» Oxford Press Publishes Professor Sebastian Edwards Book - Toxic Aid - Economic Collapse and Recovery in Tanzania
Book can be purchased on Amazon at: http://www.amazon.com/Toxic-Aid-Economic-Collapse-Recovery/dp/0198704429/ref=tmm_hrd_title_0?ie=UTF8&qid=1405614824&sr=8-3
Selection of recent reviews:
"Opposing sides on foreign aid fiercely debate whether it spurs growth or actually does harm. Sebastian Edwards' fascinating tale of aid in Tanzania suggests it can do both. He reminds us that the more recent success of aid and reform in Tanzania is undoing the disaster caused by aid's decades-long support of domestic tyranny and corruption. A must-read for both sides of the aid debate, or for all those who simply care about poverty." -- William Easterly, New York University and author of The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor
"Brilliant analysis from one of our leading thinkers on economic development. Edwards places the experience of Tanzania in the broader and continuing debate about the effectiveness of foreign aid. His sober and thorough dissection of the historical record leads to a powerful conclusion: the international assistance provided from 1961 to 1981 proved highly toxic, but outside support subsequently became more constructive. This controversial volume will become a must read for anyone concerned with prosperity and stability around the world." -- Simon Johnson, former chief economist of the International Monetary Fund and author of the best-seller 13 Bankers
"Tanzanian economic policies resulted in a disaster of monumental proportions, aided and supported by most of the foreign aid community through the first several decades. Edwards provides an excellent insightful, balanced, and well-documented analysis of the economys implosion, its turnaround in policies and performance, and the role foreign aid providers played in the debacle and the recovery. This first-rate book should be required reading for all those interested in development policies and African economic development. It also provides an invaluable overview for those non-specialists wanting to learn more about the Tanzanian experience." -- Anne Krueger, Johns Hopkins University
» Announcement - Anderson Faculty Bhagwan Chowdhry (Executive Editor) and Ivo Welch (Co-Editor) Produce a New Jagazine (journal/magazine) FAMe to Bring Research Papers to the General Public!
The top academic finance and accounting journals each collectively publish about 500 research articles. Most subscribers cannot digest this amount of info and exposure of scholarly research to practitioners and policy makers is even more limited and sporadic.
Welcome to the inaugural issue of Finance & Accounting Memos (FAMe): http://fame-jagazine.com/readers/index.html. FAMe invites authors of articles accepted for publication in top finance and accounting journals to write short versions of their articles in language that makes the main ideas and results more accessible to broader audiences. We believe that FAMe will make our academic journals, societies, and profession better. Papers, authors, and journals will garner more visibility, readership, and citations. Readers will find it easier to keep up with more research from beyond their own specific fields of interest. Doctoral students will find it easier to digest more current research quickly and efficiently. MBA students and practitioners will find academic research more accessible and relevant. (We hope professors will assign FAMe versions in their classes.) Journalists and policy makers will find it easier to access more research to guide public debate.
Professor Bhagwan Chowdry is the Executive Editor of FAMe and Professors David Aboody, Amit Goyal and Ivo Welch serve as co-editors. Professor Ivo Welch underwrote the jagazine.
FAMe is available both in print format and online, and is optimized for large-screen tablets. Enjoy the inaugural issue of FAMe here: http://fame-jagazine.com/readers/fame-1/memo0.xhtml
» Announcement - 2 Anderson Faculty Awarded Ross Best Paper
Above: Professor Bhagwan Chowdhry (left) and Professor Richard Roll (right)
The Editors of Finance Research Letters congratulate the recipients of the 2013 Stephen A. Ross Best Paper Award chosen from articles published in 2013.
The Ross Award for 2013 goes to:
Development and freedom as risk management,
Bhagwan Chowdhry, Richard Roll, Konark Saxena
Volume 10, September 2013, pages 103-109
The zero-lower bound on interest rates: Myth or reality?
Robert A. Jarrow
Volume 10, December 2013, pages 151-156
The choice for the award was made by the journal's board.
» Californians Should Wise up About our Stupid Tax Code
By IVO WELCH - June 6, 2014 - Op-ed in The LA Times
Are California taxes too low or too high? Fair or unfair? Whatever. Most important, our code is stupid. You'd think rival states such as Nevada, Texas or Florida designed our tax code to undermine us.
