Knowledge Link: Research news from Fisher College of Business
May 2008
  In this issue

Research by Allenby lauded as ‘a home run paper’ by leading marketing journal

Applied Research: Fisher to conduct longitudinal study of company’s lean management program

Minton, Stulz find credit derivatives can potentially upset banks' earnings

Klein named fellow of Society of Industrial
and Organizational Psychology


Study finds 2001 accounting rule on derivatives alters firms’ exposure to risk






Max M. Fisher College of Business > The Ohio State University Fisher College of Business
Research by Allenby lauded as ‘a home
run paper’ by leading marketing journal

An editorial in the current issue of Marketing Science by Eric Bradlow of University of Pennsylvania’s Wharton School praises a paper co-authored by Greg Allenby, the Helen C. Kurtz Chair in Marketing, as an example of an academic “home run.”

Bradlow, who was recently named editor-in-chief of Marketing Science, discussed in the Winter 2008 editorial, “Enticing and Publishing the Home Run Paper,” his new vision for the journal and his priority on publishing high impact research.

He defines a “home run” research paper as one that “changes my thinking.” Bradlow wrote, “a common thread is that all home run papers trigger the reaction, ‘I wish I had thought of that.’”

Papers Bradlow used to illustrate that concept included a 2004 paper Allenby co-authored with Timothy Gilbride, an assistant marketing professor at Notre Dame’s Mendoza College of Business, “A Choice Model with Conjunctive, Disjunctive, and Compensatory Screening Rules.” Allenby is recognized as a leading researcher in applying Bayesian methods and mathematical modeling of behavioral process.

“In this paper, the authors implement, within a Markov Chain Monte Carlo framework an approach to infer (derive a posterior probability) for the type of decision process (conjunctive, disjunctive, or compensatory) that a given respondent is utilizing,” Bradlow wrote. “The beauty of this paper is that this is done by augmenting the parameter space with latent indicator variables, a well-established framework but never applied to this important problem. It is a very clever way to “walk around” customer decision space and is a nice blend between mathematics, statistics and theories of consumer processing.”

Research at Fisher on Bayesian methods first took national attention with a series of conferences, “Bayesian Methods and Applications in Marketing,” held 1999-2002 for researchers, practitioners and doctoral students. Allenby co-authored the bestseller statistics textbook, “Bayesian Statistics and Marketing” with Peter Rossi and Rob McCulloch at the University of Chicago.

Allenby is a fellow of the American Statistical Association and an Associate Editor for Marketing Science, the Journal of Marketing Research, the Journal of Business and Economic Statistics, and Quantitative Marketing and Economics.

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Applied Research: Fisher to conduct longitudinal study of company’s lean management program


Working with corporations like Kaiser Aluminum allows Peter Ward, the Richard M. Ross Chair in Management and director for the Center for Operational Excellence, to take real world practice back into the classroom.


Kaiser Aluminum, a leading producer of fabricated aluminum products, was determined to elevate the execution of the company’s operational strategy throughout its business units and implement widespread lean management through the entire organization. To help with the process, the company turned to Fisher.

Now, two years into a customized lean management program developed at Fisher, company executives say Kaiser Aluminum is transforming itself into a lean enterprise.

Fisher’s Executive Education program, working in collaboration with its lean management training partner, Productivity, Inc., developed a certification program designed especially for Kaiser Aluminum’s managers. Company executives are hailing the Fisher partnership as a success.

However, Fisher’s Peter Ward, the Richard M. Ross Chair in Management and director for the Center for Operational Excellence, was not content with just accepting the praise of another satisfied customer in the Executive Education program. Read More »

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Minton, Stulz find credit derivatives
can potentially upset banks' earnings


Research by finance professors Bernadette Minton (left) and René Stulz find that credit derivatives can potentially upset the bottom line for American banks.

Since 2001, a small number of American banks have fueled a significant increase in credit default swaps as a way to provide credit protection to hedge risks. However, new research from two Fisher finance professors find that many big name banks steer away from hedging credit risks because they potentially increase the volatility of their earnings.

