In 2018, the Institute for Private Capital celebrated the 10th anniversary of the Private Equity Research Consortium (PERC). The conference has established a reputation as leading the discussion between leading academics and practitioners in the private capital arena.
North Carolina is a migration magnet. In 2018 alone, more than 87,000 people moved into the state. Perhaps the most stunning example of how migration has transformed the state is the city of Durham, a once-gritty town that made its name in tobacco and textile manufacturing. Dr. Jim Johnson, director of the Urban Investment Strategies Center, believes taking advantage of Durham’s migration dividend and balancing it with more inclusive and equitable development is an imperative for success.
The Kenan Institute is proud to work in partnership with Gallup to explore a more holistic view of entrepreneurship in the U.S. with a focus on those who are driving economic growth in new ways. This work was featured at an event co-hosted by the Kenan Institute and held at Gallup headquarters in Washington, D.C. on Oct. 30, 2018.
China’s venture capital funding has contracted significantly since mid-2018. According to Christian Lundblad, director of research at the Kenan Institute, this is a byproduct of U.S. trade policy, some domestic Chinese investment policy and the usual ups and downs in a developing market. Some experts are now questioning if this will be China’s “tech bubble."
Using a novel dataset on global private equity investments in 19 industries across 52 countries, we find that labor productivity, employment, profitability, and capital expenditures increase for publicly-listed companies in the same country and industry as private equity investments. Our results show that positive externalities created by private equity firms are absorbed by other companies within the same industry.
This year Rethinc. Labs joined the Duke Quantum Center and the IBM Quantum Hub at NC State to bring their Financial Services focus to the Triangle Quantum Computing Seminar Series. For our next discussion we welcome Dylan Herman, from the JPMorgan Chase Future Lab for Applied Research and Engineering (FLARE). The focus of the FLARE quantum program is to develop quantum algorithms for financial applications and quantum-resistant cryptographic solutions.
In the U.S. automobile industry, manufacturers distribute products through dealers and rental agencies. To mediate direct competition between the two intermediaries, manufacturers adopted buyback programs to repurchase used rental cars from rental agencies and redistribute them through dealers.
We examine a brick-and-mortar retailer’s choice of which product to include in a promotional display (e.g., an “endcap” display). The display provides a visibility advantage to both the featured product and its category, but it also has consequences for customer traffic and substitution.
This paper provides evidence on the determinants and economic outcomes of updates of accounting systems (AS) over a 24-year time-span in a large sample of U.S. hospitals.
This paper aims to advance the use of numerical experiments to investigate issues that surround the design of cost systems. As with laboratory and field experiments, researchers must decide on the independent variables and their levels, the experimental design, and the dependent variables. Options for dependent and independent variables are ample, as are the ways in which we can model the relations among these variables.
We consider a decentralized supply chain consisting of a retailer and a supplier that serves forward-looking consumers in two periods. In each period, the supplier and the retailer dynamically set the wholesale and retail price to maximize their own profits. The consumers are heterogeneous in their evaluations of the product and are strategic in deciding whether and when to buy the product, choosing the option that maximizes their utility, including waiting for a price markdown.
We examine realized spreads and price impact in clock and trade time following each trade in all common stocks from 2010 to 2017. The term structure of realized spreads (price impact) is sharply downward (upward) sloping, implying that (a) market maker profitability is sensitive to speed, and (b) the choice of the horizon of measurement is critical when drawing inferences from spread decompositions.
In this paper, we study within firm heterogeneity in the discounts offered to consumers. Utilizing transaction level data from a large home appliance retailer, we quantify the extent of both across and within-salesperson heterogeneity in the discounts they negotiate with consumers.
We propose a new theory of systemic risk based on Knightian uncertainty (“ambiguity”). Because of uncertainty aversion, bad news on one asset class worsens investors’ expectations on other asset classes, so that idiosyncratic risk creates contagion, snowballing into systemic risk.
We find that Credit Rating Agencies (CRAs) see through transitory shocks to credit risk that stem from transitory shocks to equity prices, while market-based measures of credit risk do not. For a given stock return, CRAs are significantly less likely to downgrade firms with transitory shocks than those with permanent shocks. However, credit default swap spreads and model-implied default probabilities do not distinguish between such shocks.
The Kenan Institute's Future of Fintech: Blockchain, Cryptocurrency and the Emerging Ecosystem symposium was featured in a WRAL TechWire story on Jan. 25. In partnership with Ripple, the event brought together business leaders, academic researchers and public sector financial regulators to discuss emerging trends, issues and opportunities in the financial technology sector.
Little is known about how TMT members affect a founder-led firm’s performance later in a firm’s life. Using novel methods and a sample of over 2,000 firms, we find that although team structure has a significant impact on the performance of non-founder-led firms (consistent with past literature), it has little to no effect on the operating performance of founder-led firms, suggesting that founder CEOs may exert too much control.
We examine the implications of less powerful forward guidance for optimal policy using a sticky-price model with an effective lower bound (ELB) on nominal interest rates as well as a discounted Euler equation and Phillips curve. We find that, under a wide range of plausible degrees of discounting, it is optimal for the central bank to compensate for the reduced effect of a future rate cut by keeping the policy rate at the ELB for longer.
Terrorist attacks. Oil spill disasters. Ebola outbreaks. Our world today is defined by what Jim Johnson, director of the Kenan Institute-affiliated Urban Investment Strategies Center, terms an atmosphere of “certain uncertainty.” Johnson spoke on what individuals need to survive this new reality at the Feb. 12 Carolina Conversations event at UNC-Chapel Hill.
Kenan Institute Executive Director Greg Brown, Director of Research Christian Lundblad and Senior Research Associate Philip Howard's research warns of the risks of investing in crowded hedge funds – particularly during periods of market distress. “The crowdedness of an equity position is an important ingredient for characterizing risk,” the trio wrote in their latest paper "Crowded Trades and Tail Risks."