Knowledge@wharton

The bombs rocked the London Underground within 50 seconds of each other near the end of rush hour on July 7 2005 killing dozens of passengers and injuring hundreds more. It was the worst attack on London since World War II. But the majority of the Underground or the Tube as it’s known locally was operating again by the next morning according to Tim O’Toole the Underground’s managing director and chief executive who spoke at the recent 11th annual Wharton Leadership Conference. What made that possible O’Toole said was the response from the Underground’s frontline employees not just at the bomb sites ”but across the entire network.” See acast.com/privacy for privacy and opt-out information.

Trying to determine what things are worth is a huge challenge in today’s business world where companies are increasingly being pressed to account for the changing values of complex financial instruments -- from insurance policies to employee stock options to exotic derivatives. Consequently firms are turning to ever more intricate financial models that attempt to deduce values using an array of indicators even though such models are complicated and can be easily manipulated. This dilemma was the topic of the Tenth Annual Wharton/Oliver Wyman Institute Risk Roundtable held on May 31-June 1. See acast.com/privacy for privacy and opt-out information.

In 2000 Bill Browder manager of The Hermitage Fund sifted through reams of obscure Russian securities registration data to piece together a presentation outlining how managers of the Russian oil company Gazprom were shifting corporate assets to entities controlled by friends and relatives. Browder shared his findings with journalists who then wrote about the case leading to the firing of the firm’s CEO and subsequent reform. Hermitage’s role in the Gazprom shake-up is the basis of new research exploring the role of public shame in corporate governance. The research was presented at a recent Wharton Impact Conference sponsored by the Weiss Center for International Financial Research. See acast.com/privacy for privacy and opt-out information.

In 1993 a television ad featuring ”Harry and Louise” -- a ”typical” American couple dismayed by the Clinton administration’s universal health care proposal -- helped to kill health care reform in the U.S. for the next decade. With the 2008 presidential election in sight the debate has resurfaced but are the prospects for universal health care any better today? In an ongoing study of health care systems spanning five countries Arnold J. Rosoff Wharton professor of legal studies and business ethics has identified a set of factors that in one combination or another come into play when a country commits to adopting universal health care. This time he says one thing seems likely: Instead of a health care ”revolution” in the U.S. change will come in increments. See acast.com/privacy for privacy and opt-out information.

When your family business involves an extended network of 52 family shareholders as it does for Bukit Kiara Properties a Malaysian real estate development firm simply pulling everyone together for family dinner can be hard work. But N.K. Tong who co-founded Bukit Kiara with his father says there’s just one person to call: ”My auntie.” Tong’s aunt plays a role some scholars describe as ”chief emotional officer ” an informal position usually filled by a family member or close advisor. But the topic is not as warm and fuzzy as it sounds: Not only can the job be stressful it can fall by the wayside as businesses are passed on to succeeding generations. See acast.com/privacy for privacy and opt-out information.

U.S. financial markets were battered at the end of last week because of a dramatic sell-off of Treasury bonds. The yield on 10-year bonds which has been rising since May neared the critical barrier of 5.25% on June 8 -- the highest level in five years. Media reports suggest that turmoil in the bond market could continue this week making investors anxious about whether interest rates might go up and bring to an end the period of cheap money that has buoyed up asset markets and also funded a world-wide boom in mergers. Why are bond yields so high? What do these developments mean for stocks and other asset classes? Knowledge at Wharton discussed these questions with Jeremy Siegel a professor of finance at Wharton and author of The Future for Investors. See acast.com/privacy for privacy and opt-out information.

In April Rupert Murdoch made a $5 billion offer to buy Dow Jones and Co. which publishes the Wall Street Journal and also owns Dow Jones Newswires and Marketwatch.com. The Bancroft family majority owners of Dow Jones initially rejected the offer but came back several weeks ago to say it would consider it along with offers from any other groups. Murdoch’s move has dismayed some Journal staffers who worry that the paper’s editorial quality and objectivity will suffer. Murdoch though seems to have more in mind for this acquisition than just getting control of the Journal. Knowledge at Wharton has asked Wharton management professor Larry Hrebiniak and Joseph Turow professor of communication at the Annenberg School for their thoughts on this possible deal. See acast.com/privacy for privacy and opt-out information.

It seemed only right that James Watson who co-discovered the structure of DNA with Francis Crick and Rosalind Franklin was the first to receive a DVD holding the sequence of his own DNA produced by 454 Life Sciences a division of the Swiss drug giant Roche and academic researchers. While DNA mapping technology under development at Roche and other companies has the potential to bring the long-awaited era of personalized medicine closer there are enormous ethical legal and investment hurdles to building successful business models based on decoding an individual’s DNA according to Wharton faculty and executives in the industry. See acast.com/privacy for privacy and opt-out information.

Think of them as the ”walking dead ” a type of customer who currently maintains service with a particular company but whose next action will most likely be to discontinue that relationship according to a new study that examines how the customers of a telecommunications firm acquire and discard services over time. The paper -- ”Modeling the Evolution of Customers’ Service Portfolios ” by Wharton marketing professors Peter Fader and Eric Bradlow and a former Wharton PhD student -- focuses in part on whether it is possible to predict future purchasing patterns by looking at past buying behavior. See acast.com/privacy for privacy and opt-out information.

As baby boomers retire and start spending their nest eggs they will need new financial products to make their money last according to speakers at a recent Wharton Impact Conference titled ”Managing Retirement Payouts: Positioning Investing and Spending Assets.” The conference explored emerging patterns in spending during retirement and debated new ideas to help retirees manage their finances after leaving the workforce. See acast.com/privacy for privacy and opt-out information.