Fisher finance professors and co-authors of the study Bernadette Minton and René Stulz found that in 2005 the use of credit derivatives was limited to just 23 out of 395 banks because of adverse selection, moral hazards and the inability of banks to use hedge accounting when hedging with credit derivatives. Minton recently presented the paper at a conference on risk management at the Federal Reserve Bank of Chicago.

The researchers, who co-authored the paper along with Fisher alumnus and Georgetown University faculty member Rohan Williamson, examined 2005 fiscal year-end disclosures from 395 domestically-owned bank holding companies with more than $1 billion in assets. Growth in credit default swaps jumped from $698 billion in June 2001 to more than $42.5 trillion by June 2007. They find that usage of credit derivatives is not widespread among banks. Typically, about 20 bank holding companies use credit derivatives in their sample.

Larger banks such as JPMorganChase and Bank of America bought and sold a combined $4.2 trillion in 2005, which exceeded the total notional amount of $1.2 trillion in derivatives bought and sold by all other banks examined as a part of the study. Read More »

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Klein named fellow of Society of Industrial
and Organizational Psychology

The executive committee of the Society of Industrial and Organizational Psychology (SIOP) elected Howard J. Klein a Fellow of the society on Jan. 25. Klein is a professor in Management and Human Resources.

Howard J. Klein
Howard J. Klein
Fellow status is an honor awarded to SIOP members who have shown evidence of unusual and outstanding contributions or performance in industrial and organizational psychology through research, practice, teaching, administration and/or professional service, according to the SIOP Web site.

Klein’s research is focused on three areas: employee commitment; new employees’ socialization and on-boarding, and motivation. His study on employee commitment explores several levels of commitment—to employers, projects, work teams, supervisors, work goals and customers. He is examining the drivers and rationale for employees’ commitment to their work. Klein is also editing a book on the topic that will be published in 2009.

At Fisher, Klein teaches classes in human resources management, management and organizational behavior, research methods and staffing. Klein is the scholarly program chair for the Human Resources Division of the Academy of Management, serves on the board of directors and research director for the Society for Human Resource Management (SHRM) Foundation. He is the founder and site coordinator for the Human Resources Instructional eXchange (HRIX), a Web-based clearinghouse for teaching and learning about human resource management.

Klein's fellow status was recognized at the 2008 Annual Meeting of SIOP, April 10-12 in San Francisco.


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Study finds 2001 accounting rule on derivatives alters firms’ exposure to risk
A new study by a Fisher College of Business accounting professor may put to rest a decade-old debate on the impact of Statement of Financial Accounting Standards rule on reporting derivatives such as options, swaps and futures contracts.

Haiwen Zhang
Howard J. Klein
Effective in 2001, Statement of Financial Accounting Standard 133, accounting for derivative instruments and hedging activities required firms to record all derivatives as either assets or liabilities at fair value and recognize unrealized gains or losses in the income statement. Before the rule, derivative financial instruments were mostly recorded at historical costs. So any changes in their value were not reflected in income statements.

Haiwen Zhang, an assistant professor of accounting, examined how this new rule effects risk management behavior of non-financial firms.

Zhang received her bachelor’s and master’s degrees from Tsinghua University in China and a PhD from the University of Minnesota. Her research interests include accounting regulation, corporate risk management behavior and how capital markets use accounting information, and how accounting choices affect firms’ investment and production decisions. Read More»

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News Briefs

Fisher PhD programs
rated best at OSU

Of the 90 doctoral programs at Ohio State, all three of Fisher College of Business' PhD programs were recognized among the very best at the university in a far-reaching Doctoral Program Assessment led by Pat Osmer, vice provost for graduate studies and dean of the Graduate School.

Fisher's three programs were among the 12 rated as “high quality,” which means “they stand out in terms of their planning, focus and potential to enhance the standing of the university,” according to the report. Fisher offers doctoral level degrees in Accounting and Management Information Systems, Business Administration and Labor and Human Relations.