Our tax situation is absurd. Our income tax is ostensibly progressive; rates are higher for the rich than the poor. But if you take into account sales taxes, it may well be the poorest who pay the largest fraction of their income to the state. Adjusted gross income - the basis for income tax - isn't a true indication of income, much less total wealth. (Billionaire Oracle CEO Larry Ellison, whose "income" is mostly in unrealized capital gains on stock, probably pays the lowest tax rate in the state.) Proposition 13 means there are guest houses in Bel Air with higher property tax bills than the mansions they used to be attached to.
It is time to start over. And now is the moment to do it. We have solid Democratic and reasonably functional legislative majorities, and a powerful and remarkably sensible governor, plus the potential to get even the Republicans and the Chamber of Commerce on board.
The solution is a straightforward and standard prescription in economics. California should tax primarily what can never escape its borders: its real estate. And we should abandon state income and sales taxes.
Wealthier individuals would still pay more in taxes because they generally own more expensive houses in more expensive locations. Property taxes rates could be progressive, sliding upward with the value of the land and house: a $5-million mansion would be taxed at a higher rate than a $100,000 condo.
The 44% of Californians who rent would still contribute to state coffers indirectly through higher rents.
Is this feasible? Yes. Several states, including those that compete directly with California for jobs and retirees like Texas and Florida, have no income tax, lower sales tax, and 2% to 3% property taxes.
This will demand dealing with the third rail of California politics: Proposition 13, which locks in tax bills based on sales price with slow increases thereafter. But basing tax bills on grossly outdated values is not only unfair to newer property buyers, it distorts the housing market. This tax discount locks many homeowners in a golden cage, so they don't move. That creates a tight market and drives up prices.
Right now property tax represents about one-third of state tax revenue. The exact amount changes each year, but in 2009-10 California collected about $50 billion in property tax, $55 billion in income and corporate tax, and $42 billion in sales tax. If a 3% or 4% tax were applied to the fair market value of all property - not just houses but commercial and investment real estate - we'd no longer need those other forms of tax.
Tripling one's property tax bill sounds terrifying. But remember that it is offset by no state income tax (which tops out at 12.3%) and no sales tax (9% in Los Angeles).
Would you be better or worse off? Consider a hypothetical family with two earners who net $100,000 (after U.S. taxes and deductions). Today, they owe California $4,500 in income taxes. Today, such a family may live in a $300,000 house and thus owe about $4,000 in property tax. Add $3,600 in sales tax on purchases of about $40,000. Instead of $12,100 in three pieces, a 4% property tax on $300,000 would collect $12,000. Most Californians would come out roughly the same. Some a bit better, some a tad worse.
Clearly, more work would have to be done to determine exactly what the tax rates should be, and how to cushion the repercussions for some specially affected groups (real estate agents, poor seniors in expensive houses, etc.). To make sure tax reform is in all of our interest, however, we should not increase the total tax burden, and keep average taxation roughly the same in each income class (except for the very poor, who should no longer be taxpayers).
One concern is that a sudden jump in property taxes might shock housing prices. But remember that most Californians would be paying the same amount of total tax. To have much of an effect, people would have to shift their behavior a lot - toward buying more untaxed stuff and giving up their house. As for me, I wouldn't downsize to a smaller house. Would you?
In addition, any initial decline in house values would probably be offset by rising demand as more people and companies relocated to California for the tax benefits.
This change would give Sacramento - at long last - a reliable, less-erratic tax base. And yet each party and lobbyist would want to extract its pound of flesh. For the greater good, our politicians must resist. Jerry Brown has already shown great spine. Tax reform could become his crowning achievement.
This state could finally have a tax system that induces businesses to move to California and employ more Californians. That saves our cities and retailers from unfair no-sales-tax Internet competition. That costs the state and its citizens much less to administer. That is fairer to those who need to move. That does not penalize our poorest nor penalize work. And that makes all of us Californians better off.
If California wants to compete with states like Florida and Texas, we need to wise up about our stupid tax code.
Ivo Welch is a professor of finance and economics at the Anderson Graduate School of Management at UCLA.
» Why Divestment Fails
By IVO WELCH - May 9, 2014 - Op-ed in The New York Times
LOS ANGELES - TONIGHT, the 20,000 students at Stanford will sleep more soundly. Earlier this week, a group called "Fossil Free Stanford" persuaded the university's endowment to divest its stock holdings from coal-mining companies. The world will be a better place.
Except that it won't be. Individual divestments, either as economic or symbolic pressure, have never succeeded in getting companies or countries to change.
