Tag: Specialized Masters



Paulino do Rego Barros Jr.

The 2018 Olin Business magazine shared a series of vignettes featuring alumni faced with a business decision requiring them to weigh data with their values. We featured these stories to support Olin’s strategic pillar focused on equipping leaders to confront challenge and create change, for good. This is one of those vignettes.

When Retail Credit Corporation was founded in Atlanta nearly 120 years ago, the company kept paper files on consumers to gauge their creditworthiness. “This industry has grown from looking at a file and just saying, ‘Does he pay his bills? Yes or no?’” said Paulino do Rego Barros Jr., MBA ’91.

Indeed, as a veteran executive at the company now known as Equifax, he’s on the vanguard of the power and pitfalls the massive data revolution has wrought on the industry and its customers. Equifax and its competitors wield data that tracks purchases, evaluates how reliably customers pay bills, and measures customer assets.

In spite of the power, Barros said, “there is a strong sense of stewardship and ethics.” That sense of stewardship came through a little more than a year ago when hackers breached Equifax.

Two days after he was named interim CEO, Barros apologized to consumers and customers in The Wall Street Journal. Barros is now US Information Solutions, president and former interim CEO, Equifax.

“We didn’t live up to expectations,” he wrote. Under his leadership, the company gave consumers free credit monitoring services, upgraded its website, boosted access to call-center support, and instituted other measures to regain the faith of consumers and customers.

“The regulatory framework establishes very clearly what we can or cannot do with consumer data,” he said. “But the decisions I made—and our ethical and moral values—are very important to us.”




Munir Mashooqullah

The 2018 Olin Business magazine shared a series of vignettes featuring alumni faced with a business decision requiring them to weigh data with their values. We featured these stories to support Olin’s strategic pillar focused on equipping leaders to confront challenge and create change, for good. This is one of those vignettes.

In 2012, Munir Mashooqullah’s company was an acquisition target. For shareholders, the deal might have made sense: Mashooqullah, EMBA ’98, and an Olin Distinguished Alumnus, said the acquiring company had higher profit margins and better systems and IT infrastructure.

Even some of his employees thought the deal would be good for Synergies Worldwide, which manages apparel sourcing and supply chain management for the “fast fashion” industry. “Everyone was saying, ‘Why can’t you be more like them?’” said Mashooqullah, founder and custodian, Synergies Worldwide. “I lost people. I lost tactile monetary opportunities.”

Clients, however, didn’t like the deal. They liked their current service. They appreciated the value they received.

“There are stories in leadership where you do not go with what is told to you just because the numbers look right,” he said.

Today, the company Mashooqullah founded 31 years ago is thriving. In fact, a senior executive for the competitor jumped ship to become the CEO when Mashooqullah retired in 2016.

“If there is something you believe in— and you’re not just driven by the dollar sign—in retrospect, many times people win,” Mashooqullah said. “But at the time, it may not look right.”




Tom Tian, BSBA; Lilu Li, MSF-WAM; Robert Huang, MSFC; Tim Solberg; Alvin Nguyen, MSFC; Carl Compton, BSBA; James Pai Hao-Lun, MSF; winners of the 2019 Quinnipiac portfolio competition.

For the second time in as many years, a WashU Olin team grabbed the first-place trophy at the prestigious Quinnipiac Global Asset Management Education Competition in New York City March 28-30, 2019.

A six-member team of master’s of finance students and BSBAs competed against 75 teams for the trophy in a competition culminating months of work managing a portion of the Washington University endowment fund, analyzing stock choices and presenting about the team’s investment strategy.

Olin Professor Tim Solberg coached the winning team, which included Tom Tian, BSBA ’20; Lilu Li, MSF-WAM ’19; Robert Huang, MSFC ’19; Alvin Nguyen, MSFC ’19; Carl Compton, BSBA ’19; and James Pai Hao-Lun, MSF ’19.

“Professor Solberg successfully put together a very diversified team,” said Nguyen, the team leader. “James has advanced technical skills, therefore he increased our team productivity by gathering necessary data from different sources, then cleaning them up, and uploading them to Bloomberg for analysis. Liyu’s quantitative background, Robert’s in-depth fundamental knowledge, and Tom’s quick thinking enabled us to combine all the resources needed to conduct our comprehensive analysis report quickly and efficiently.

“Carl transformed our analysis into an excellent PowerPoint presentation and collaborated with other team members to polish their presentation skills,” he added. “I leveraged the strengths of my teammates so we can work in complementary partnership to maximize each other’s strengths and compensate for individual weaknesses.”

An Olin team also won the same competition last year. In both cases, the students had participated in WashU’s “investment praxis” course, taught by senior lecturer Charles Cuny and Solberg. In the course, students manage a $1 million segment of Washington University’s endowment.