“The most significant and tangible result of this rating is that additional resources will flow to our PhD programs as individual students qualify for enhanced graduate fellowships,” said Steve Mangum, interim dean of Fisher.

Conducted by a 13-member faculty committee, the doctoral program assessment was a result of follow-up recommendations and findings in a March 2007 university report, “Funding Models for Doctoral Education Based Upon Quality.”

Raabe presents at NYU
William Raabe, who teaches graduate tax courses in the accounting department, was a featured speaker at a conference on retirement fund withdrawal strategies at New York University’s Stern School of Business on May 1.

Raabe will discuss liquidating retirement assets in a tax efficient manner at the conference, titled “The Optimal Retirement Withdrawal Strategy.” The event was sponsored by Stern’s Salomon Center for Financial Institutions.

Rucci receives Academy of Management honor
Anthony J. Rucci, senior lecturer in the Department of Management and Human Resources, will be awarded the 2008 Distinguished Human Resource Executive Award from the Academy of Management’s Human Resources Division.

The award is given to executives who have distinguished themselves throughout their careers in the field of human resources management, according to the award criteria. The award is co-sponsored by the Society for Human Resource Management.

Rucci teaches in the Executive Education program and in Fisher’s Department of Management and Human Resources. Prior to joining Fisher, Rucci was a senior vice president at Cardinal Health, the chief executive officer of Ohio State University Physicians Inc. and senior vice president for Health Sciences. Rucci has published articles and chapters in more than 25 publications, including the Harvard Business Review and Fortune magazine.

“This is a great honor and we all know he is very deserving of this award. We are lucky to have Tony on the faculty,” said David Greenberger, chair of Fisher’s Department of Management and Human Resources.

Five Management Science professors honored for research work
A review of management science, production and operations management professors in the United States recognized five Fisher professors on a list of the field’s top 50 scholars based on the impact of their research.

Management Science professors W.C Benton, John Current, Nicholas Hall, David Schilling and Peter Ward were selected from a review of 1,376 professors at 225 business schools.

The review conducted by Bin Jiang, assistant professor of management at DePaul University, calculated the importance, significance and broad impact of the scholars’ research contributions.


Fisher In the News

Rüdiger Fahlenbrach, assistant professor of finance, was quoted in the April 7 edition of TIME magazine on changes made by Starbucks’ CEO Howard Schultz to revive the company.

Fahlenbrach told the magazine Schultz has the ability to make bold changes because he is the founder of the company.

Andrew Karolyi, professor of finance, and Matthew Falk, a second-year MBA student and graduate assistant for the Student Investment Management Program, were quoted in an April 20 Chicago Tribune article on student-managed investment funds.

Karolyi was quoted on the democratic format used to drive investment decisions, while Falk was quoted on the fund’s limited investment in energy stocks.

Itzhak Ben-David, incoming assistant professor of finance, had his research on sub-prime mortgages spotlighted in the New York Times Freakonomics blog on April 7.

Ben-David was citied for his research of cash-back transactions, which allowed cash-poor home buyers to receive an unrecorded cash rebate from the seller in order to qualify for a loan.

René Stulz, professor of finance, was quoted in a March 4 The New York Times article on the increase of corporate cash holdings since 1980.

Stulz told the paper that the moves to stockpile cash reflect a riskier business world.

John P. Saldanha, assistant professor of logistics, was quoted in a Feb. 29 Associated Press article on the impact of rising fuel prices on owner-operated truck drivers.

Saldanha told the news service if fuel costs eliminate independent truck drivers, it would create regional and national oligopolies which would raise shipping costs once the economy improves.

The article appeared on the Web sites of more than 130 media outlets including BusinessWeek.com, Forbes.com, CNNMoney.com, Washington Post, Los Angeles Times, Chicago Tribune, Boston Globe, San Francisco Chronicle and USA Today.

Fisher Working Paper Series


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