Global public equity markets constitute about $60 trillion of market capitalization. With about $19 billion, Stanford's endowment represents only about five-hundredths of 1 percent of the world's capitalization. Even if Stanford divested itself fully of all its stocks, both fossil and nonfossil, it would probably take the market less than an hour to absorb the shares. It would not lead the executives of the affected companies to engage in soul-searching, much less in changes in operations.
Proponents of divestment argue that it sends an important signal, and that other university endowments will follow. Yet all of them together command only about $500 billion of market capitalization.
Moreover, if divestment really drove down fossil-fuel stock prices, then there would be plenty of other investors ready, able and willing to step in to buy their shares, now trading for just a little cheaper than they otherwise would.
But didn't a similar boycott force South Africa in the 1980s to abandon apartheid?
Unfortunately not. In an academic study, my co-authors and I found that the announcement of divestment from South Africa, not only by universities but also by state pension funds, had no discernible effect on the valuation of companies that were being divested, either short-term or long-term.
And there was no real effect on the composition of their shareholders between institutional and noninstitutional investors. We looked hard for evidence linking boycotts and sanctions to the value of the South Africa's currency, stock market and economy. Nothing.
In retrospect, our evidence should not be surprising. For each investor and business that withdrew, there were others standing by ready to step in.
True, stating that the impact of economic sanctions was low is not the same as stating that the isolation of the apartheid regime had no effect. The wide ostracism may well have weighed on President F. W. de Klerk's mind. But it was not the economic effect of the boycott that forced him to the table.
Of course, not everything is economics. Morals matter. Would I have divested from South Africa? Yes, but I would have had no illusion that doing so would have made a difference. And I would have told others that, in light of its ineffectiveness, I would have understood that reasonable and moral individuals could have come to a different conclusion.
In the case of fossil fuels, the situation is even murkier.
The moral choice is much less clear than it was with apartheid. Energy is an area with no obvious solutions. Apartheid had no place in a civilized world. Fossil-fuel companies are supplying a market demand, one that for the time being cannot be met by other fuel sources. Divestment won't change that calculus.
And there is no guarantee that the strategy will lead to the outcome that divestment proponents want. Suppose divestment worked - and coal companies poured their resources into, say, hydroelectric power, or nuclear. Neither outcome would be a clear-cut win for society or the environment.
If Stanford really wants to reduce fossil fuel use, it has two better options.
For one, Stanford could pay polluters to pollute less and press institutions that want access to Stanford's intellectual resources. One way to do this would be to take a 180-degree turn from its current course and buy up lots of energy stocks, concentrating its holdings and then using that position to press corporate boards to make changes.
This would be expensive. The values of these companies would most likely drop, imposing a cost on the Stanford endowment. But unlike the "run" strategy, the "influence" strategy could actually make boards and executives of these companies take notice.
The second option is to help make both clean and nuclear energy cheaper than fossil fuels. Stanford has enormous intellectual and financial resources that have helped revolutionize the technology sector. Why can't it do the same with energy? This includes not only the research and development of clean-energy technology, but also its commercialization.
Neither option is cheap. And neither is necessarily the mission nor in the self-interest of Stanford. But either would be more effective than divestment.
Ivo Welch is a professor of finance and economics at the Anderson Graduate School of Management at the University of California, Los Angeles.
» Anderson MBA Student Wins 2014 National Investment Banking Competition
Saturday, January 11, 2014
Congratulations to McGill's Desautels Faculty of Management Undergraduate team, Positive Carry, and the UCLA Anderson School of Management MBA team, Point Break Investment, for distinguishing themselves amongst 250 teams worldwide as the winners of the 2014 National Investment Banking Competition. By successfully showcasing their technical skills in the final round on an international stage, McGill's Positive Carry and UCLA's Point Break Investment excelled in the Final Round and presented to over 300 students and 150 professionals in attendance. Each winning team received a $7,500 cash prize and the individuals on the winning teams have since moved forward to start their careers in industries including investment banking, private equity, asset management, and law. Thank you to all competitors for their interest and participation in NIBC 2014. We wish all of our competitors the best of luck in their future careers.
