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Professor Voices is a timely collection of newsworthy commentary and analysis supplied by Boston University faculty and experts. Opinions expressed by these experts represent their personal perspectives, not those of the University.
BU experts on Bain, worker safety, Google, and Facebook
Below is a sampling of quotes by experts from BU’s School of Management on recent issues impacting the business world:
Do the Bain Hustle (Huffington Post): “The amounts of money are so vast that it is truly a matter of time before the taxation of private equity is front and center of the public agenda. Increasingly, this world of private equity looks like a world of robber barons, and Romney comes out of that world.” James Post
How Subcontracting Affects Worker Safety (PBS “Frontline”): “The more subcontracting, the more ‘fissuring’ of the work, the greater the risk for health and safety at the bottom of those chains.” David Weil
Google completes Motorola deal, heralding new era (Associated Press): “This gives Google a chance to develop and showcase a ‘next generation’ device for mobile computing. But it could also create a complex issue for Google. How do you balance the desire to create something that consumers love without upsetting the rest of the Android ecosystem?” N. Venkat Venkatraman
How to better understand your risk tolerance (MarketWatch): “I think that all these questionnaires are worthless and may be counterproductive. All of the (risk-tolerance questionnaires) I have seen ask about time horizon. If an individual has a long time horizon, it is taken as an indicator of tolerance for risk. The possibility of having a long time horizon and yet being extremely averse to risk is ruled out.” Zvi Bodie
Swaps clearinghouses set for systemic designation (Bloomberg): “The big clearinghouses are providing the freeway on which these financial products can trade. The regulators are saying, ‘We need to understand what sort of activities are on it, and we need to control the speed limit on this freeway.’” Mark Williams
Facebook stock slide puts new pressures on company (Reuters): “While Facebook’s corporate governance practices leave much to be desired, the company is unlikely to feel any real pressure for change from investors for some time. If the company were to make a costly strategic blunder which raised questions about Zuckerberg’s leadership, that might increase pressure for change.” James Post
This Week in Business: Facebook’s IPO (NECN): N. Venkat Venkatraman discusses aspects of Facebook’s IPO, including what type of CEO Mark Zuckerberg might be now that the company is public.
Getting to retirement with a minimum of financial risk (New York Times): Zvi Bodie offers advice when investing for retirement, saying a “safety first” approach might be best.
Bill Ackman: JPMorgan loss ‘not that big’ in bank’s context (Newsmax): “JPMorgan Chase has a big hedge fund inside a commercial bank. They should be taking in deposits and making loans, not taking large speculative bets.” Mark Williams
Scrutiny of Facebook IPO
Regulatory concerns over the Facebook IPO continue to grow following a lawsuit filed against the social network, CEO Mark Zuckerberg and several banks involved in the initial public offering. Law School professor Tamar Frankel, an authority on securities law, corporate government, and legal ethics, offers the following comment:
“There is nothing new under the sun and the Facebook IPO debacle is no different from the same type of distributions in the 1920s.
“To be sure, some things have changed. Congress passed the Securities Act of 1933 to preclude the ‘heating and revving up’ of investors’ markets. Section 5 of the Act prohibits public offering of securities before the details regarding the offering were filed with the Securities and Exchange Commission. This provision imposed high costs on underwriters.
“After all, why are they called underwriters? They underwrite the risk that the offering will not be sold at the offered price. Throughout the years, however, with the theories that market information is available in various ways and underwriters could address sophisticated investors by directly providing information before the public offering, the rules were relaxed.
“In addition, the rules became both numerous and specific. Numerous specific rules have two advantages. They can be more easily circumvented and, because they are numerous, one can complain bitterly (and sometimes justifiably) about the cost.
“We have seen the IPO craze before in one form and now in another, under one regime and now in another. In all cases the smaller or uninformed investors were ‘revved up’ and the favored investors were fattened up. In all cases the promise of quick riches has won too many investors.
“Investors should learn that if others make fortunes, run away as far as you can because you will pay for their fortune.”