Last week the United States’ first major immigration reform bill in two decades collapsed in the Senate. Buried in the ongoing debate was the potential economic impact of a measure that could change the composition of America’s workforce in significant ways: By cracking down on illegal immigration the legislation could constrict the future supply of low-skilled workers while a move to skill-based visa evaluations could provide more workers for booming high-tech industries. Meanwhile it isn’t exactly clear what impact the country’s 12 million illegal residents have on its economy. Experts from Wharton and elsewhere weigh in. See acast.com/privacy for privacy and opt-out information.

Lucrative deals are hard to come by these days for investors looking to extract value from distressed companies around the world. As global markets become increasingly sophisticated success will be determined by those who know how to navigate local corporate legal and cultural terrains. At the 2007 Wharton Restructuring Conference turnaround consultants and distressed asset investing experts noted that calibrating strategies for individual markets obtaining accurate information and building trust are more important for a successful outcome than spreadsheets and financial models. ”What you don’t know will kill you ” one panelist said. See acast.com/privacy for privacy and opt-out information.

When it comes to rolling out new goods and services companies tend to choose one of two strategies as a way of generating interest in their products whether it’s Apple’s iPhone or Microsoft’s Surface Computing effort. One is pre-announcing the product to give customers partners and even competitors advance notice of what’s to come. The second approach is the surprise unveiling where a company hopes to make a big splash by giving few advance hints about an upcoming release. Which approach is best? It depends -- on the product the company and its position in the market say experts at Wharton. See acast.com/privacy for privacy and opt-out information.

Earlier this month Cerberus Capital Management bought 80.1% of Chrysler Group from German auto maker Daimler-Chrysler effectively ending a nine-year marriage between the two that never quite worked out. The expectations created by this acquisition are huge and revolve in part around Cerberus’s ability to make a deal with the United Auto Workers union that would include restructuring billions of dollars of retirement and health-care benefits -- a burden that both Ford and GM -- but not Toyota -- also carry. We asked Wharton management professor John Paul MacDuffie co-director of the International Motor Vehicle Program to give his views about Chrysler Cerberus high gas prices and other auto-related issues. See acast.com/privacy for privacy and opt-out information.

Some shoppers just can’t help themselves and buy mostly on impulse without regard to price. Others are die-hard bargain hunters who only open their wallets for a discount. Then there are the strategic consumers who are willing to buy full-price sometimes but at other times they will wait for a bargain. According to new research by Gérard P. Cachon professor of operations and information management at Wharton and doctoral student Robert Swinney it’s these customers that retailers need to focus on in order to reap the full benefits of lean retail inventory management and variable pricing. See acast.com/privacy for privacy and opt-out information.

With an estimated $1.2 trillion under management it’s clear that hedge funds must have an effect on the financial markets. The question is: How? In one of the first studies to shed light on that subject researchers at Wharton and three other business schools find that hedge funds’ efforts to improve companies they hold big stakes in have spillover benefits for all shareholders: a quick 5% to 7% jump in stock prices. The gains measured as an ”abnormal return” on top of the broad market’s were nearly 11% when a hedge fund pushed for the targeted company to be sold. See acast.com/privacy for privacy and opt-out information.

We’re all familiar with titles like chief executive officer chief financial officer and chief operating officer. We have even grown used to chief technology officer chief marketing officer and chief diversity officer. But what about chief talent officer chief cultural officer chief innovation officer chief privacy officer chief apology officer and chief geek to name just some of the more contemporary titles in today’s companies? On the surface this looks like title inflation -- an overabundance of C-level jobs that cheapen the prestige that used to go along with promotions. Yet according to several Wharton faculty members there is more to this story than inflated egos.  See acast.com/privacy for privacy and opt-out information.

According to estimates micro and small businesses contribute almost 50% of South Africa’s total employment and 30% of its gross domestic product. Until recently however the impact of poor health and in particular HIV/AIDS on these enterprises -- ranging in size from single owner-workers to companies with 100 employees -- has been largely overlooked by researchers. A new study by Li-Wei Chao from the University of Pennsylvania’s Population Studies Center Mark V. Pauly Wharton professor of health care systems and others examines how owner health determines the fate of small businesses in South Africa and impacts the larger economy as well. See acast.com/privacy for privacy and opt-out information.

”The U.S. pursues securities law violations with a regulatory intensity unmatched elsewhere in the world ” according to John C. Coffee Jr. director of the Center on Corporate Governance at Columbia University Law School. At a recent Wharton Impact Conference on international corporate governance Coffee said that although securities law enforcement can lower the cost of capital it may deter some foreign firms from cross-listing in U.S. markets. Still he argues strong enforcement is critical for creating good governance and adding value to corporations and investors stand to gain from it. See acast.com/privacy for privacy and opt-out information.

Dana Gioia (pronounced Joy-a) claims to be the only person in history who went to business school to be a poet. Having earned a degree from Stanford’s graduate school of business he worked 15 years in corporate life eventually becoming vice president of General Foods. In 1991 Gioia wrote an influential collection of essays titled ”Can Poetry Matter?” in which he explored among other themes the nexus between business and poetry. Since 2002 he has been chairman of the National Endowment of the Arts where he has overseen programs aimed at making Shakespeare and poetry recitation more popular in the U.S. Gioia who is a speaker at the Wharton Leadership Conference in Philadelphia on June 7 talked about these ideas with management professor Michael Useem and Knowledge at Wharton. See acast.com/privacy for privacy and opt-out information.