed to empower clinicians to make business decisions and effectively lead health care delivery organizations,” says Van Horn.

Along with the MM Health Care, Owen offers a Health Care MBA and several open-enrollment health care programs in the Executive Development Institute. Additionally Owen has developed several custom executive programs for health care companies.

November 10, 2008
Rethinking the Effectiveness of Reg FD

As debate continues over recent and potential financial market reforms in the United States, compelling new research from the Owen School casts doubt on the effectiveness of Regulation Fair Disclosure (Reg FD), one of the key reforms of the past decade. According to the analysis, Reg FD has failed to create a “level playing field of information” for investors and has resulted in market makers demanding higher premiums due to the risk associated with “information asymmetry,” or trading against better-informed individuals.

Implemented in October 2000 by the Securities and Exchange Commission (SEC), Reg FD prohibits the disclosure of material nonpublic information to select individuals or groups such as financial analysts or institutional investors. The SEC’s intent, in part, was to level the playing field for all investors by ensuring that such disclosures, if they occur, be made simultaneously and with identical content to all market participants.

“In such a scenario, it is anticipated that the information will be immediately incorporated into the trading price with little or no profit for select market participants,” says Richard Willis, Associate Professor of Accounting and co-author of the study. “However, our research indicated this outcome has not been the case. Reg FD has not turned out to be a rule that levels the playing field for all investors.”

In fact the research identified a dramatic increase in the portion of the bid-ask spread associated with adverse selection—which jumped about 36 percent. The adverse selection premium is demanded by market makers to cover potential losses associated with trading against individuals who might possess superior knowledge about a security’s value.

The Vanderbilt researchers reached this conclusion by analyzing the cost components of market maker bid-ask spreads—the difference between the offering and purchase price of a security at any given time—from the Nasdaq Market for all time-stamped stock trades during a five-month period before and after the adoption of Reg FD. To verify their findings, the researchers tested and eliminated the possibility that other factors may have affected the market maker’s spread. “For example, we found that the timing of quarterly earnings announcements, changes in analyst coverage or seasonal effects in information flow had little to no impact,” says Willis.

Why has Reg FD achieved the opposite of what was intended? Study co-author Robert E. Whaley, Valere Blair Potter Professor of Management, believes the answer is clear. While Reg FD requires universal and simultaneous disclosure if a company elects to release material nonpublic information, it leaves it up to the company to decide if and when it will make such a disclosure.

“In reality, there has been a curtailment in the amount of information released to the public,” says Whaley. “This reduction has heightened perceptions that insider information can surface later. Market makers view this extended timeframe for insider information as an added risk that they seek to hedge by raising their premiums.”

According to Whaley, the ideal situation would be one in which firms immediately disclose any information that a reasonable person would expect to have a material effect on the value of a firm’s share price. Such so-called “continuous disclosure” has been in effect in countries like Australia for more than a decade.

The researchers anticipate that continuous disclosure may become a requirement for U.S. exchange-listed companies, especially in light of ongoing global convergence of accounting rules.

“The SEC appears to be moving toward allowing U.S.-domiciled companies to prepare their financial statements with International Financial Reporting Standards (IFRS), which begs the question of whether convergence in listing standards worldwide might follow,”

Whaley says. “If that’s where we are headed, then the ‘continuous disclosure’ listing rule could become a requirement for U.S. companies.”

The study—“Regulation Fair Disclosure and the Cost of Adverse Selection”—was published in the June 2008 edition of the Journal of Accounting Research. In addition to Professors Willis and Whaley, co-authors include Professor Baljit Sidhu of the University of New South Wales and Professor Tom Smith of the Australian National University.

November 10, 2008
Professor Joins Environmental Think Tank

Mark Cohen, Vanderbilt’s Justin Potter Professor of American Competitive Enterprise and Professor of Law, is taking on a new role for Resources for the Future (RFF) as Vice President of Research. RFF is an independent, nonpartisan research organization dedicated to improving environmental, energy and natural-resource policymaking worldwide through social-science research of the highest caliber. Cohen has been granted a sabbatical from the Owen School to lead a team of 40 researchers in Washington, D.C.

Cohen is a leading expert on enforcing environmental regulations and on corporate crime and punishment. He has published more than 85 articles and books on such diverse topics as the effect of community “right to know” laws on firm behavior; why firms reduce toxic chemical emissions; cost-benefit analysis of oil-spill regulation and enforcement; how the financial markets value corporate environmental policies and perform-ance; and government enforcement policy and judicial sentencing of individuals and firms convicted of environmental crimes.

Cohen is Co-Director of the Vanderbilt Center for Environmental Management Studies and currently part of a team of researchers investigating greenhouse gasses and individual behavior through Vanderbilt’s Climate Change Research Network.

“It’s crucial that the brightest minds in academia and the business community take the lead on creating ways to protect and improve the environment. Owen is strongly committed to teaching our students the value of integrating environmental innovation and sustainability into business,” says Owen Dean Jim Bradford. “We applaud Mark’s selection into this prestigious organization.”

Cohen is a member of the Stakeholder Council of the Global Reporting Initiative, which is affiliated with the United Nations Environment Programme, dedicated to developing and disseminating globally applicable sustainability reporting guidelines. He has recently served as a member of the U.S. EPA Science Advisory Board’s Illegal Competitive Advantage Economic Benefit Advisory Panel; the General Accounting Office’s Expert Panel on Disclosure of Environmental Information in SEC filings; and Tennessee’s Environmental Justice Steering Committee. Prior to joining the Owen faculty in 1986, Cohen served as an economist at the U.S. Environmental Protection Agency.

November 10, 2008