Richard T. Bliss

CEO Compensation and Bank Mergers

Recent bank mergers generally did not improve relative operating performance or produce positive abnormal returns to acquiring bank shareholders. We examine the relationship between mergers and CEO compensation during 1986-1995, a period marked by overcapacity and frequent mergers. We find that mergers have a net positive effect on compensation, mainly via the effect of size on compensation. Compensation generally increases even if mergers cause the acquiring banks stock price to decline, as is typical after a merger announcement. The form of compensation affects merger decisions, since CEOs with more stock-based wealth or compensation were less likely to make an acquisition.

Supporting Women Entrepreneurs in Transitioning Economies

Since the implementation of the Belcerowicz plan as part of Polands transition to a free market economy in 1990, the countrys economy has made great strides. This economic progress at the macro level however was accompanied by systematic discrimination towards women, resulting in economic hardships. Gender specific discriminatory legislations enacted in the 1960s and the 1970s combined with a number of social factors prevented womens access to high paying jobs and a dominant role in the business industry. The economic transition in the 1990s, however, saw a large growth of the private sector in Poland, with women starting many small firms although the distribution of benefits has largely been unequal. There is a real need for supporting women entrepreneurs. A review of past research reveals both a lack of government support for entrepreneurs in general, and differences in the needs of female and male entrepreneurs. In order to offer unbiased recommendations to the Polish Association of Women Entrepreneurs and other support groups, twelve existing women organizations were surveyed and this information was used to establish best practice guidelines for such groups.(VRS)

A Venture Capital Model for Transitioning Economies: The Case of Poland

The venture capital investment process is examined in a transitioning economy. The move from a planned economy to a free-market system confronts venture capitalists and entrepreneurs with an environment not typically encountered in developed countries. This may include high inflation, immature capital markets, a nascent legal system, and a dearth of managerial talent. Using interviews and follow-up questionnaires with a sample of Polish venture capital firms in 1995, the research yields two important results. The first is a VC decision-making model for transitioning economies that diverges from previous research in two areas. First, the privatization of state-owned enterprises is an important part of deal origination and many venture capitalists actively solicit deals from targeted industries. Second, firm-specific screens are rarely part of the process owing to the lack of depth in most industry and geographic segments. The second result is a modified set of investment criteria that reflect some of the unique difficulties venture capitalists face when evaluating deals in transitioning economies. Several differences between their criteria and those used by venture capitalists in developed countries are identified. The implications of these results for venture capital firms are discussed briefly.

Performance Characteristics of Individually-Managed versus Team-Managed Mutual Funds

The fields of psychology and sociology offer a large body of theory and evidence on how individual behavior differs from group behavior, particularly for performance and risk-taking activities. Relatively little attention, however, has been devoted to this topic in regard to managed portfolios, even though over 50% of mutual funds are managed by a team. In this article, the authors provide an empirical examination of whether funds managed by individuals perform differently from funds managed by teams. Using a sample of about 3,000 equity mutual funds over a 12-year horizon, the authors find that although the number of funds managed by teams has grown at seven times the rate of funds managed by individuals, no significant difference in risk-adjusted performance is observed between team-managed and individually managed funds. Funds managed by teams, however, are significantly less risky and exhibit lower turnover. In addition, the total cost of owning a team-managed mutual fund is, on average, nearly 50 bps lower per year than the cost of owning an individually managed mutual fund. Finally, team-managed funds attract significantly greater investor flows than individually managed funds, even after controlling for performance, risk, and expenses.

Decision Making and Risk Aversion in the Cash Cab

We use the Emmy Award-winning game show Cash Cab to study decision-making in a risky framework. This is a unique environment because, unlike other game shows used to examine risk-aversion, players participate individually or in teams varying in number from two to five. This creates a natural laboratory to measure performance and risk aversion conditional upon the size of the team as well as the characteristics of the team members. Teams are much more likely to complete overall tasks successfully. Most importantly, risk aversion estimates indicate that when participants are part of a group, they focus on the overall size of the dollar amounts that are “at risk”, rather than their “slice of the pie”. The implications of our results span a number of areas where groups are part of the financial decision-making process, including investment analysis and portfolio management, corporate governance, and corporate finance.

Private Equity: The Differences between Developed and Emerging Markets

From 2002 to 2008, private equity (PE) investments in emerging markets grew from

Women managers in Poland and the United States: a comparative analysis

2.0 billion to

Performance Characteristics of Individual vs. Team Managed Mutual Funds

47.8 billion, a 24-fold increase, representing a compound annual growth rate (CAGR) of 70 percent. Over the same period, PE investment in the United States rose fivefold at a 31 percent CAGR. The 2008 number for emerging markets represents 13.8 percent of global PE investment versus just 2.5 percent in 2002.1 This chapter explores some of the factors behind this explosive growth in PE investment in emerging markets. It also highlights important differences between developed and emerging markets and what they mean for both investors and entrepreneurs seeking funding.

Profitable Growth by Acquisition

This paper compares women managers in Poland and the United States in the context of their contrasting political and economic systems - the socialism of Central and Eastern Europe and the liberal democratic tradition of the West. We discuss the two political philosophies and their impact on gender roles and labour markets, and then compare this theory to the reality of Polands transition. Finally, this background is used to analyse differences between Polish women managers and their American counterparts.