2005
April
• Unbiased Behavior: Contrary to popular belief, analysts at large investment banks don't seem to let conflicts of interest bias their stock-market recommendations, according to research by Georgia Tech finance professors Jonathan Clarke and Ajay Khorana, whose findings were reported recently by the Atlanta Business Chronicle. Two years ago, 10 Wall Street investment banks agreed to pay $1.4 billion to resolve charges that their analysts hyped the stocks of existing and potential customers of the banks' services during the 1990s. Part of the settlement with the Securities and Exchange Commission required the investment banks to put $432.5 million over five years into a fund to provide investors with stock-market analysis from independent research firms that might be less biased.
• Moving Up: The Atlanta Journal-Constitution recently spotlighted the College of Management's 10-position jump in the latest U.S. News & World Report rankings of the nation's top MBA programs. Georgia Tech rose from 42nd to 32nd. "That is an unusually strong showing for any program, and I'm very pleased for our business school," said Georgia Tech President G. Wayne Clough. "We've done a lot to invest in the College of Management, and we've known that those investments would pay dividends. While the rankings are not the sole measure of success, it's great to see such a strong, positive direction for the college."
• Shades of Gray: Following reports in national media that research by the College of Management's Financial Analysis Lab led the Securities and Exchange Commission to ask some companies to correct their cash-flow reports, The Atlanta Journal-Constitution featured a Q&A with the lab's director, accounting professor Charles Mulford, on his work. When asked about the multitude of gray areas in accounting, Mulford responded, "There are so many differences among companies and industries that if accounting rules became very strict, we would probably lose value in financial reporting. We need flexibility to deal with differences across companies and industries." Mulford also appeared in a recent issue of BusinessWeek, discussing big-box retailers' unclear accounting of various incentive programs, including gift cards.
• Turbulent Times: WAGA-TV (Fox 5) and WSB-FM recently turned to Fred Allvine, professor emeritus of marketing, for commentary on the challenges facing Delta Air Lines. Allvine believes the troubled airline might have to declare bankruptcy as early as July, given high fuel costs and other financial problems.
• Statistical Significance: Six Sigma strategies for improving the bottom line are spreading to companies throughout metro Atlanta, reported Business to Business magazine recently. The article described the Six Sigma training offered through the College of Management's Executive Education area. "The power of it today is it has become a management philosophy," said Lee Campe, a Six Sigma instructor at Georgia Tech. "The philosophy is manage your organization, make business decisions based in data, not hunch and intuition. I haven't been in a company yet that can support most of the business decisions they are making with hard data and analysis, with the exception of those that are applying Six Sigma."
• Hot Commodity: As the dollar cools, commodities are heating up, reported the Global News Wire's Business Line recently. The report featured research by Rajesh Chakrabarti, assistant professor of finance, who addressed the history of trading commodity futures in a recent paper. "The idea of trading futures may be traced to forward contracts as far as back to around 2000 B.C. in China," he wrote.