Contact Frankel at 617-353-3773; tfrankel@bu.edu
Dean’s Corner: Busy summer travel season ahead
In this installment of “Dean’s Corner,” Christopher Muller, Dean of the School of Hospitality Administration, discusses his predictions for the upcoming summer travel season and its potential impact on the economy. He also offers tips for how consumers can save money when making travel plans.
Contact Muller at 617-353-6327 or cmuller@bu.edu. Twitter: @hospitalitydean
Weekly roundup: BU experts on President Obama, Mitt Romney, political ads, GOP running mate, & Massachusetts politics
Below is a sampling of quotes by BU experts on the road to power:
Over before it starts in Massachusetts (The Maddow Blog): “To know Mitt Romney is to dislike him. That is the moral of the story.” Tom Whalen, College of General Studies
Common Cause seeks end to Republicans’ use of filibuster (Bloomberg): “It reflects the breakdown of any sense of collaboration between the Democrats and Republicans. Whichever party is out of power wields the filibuster like a mace. Whichever party is in power bemoans the degradation of Senate decorum due to the filibuster. This has made the world’s foremost deliberative body increasingly more dysfunctional.” Tobe Berkovitz, College of Communication
President Obama strikes at Mitt Romney on jobs (Boston Globe): “The Obama campaign is really putting on a full-court press to take over the conversation. When Obama looks at the competitive situation now, what he’s trying to do is get off the defensive on the economy and essentially paint Romney as a dangerous kind of capitalist promoter and redefine Romney in a way that will take the heat off Obama for unemployment and the sputtering state of the economy.’’ John Carroll, College of Communication
Political ad war (NECN): Tom Fielder, Dean of the College of Communication, discusses the latest headlines of Campaign 2012, including President Obama’s latest attack ad on Mitt Romney’s tenure at Bain Capital.
Can Mitt Romney survive Bain Capital ad attacks? (PoliticoArena): “The Newsweek portrayal – and President Obama’s public support for single-sex marriage – will not trigger any shift in the electorate, nor will it alter the trajectory of the race. That cake has already been baked.” Tom Fiedler
Campaign 2012: Who should Romney select as his running mate? (Professor Voices): Tom Whalen offers his analysis on who he believes Mitt Romney should select as his running mate and why.
Gov: Prez stance on gay marriage from the heart (Boston Herald): “It certainly raises an eyebrow whenever a politician says it has nothing to do with politics. Usually, that’s a good indicator that that’s exactly what it’s about, especially in an election year. … What underlines this for me is that Gov. Patrick, I think, has larger ambitions. He wants to go to 1600 Pennsylvania Avenue.” Tom Whalen
Has Massachusetts lost its political clout? (WFXT): “We were a giant in terms of the congressional delegation just a few short years ago, but now you get the feeling that with these retirements we’re going to become something of a political backwater for the United States.” Tom Whalen
In Mass. US Senate race, a question of ancestry (Associated Press): “The first rule of politics is when you’re in a hole, stop digging. She should have just done a mea culpa and hoped that it went away.’’ Tobe Berkovitz
Who should Romney tap for understudy? (PoliticoArena): “Gov. Bobby Jindal would risk repeating the Sarah Palin blunder – and he’d bring less passion to the ticket than she did to McCain’s.” Tom Fiedler
Malia, Sasha may be Obama’s most important advisers (New York Daily News): “Obama opens up a slippery slope when he refers to his children when at other times says he wants them to have a private life. You can’t have it both ways. I don’t think voters want to feel that (the girls) are being used as political surrogates on campaign trail. There could be a backlash.” Tobe Berkovitz
Gas prices and summer travel
With consumer prices flat, due in part to falling gas prices, Americans find themselves with a little more money to spend on autos, furniture, and travel. Christopher Muller, Dean of the School of Hospitality Administration, discusses how falling gas prices will impact the summer travel season.
Contact Muller at 617-353-6327; cmuller@bu.edu; Twitter @hospitalitydean
