Tag: class of 2014

Poets&Quants.com, “Strong Pay & Jobs Stats in First 2014 Report” John Byrne reports on Olin’s strong job placement statistics for the MBA Class of 2014. MBAs landed median base salaries of $100,000 with median sign-on bonuses of $15,000.

Image: Fortune cookie, Flazingo Photos, Flickr Creative Commons

From determining the value of a sports franchise to the psychological effects of a job interview, undergraduate business students explored a wide range of topic this year in their honors theses. Each year a small number of undergraduate honors students complete a formal thesis under the supervision of a faculty advisor. Students investigate current issues in business using different disciplinary approaches.

In the first semester, faculty guide the class through seven sessions that introduce students to contemporary academic research. Students read and critique articles selected from the academic literature and design a number of potential research studies to investigate questions raised by this literature. In the second semester, students pursue a research project with the objective of generating a paper that is a unique contribution to the academic literature.

This year, four insightful theses were produced by 13 students. Abstracts with links to the complete research papers are provided here.

Psychological Ownership and the Endowment Effect in Employee Recruitment Processes
Authors: Karl Bach, Shiv Bery, Jordan Flink, and Elise Tanner
Advisor: Professor Bottom
Abstract: Previous research has demonstrated that employees often develop feelings of ownership towards both jobs and organizations (Pierce et al 2001; Ashkanasy et al 2007). Additionally, much of the endowment effect literature has provided evidence that as an individual’s feelings of ownership towards a particular object increases, so does the perceived value that individual assigns to that object (Peck & Shu 2011).

This study attempts to bring together these two areas of research by postulating the existence of the endowment effect in employee recruitment processes. Specifically, this study examines the idea that job applicants may develop feelings of ownership towards the positions they interview for, as well as explores the link between psychological ownership and perceived attractiveness of an employment opportunity. Results indicate that level of ownership has a significant effect on perceived value when both WTA (willingness to accept) and ratings of attractiveness were used as dependent variables. However, evidence in support of the endowment effect is only present when ratings of attractiveness is used as a dependent variable. Implications of these results for both employers and applicants are discussed.
Read full thesis here

A Two-Step Model to Value Professional Sports Franchises
Authors: Liya Mo, Alexandra Orlander, and Eve Sembler
Advisor: Professor Hamilton
Abstract: In our paper, we value sports franchises while considering both the probability of a transaction and the price of a sale. We hypothesize that offer prices change while reservation prices stay constant, and we also hypothesize the effects of certain market, team, and ownership characteristics on both the value of a franchise and the probability of sale. First we performed a simple linear regression to model franchise values, and then we ran a Probit regression to examine the probability of a sale at any given time. Using the Heckman Selection Model to combine our first two regressions, effectively controlling for non-random selection, we take into account that we only observe a franchise price when there’s a sale.

Our results show that while franchises that generate more revenue are more valuable, higher revenues also decrease the likelihood of a sale. Franchises located in markets with greater populations and higher market median incomes are more valuable, but higher market median income decreases the likelihood of a sale. When the market is up, franchises are valued higher and the probability of a sale is greater. Additionally, while NFL teams sell at a premium compared to other leagues, NFL owners are less likely to sell. As expected, a human owner is less likely to sell a franchise, but the death of an owner increases the likelihood of a sale. Our Heckman Selection Model concludes that we tend to see sales when there is a drop in the reservation price, not necessarily when there is a high offer.
Read full thesis here

Exploring the Impact of Outside Influences and Introduced Biases on Risk and Reward Preferences
Authors: Yoni Barlev, Jeff Lin, and Greg Porter
Advisor: Professor Seetharaman
Abstract: We go through each and every day being bombarded with media, news articles, and conversations. We are constantly faced with decisions. Whether we realize it or not, each choice we make is a calculation of risk and reward among alternatives. While in some cases it may be easy to calculate expected payoffs, sometimes it can be much harder. This subconscious process of evaluating different alternatives varies from person to person based on individual preferences and characteristics. 4659674164_fbe26cf2b7_z

The goal of our research is to investigate whether priming an individual with an article about losing money through risky choices or an article about winning money and the excitement involved has any effect on an individual’s attitude toward risk and reward. Is it the case that individuals become more risk-averse or risk-seeking after being influenced by some outside source? We hypothesized that individuals who are exposed to an article demonstrating risky behavior with an undesirable outcome will internalize the losses presented and thus be more likely to be risk-averse in their decision-making process. Conversely, we believed that individuals who are primed with an article demonstrating risky behavior with a desirable outcome will respond with more risk-seeking behavior as a result of the excitement and possibility of achieving a similar outcome.

Using Markowitz-based models and a risk/reward factor calculated from the alpha and betas of the Markowitz specifications, we were able to illustrate changes in behavior through the news story cueing mechanisms, though not always in the expected “direction.” Our first model assumed 10 participants per condition (control, risk-seeking, and risk-averse). Per our hypothesis, the average risk/reward factor for the 10 respondents in the risk-averse condition was much lower than that of the control and risk-seeking groups, indicating that the news story did influence decision-making. After consolidating the data to simulate one respondent per condition, a similar result was found in the second model. Our analysis went further, however, exploring how demographic differences may be connected to different decision-making biases. We found that differences in gender, age, and family/marital status helped explain some of the variability across participants in each condition. Overall, our results support a connection between the conditional cues and temporary changes in decision-making, though further questions remain for future research.
Read full thesis here

The Effect of Academic/Social Aptitude as a Student on Managerial Styles as CEO
Authors: Shawn Huang, Sherry Liu, and Zack Gong
Advisor: Professor Leary
Abstract: Research suggests that a CEO’s previous experiences could have a significant impact on his/her behavior in managing a company. A study by Bertrand and Schoar (2003) demonstrated that CEOs with MBA degrees tend to pursue more aggressive (risk-loving) managerial styles. In this study, we aim to identify the influence that being a “nerd” or “social butterfly” in school has on how CEOs of major public companies manage their respective firms in the context of risk taking. Using a fixed effect regression model, we regressed multiple financial policy variables we deem to be key indicators of riskiness over independent variables from the CEO’s educational background that reflect the extent to which that CEO is either academically or socially oriented.

Specifically, we looked at changes in the financial policy variables a few years before and after the CEO took over to clearly capture the impact of a particular CEO. Results suggests that generally speaking, CEOs who were more academically oriented in school were more risk loving whereas those that were more socially oriented were more risk averse, but further research must be done to draw any specific conclusion of the effects each independent variable has. The findings may shed light on how companies should expect CEO candidates to behave when managing the firm based on what type of student they were in school, information that would be highly beneficial in in deciding whether a particular candidate would be suitable as CEO.
Read full thesis here

Images: Writing Thesis by Sam; The Thesis by Dan Stowell, Flickr Creative Commons