For more information on where our past competitors are employed today, please visit (NIBC.ca/past-winners).
|NIBC 2014 Winners|
Undergraduate Division: Desautels Faculty of Management
RBC Capital Markets
RBC Capital Markets
CIBC World Markets
MBA Division: UCLA Anderson School of Management
AIG Life and Retirement
Angeles Investment Advisors
» Two Legends Came Together
UCLA Anderson Reunites Two of the World’s Most Influential Money Managers
Alumni Bill Gross ('71) and Larry Fink ('76) agree: default is not an option
LOS ANGELES (Oct. 4, 2013) - The world's largest bond mutual fund manager and the world's largest asset manager -PIMCO's Bill Gross, founder and co-chief investment officer, and Larry Fink, chairman and chief executive of BlackRock Inc. - were reunited for an evening of discussion on national, international and governmental issues at the Beverly Hilton Hotel in Beverly Hills, CA, on Thursday, Oct. 3, 2013. In addition to sharing their perspectives on global economic and financial markets, the two UCLA Anderson School of Management alumni focused their conversation on an emerging concern: a new workforce that may be ill prepared to respond to the needs of advancing technology and the demands of future economies.
Read more: Fink/Gross Event
» Dialogue with Harry Markowitz
On Wednesday, September 25th, 2013, The UCLA Fink Center for Finance & Investments in partnership with the Directors Roundtable held a Conference featuring a dialogue with Nobel Laureate Harry Markowitz: Opportunities & Challenges in Applying Financial Techniques during a Crisis.
The event was attended by over 300 finance students, alumni, faculty, and investment professionals and began with a reception in the Marion Anderson Courtyard. Following this networking opportunity, the conference program ran from 6-8pm in Anderson's Korn Convocation Hall. Distinguished speakers spoke about what caused the recent market crisis and provided valuable insights for combining theory and practice for more successful results in challenging markets. The Roundtable included discussion topics on stocks, bonds & derivatives; modern portfolio theory; mark-to-market; Black-Scholes; real estate; M&A; bankruptcy claims; and litigation.
Read more: 2013 Events
» Big Data Jobs
As quantitative positions become more and more popular at firms, UCLA's Anderson School of Management Masters in Financial Engineering program has seen a 76% increase in applications. The growing program is very successful and currently enrolls ~50-60 students a year. For more, read the recent article in Businessweek: Big Data Jobs
» The Fink Center Stock Pitch Competition
On Friday, February 22, UCLA Fink Center held its second annual Fink Center AIA Stock Pitch Competition that brought together 12 teams from the top MBA programs across the country. The teams included: UCLA Anderson School of Business, Chicago Booth School of Business, Columbia Business School, UVA Darden School of Business, Duke University Fuqua School of Business, UC Haas School of Business, Indiana University Kelly School of Business, Richard
Ivey School of Business, Michigan Ross School of Business, MIT Sloan School of Management, University of Rochester Simon Graduate School of Business, and USC Marshall School of Business. The full day competition was split into two rounds, a first round in the morning and a final round in the afternoon. During the morning rounds teams competed simultaneously in 4 rooms and pitched a long or short stock that they chose from a list of 20. Each room was judged by two industry professionals and the finals were judged by 5 industry professionals. Judges came from top finance firms including: PIMCO, TCW, DoubleLine, HighMark Capital, UCLA Investment Company, Research Affiliates, MAZE Investments, and Anderson. Teams were randomly assigned presentation time and room, and the best team from each of the 4 morning rooms was chosen to proceed to the finals. During lunch, as judges deliberated, students enjoyed a keynote speech by Joel Fried, President and Director of PRIMECAP Management Company. Joel spoke about his start in investment management and how he thought he was so lucky to be paid for what he loved to do. He spoke about market crises and the ups and downs that come with working in the business. Finally, he gave students advice on how to pick the best stocks and spoke about a stock - an LED light manufacturer and an industry sector - pharmaceuticals that he likes right now.
The finals included 4 teams (UCLA, Ivey, Columbia, and Haas) presenting their buy or sell recommendation on Tesla in front of the judges and a 50 person audience. Teams presented their analyses on the company for 20 minutes followed by 25 minutes for questioning by the judges. Each team did an excellent job, and the final awards were:
1st Place: UCLA Anderson - Team GreenRock - $5,000
2nd Place: Richard Ivey School of Business - Team IV Associates - $3,000
3rd Place: Columbia - Team Number Crunchers - $2,000
The event concluded with a reception celebration where winning teams were awarded their prize by the Fink Center.
» UCLA Anderson Gets $1 Million Charitable Boost from Joel and Deanne Fried
New gift will be used to match other donors' annual contributions
UCLA Anderson School of Management alumnus Joel Fried and his wife, Deanne Fried, have pledged $1 million to be used as a matching challenge to encourage support for the school from alumni and friends.