This year’s team didn’t have to fight through a wicked nor’easter to make it to the competition, but they shared the same appreciation for the discipline, teamwork and rigor required to compete.

“The competition gave me a much more holistic, hands on experience to the world of finance than is readily available at most schools,” Compton said. “The ability to run $1 million of real money puts much more emphasis on the psychological side of finance that escapes the normal classroom setting. It is very easy for students to nod their head in agreement when a company is worth buying or selling, but when the money is tangible, you begin to question your assumptions and selling policy.”

Using the new finance lab in the Kopolow Library, Solberg taught the team how to use Bloomberg terminals to determine portfolio attributions by industry sector and stock selection. It was while coaching the team last year he realized a financial lab would be much better for tutoring than having terminals spread throughout the campus.

Compton said the competition forced the team to do performance attribution and analyze a portfolio from multiple different angles, pushing them to better understand where their portfolio was underperforming or outperforming—and why.

“It’s easy to give a presentation on a portfolio that does better than the market, because no one questions you,” he said. “It is much more difficult to be convincing when your portfolio underperforms the market, and you have to argue that the portfolio performed exactly as it was expected to, even with huge drawdowns from unforeseeable losses from two holdings.”

He said the team felt confident standing in front of a panel of judges, delivering a robust answer to every question “and walking out of the room knowing you killed it.”

Pictured above: Tom Tian, BSBA ’20; Lilu Li, MSF-WAM ’19; Robert Huang, MSFC ’19; Tim Solberg; Alvin Nguyen, MSFC ’19; Carl Compton, BSBA ’19; James Pai Hao-Lun, MSF ’19.




Cash Nickerson

The 2018 Olin Business magazine shared a series of vignettes featuring alumni faced with a business decision requiring them to weigh data with their values. We featured these stories to support Olin’s strategic pillar focused on equipping leaders to confront challenge and create change, for good. This is one of those vignettes.

Data and values are important in making big decisions, but as Cash Nickerson, JD ’85, MBA ’93, points out, “there are really very few momentous decisions.

“We make hundreds of decisions in a day,” said Nickerson, an author and president/principal at PDS Tech Inc., one of the largest engineering and IT staffing firms in the United States. “Many are trivial. But many of the trivial decisions come back to you in one form or another.”

Nickerson thinks in terms of a “structure of thought,” a muscle he’s developed so those everyday decisions are still based on data and values. “What fascinates me more than how someone makes the big decisions is the algorithm an executive uses for making the everyday decisions,” he said.

For him, that algorithm focuses on people.

“I like to think of myself as very numbers driven as well as values driven,” Nickerson said.

“My philosophy is that I wake up every morning and remind myself of the uniqueness of humans. To me, it’s a value to treat each person as an individual.”




This story includes material contained in a news release issued by the American Accounting Association. Researcher Philip Berger received financial support for this research from Chicago’s Booth School of Business.

A common assumption is that stock analysts gather earnings and other pertinent information to communicate to current and potential stockholders, and then incorporate that information by revising their current-quarter earnings forecasts.

So much for that perception. A new study involving two WashU Olin faculty members finds that analysts disseminate earnings news by revising share-price targets or stating they expect firms to beat earnings estimates, often tempering such information—even suppressing positive news—to facilitate beatable projections.

The study discovered that, when it comes to the current-quarter earnings reports that are analysts’ most closely followed work product, analysts become selective about which forecasts they update and what information they convey. The researchers found that later forecasts issued by the same analyst—such as share-price target revisions, forecast revisions to the other quarters’ forecasts or textual statements about earnings after the last quarterly forecast—surprisingly predict errors in the analyst’s own current-quarter forecast. These associations are much stronger for good news, consistent with analysts catering to managers’ desires to meet or beat earnings forecasts.

Kaplan

Their paper—coauthored by Zachary Kaplan and Chad Ham, both assistant professors of accounting at Olin, along with Philip Berger of the University of Chicago—is scheduled for the March issue of The Accounting Review.

Using data from 8,860 analysts covering 7,933 unique companies over 71 quarters, the researchers reported the likelihood of a downward revision of current earnings estimates came at a 50-percent greater possibility than an upward revision: 19.5 percent downward vs.13 percent upward. When it came to revising stock-price targets and future-earnings estimates, however, the reverse was true to a 20-percent greater possibility: 11.2 percent upward vs. 9.3 percent downward. The firms most likely to meet or beat earnings were those with positive price-target revisions, suggesting those revisions were at least partially motivated by prior omitted earnings information.

Ham

There are two important takeaways from these findings, Kaplan and Ham said.

First, one of the reasons managers are so successful in meeting or beating earnings forecasts is that they persuade analysts to omit positive news from forecasts.

