Headlines from Around the World

On the Whole, Raising the Gates, Rigged Games

From the Spring 2009 edition of Vanderbilt Business

newspaperOn the Whole

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

Dim Outlook

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

Raising the Gates

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


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

The Obama Effect

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

Rigged Games

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

Fear Factor

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

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