The Deanne and Joel Fried Anderson Fund Challenge will match each new or increased annual Dean's Society donation to the Anderson Fund. The Dean's Society recognizes those donors who make annual contributions to the fund of $2,500 or more, as well as students and new alumni who donate at least $1,000.
Dean's Society donors provide a foundation of critical support for the school, helping to sustain top-notch programs and provide support for many of the school's endeavors, ranging from student fellowships and alumni programs to faculty recruitment and retention.
"We are very grateful for the Frieds' continuing generosity, which encourages our donors to become engaged with UCLA Anderson," said Judy Olian, the school's dean. "The Frieds' matching program enhances the impact of gifts from alumni and friends and provides even added reasons to support UCLA Anderson."
The Fried Challenge is designed to match new Dean's Society donations dollar for dollar, with student contributions being matched at two-to-one. In addition, any upgrades made by Dean's Society members to their current gifts will also be matched.
"DeeDee and I believe strongly in the mission of UCLA Anderson," Joel Fried said. "We want to ensure that future Anderson students have the same opportunities to learn, grow and excel that I enjoyed during my time at the school."
Joel Fried is president and director of PRIMECAP Management Co. and co-executive officer and trustee of PRIMECAP Odyssey Funds. Along with two of his colleagues, he was awarded the Domestic Equity Fund Manager of the Year Award in 2003 by Morningstar.
Fried received his B.S. degree in economics/systems science from UCLA and his M.B.A. degree from UCLA Anderson (1986). He currently serves on the board of the UCLA Anderson Fink Center for Finance and Investments.
» Finance Faculty Research Published
Why are older people especially vulnerable to becoming victims of fraud? A new UCLA study indicates that older people may miss cues about trustworthiness!
Senior author of the research Shelley E. Taylor is a distinguished professor of psychology at UCLA. Co-authors of the research also include Naomi Eisenberger, a UCLA assistant professor of psychology; Mark Grinblatt, professor of finance at the UCLA Anderson School of Management; and Ian Boggero, a former UCLA psychology research assistant. The research has been published in the journal Proceedings of the National Academy of Sciences (PNAS).
» UCLA Anderson MFEs Win 2012 Trading Challenge Competition
This year a number of MFEs participated in the University Trading Challenge at NY's Baruch College. The challenge culminated in New York on November 16, 2012.
Press Release: http://www.prweb.com/releases/prweb2012/11/prweb10159408.htm
Congratulations to the winning team and all of the MFE students who participated in this competition.
Can Zhao, Class 2012
Hui Chen, Class 2012
Bo Wang, Class 2013
Yun Lei, Class 2013
Team 2 - Students from the Class of 2013
Ensu Yang (Best individual trader winner)
Pithawat Tan Vachiramon
» The Ross Investment Competition
The Ross Investment Competition was a two-day event, November 15th &16th, 2012 featuring 11 top MBA programs from both the U.S and Europe.
The participants included:
- Chicago Booth School of Business
- Columbia Business School
- Duke - The Fuqua School of Business
- Kellogg School of Management
- London Business School
- NYU Stern School of Business
- Richard Ivey School of Business
- Stephen M. Ross School of Business
- SC Johnson Graduate School of Management
- Tepper School of Business - Carnegie Mellon University
- UCLA Anderson School of Management
The competition consisted of two rounds where the teams presented in front of a panel of 8 judges (buy-side analysts, sell-side analysts, and portfolio managers). Prior to the event, the judges put together a list of 25 investment options and distributed the list to all registered participants. Each team had to select one investment option and put together a presentation to either buy or sell the security. In addition, each team had to develop a second presentation to recommend either a buy, hold, or sell rating for Ford Motor Co., in case the team was selected for the final round. For both rounds, each team was allotted 15 minutes for the presentation and 30 minutes for Q&A.
For the first round, we pitched Tractor Supply Co. (TSCO, buy rating, PT $112). We presented very well and made it to the final round. Three other teams made it with us: Michigan's Ross School of Business, Cornell's Johnson School of Graduate Management, and Carnegie Mellon's Tepper School of Business. For the final round, we all pitched Ford Motor Co. We placed second by recommending a hold rating and PT of $12. For the second place finish, we were given a SumZero Elite membership ($1,500 value). Ross, surprisingly enough, won the competition and was awarded a $5,000 grand prize.