“Managers care a lot about beating earnings forecasts, and analysts rely a lot on managers, so upsetting them is not really an option,” Kaplan said. “Additionally, analysts care deeply about conveying information to their clients, so they cannot merely issue beatable forecasts. The way we find analysts deal with this dilemma is by conveying positive news through the text of their reports and share-price target revisions—this allows managers to meet or beat estimates while also allowing the analyst to update clients about positive news.

“Non-clients, who rely on earnings forecasts because they do not have access to the whole of an analysts’ work product, end up with skewed information, but this is not an issue for the analysts’ business,” Kaplan said.

The researchers said that analysts purposefully lower, or “walk down,” projections. By keeping earnings forecasts low and neglecting some positive developments, the researchers wrote, analysts “cater to managers’ preferences for a walked-down (earnings) forecast pattern. The pattern we document, however, includes avoidance of walking up rather than only a walk-down. … Non-earnings forecast signals are more prevalent for positive news than negative news, consistent with analysts responding to incentives to issue [earnings] forecasts managers will meet or beat.”

Second, by not disseminating all information through current quarter’s earnings forecasts, which are widely available through commercial databases, analysts provide an advantage to clients who have paid for access to the full breadth of their research product.

“Analysts convey information in ways that enable them to be of service to clients, who they care about, and, at the same time, to avoid displeasing corporate managers, who they also care about,” Ham said.

The study may offer a lesson to the broader public: Perhaps widely circulated earnings forecasts aren’t as informative as people think.  If you want the best information an analyst has to offer, you have to pay for it.

In a separate survey of brokerages’ reports to clients, the researchers learned that — without changing forecasts — analysts didn’t refrain from explicitly predicting firms would beat or miss their targets … and the “beat” or positive predictions outnumbered the “miss” or negative predictions by roughly 30 percent.

Image above courtesy of Shutterstock.




Almost exactly five years ago, some of the most spectacular facilities of the Olin campus opened for their first day of classes: students, faculty, staff and WashU leaders gathered in Frick Forum for free coffee and doughnuts and to celebrate the debut of Bauer Hall and Knight Hall.

In fact, exactly five years ago tomorrow, my predecessor, Dean Mahendra Gupta, drafted a blog post announcing the opening ceremony—noting that the new buildings would double WashU Olin’s footprint on the Danforth campus—and heralding a dramatic renovation to Simon Hall, which had opened as Olin’s headquarters under Dean Bob Virgil’s leadership.

On that St. Patrick’s Day in 2014, under a crisp blue sky that shone down through the atrium, WashU officials made their remarks before a banner announcing “Four Buildings, One Olin,” a sign of pride and, perhaps—in its explicit mention of Olin’s split campus—an acknowledgement of the challenge ahead.

That challenge was this: maintaining a sense of unity and esprit de corps among the faculty and staff of our extraordinary business school. With Olin employees spread among Knight Center and Knight, Bauer and Simon halls, a special commitment is required to foster collaboration among faculty, teamwork among staff members and a sense of camaraderie among everyone who passes through our hallways, our common spaces and our classrooms.

I wasn’t here for the grand opening, but I’m delighted now by what I see among my colleagues as they have taken on the challenge, with admirable results.

This academic year, for example, Hillary Anger Elfenbein has kicked off a series of “across the field” luncheons for full-time faculty. The idea was to convene on either side of Mudd Field one Friday a month. So far, the faculty has met for three such gatherings.

“The idea is for faculty to interact on an informal basis—particularly those who work in separate buildings,” Hillary said. “Ever since we moved to separate buildings, it’s been harder to have informal interchange. This initiative is meant to address that. The faculty appreciate it greatly.”

Since my arrival at Olin, I’ve also had the pleasure to meet and engage with many of the faculty and staff at a series of events the Olin Staff and Faculty Advisory Committee has arranged. Though I could only participate in the recent doughnut party through Twitter, I have enjoyed mixers in the courtyard, an ice cream social and our holiday ornament exchange in December—an extremely exuberant (and surprisingly competitive!) event indeed.

I am equally gratified by the work Sandy Vaughn has put forth in organizing a series of lunch-and-learn events that have bounced back and forth between Simon and Bauer halls.

So far, staff and faculty have had the chance to attend four such events, two of which relied on the expertise of our faculty: most recently, Hillary Elfenbein focused on negotiating and, before that, Sergio Chayet hosted a lunch-and-learn on project management.

Earlier sessions drew on WashU HR experts sharing resources for career development and wellness initiatives on campus.

Of course, none of this replaces the one-on-one interactions that happen every day, or the team-oriented projects that advance our school’s work for students, alumni, and the community at large, or the work of our faculty that advances our international reputation for path-breaking research and educational excellence. In fact, our “across-the-field” initiatives are a reflection of the fact that we indeed think and act as “one Olin.”

Pictured above: Olin Professor Sergio Chayet, director of the master of science in supply chain management program, hosts a lunch-and-learn for Olin staff and faculty on project management on January 25, 2019.