IESE Insight - Finance

Search fund model takes root in Europe and Latin America

Kolarova, Lenka; Dávila, Antonio; Johnson, Rob; Kelly, Peter In 2017, there was a new peak of search-fund activity outside of the U.S. and Canada, with the founding of 21 new funds. Recent growth is especially robust in Continental Europe and Latin America, according to a 2018 biennial study of this investment vehicle.

A Basic Ingredient for Finance to Avoid a New Crisis

Argandoña, Antonio A decade after Lehman Brothers' collapse and the global financial crisis, Antonio Argandoña insists that ethics is the fundamental requirement to restore our sense of security and confidence in the financial system that was cracked by the last crisis.

Backdoor Bailouts: Banks Exploiting Other Banks' Government Guarantees

Eisert, Tim; Eufinger, Christian Do banks take advantage of the assumption that they may be deemed "too big to fail" or "too interconnected to fail"? Yes, says research by Christian Eufinger. What's more, this assumption adds systemic risk, as increasingly interconnected banks have learned to exploit "backdoor bailouts."

Why Was the Sovereign Debt Crisis in Europe So Severe?

Acharya, Viral V.; Eisert, Tim; Eufinger, Christian; Hirsch, Christian Why did billions in investment, sales and so many jobs disappear during the European sovereign debt crisis? The Eurozone credit crunch deserves about half of the blame, which is a lot, according to research by IESE's Christian Eufinger and co-authors. They find two significant factors that helped cause the crunch and offer advice to free up the lending supply next time.

Why the Presence of Common Shareholders in Rival Companies Looms as a Threat

Azar, José; Schmalz, Martin; Tecu, Isabel "Common ownership" is a buzzword in academic and regulatory circles these days. José Azar's paper linking common ownership to higher airline ticket prices and other negative consequences is at the center of a new debate that could profoundly affect the investment fund industry as we know it.

Who Are Spain's Business Angels and What Do They Like?

Roure, Juan; de San José Riestra, Amparo More professional and experienced -- this is the latest profile of Spain's business angels, according to the 2018 report by AEBAN, the Spanish Association of Business Angels. What remains elusive is the presence of women and interest in the social impact of investments.

Housing Bubble?! How to Predict (and Hedge Against) Housing Downturns

Saffi, Pedro; Vergara, Carles Is the housing market heading for a fall? A study by IESE's Carles Vergara-Alert says an informed look at trading in real estate investment trusts (REITs) can let you know if there will be a decrease in housing prices in the following month.

Venture Capital and Ethnic Integration: Better Together

Samila, Sampsa; Sorenson, Olav Diversity is one thing, integration another, according to an empirical study of the impact of venture capital in the U.S. IESE's Sampsa Samila finds a one standard deviation increase in racial integration increased the positive outcomes associated with VC by at least 30 percent.

VC and Private Equity: Where Next to Invest -- Taking Brexit Into Account

Groh, Alexander; Liechtenstein, Heinrich; Lieser, Karsten; Biesinger, Markus Beyond the U.S. and U.K., where are the most promising spots for private equity and VC fund investments? The VC/PE Country Attractiveness Index ranks 125 countries -- and makes predictions for a post-Brexit world.

Banking Risk: Time to Separate CEO Compensation From Shareholders' Interests

Eufinger, Christian; Gill, Andrej When CEO pay is aligned with shareholders' interests, bank executives may be incentivized to take on too much risk, says IESE's Christian Eufinger. This is not a corporate governance failure, but a problem stemming from government guarantees -- one with a proposed solution.