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Issue No. 5, Fall 2012

The ABCs of personal Finance New York Trader Comes to Kansas Venture Capital: Angels to the Rescue

close calls and rebounds in real estate dana anderson vice chairman macerich board of directors

August brought the beginning of Year Two on the job as dean of the University of Kansas School of Business, and it is my great pleasure to present the fifth edition of Annual Report of KU Finance, a publication of which I’m quite proud. Our finance faculty, alumni and students continue to build on their reputations, and the stories in this issue reinforce their excellence. You’ll read about Dana Anderson, a distinguished alumnus and member of my advisory board, who learned how to reinvent himself in business to become a leader in real estate. It has been my great pleasure to get to know him during my time as dean. He is a great friend of the School of Business and a testament to the caliber of KU business alumni found all across the globe. I am deeply grateful to Dana Anderson for his contributions to the university – both financial and intellectual – and for his generous contribution to our new building campaign. Be sure to read about our talented students in finance. You’ll hear about their success in and outside of the classroom, including their consistent victories at financial competitions, proving externally the strength of our finance program and its students. Our students are earning top-rate placement in internships and jobs in some of the finest financial firms in the industry. I’m so proud of my Jayhawks, and you should be too.

As I begin my second year as the director of the Finance, Economics and Decision Sciences area, it’s a good time to look back to the activities that took place in the previous year. The successful events of the past year are largely due to the efforts of my finance colleagues. For example, George Bittlingmayer continues to play an important role in organizing the Finance Advisory Board meetings and in co-editing the Annual Report of KU Finance. Bob DeYoung, Chris Anderson, Paul Koch and Jide Wintoki all served on the search committee that led to the successful hiring of two new assistant professors: Brad Goldie, from Penn State, and Lei Li, from Boston College. Our new director of the MBA programs, Cathy Shenoy, and the MBA team (Chris Anderson served as the finance faculty member on this team) have spearheaded exciting changes in the full-time MBA program and in the working professional MBA program. Both of these new MBA programs will now include a dedicated track in finance, as well as the opportunity for

welcome to THe annual report of ku finance

This edition of Annual Report of KU Finance will also familiarize you with some of the excellent research being conducted by our faculty. Felix Meschke’s study on the value of corporate political contributions continues to earn national media attention – including an Election Day mention in The New York Times. You can also read more about George Bittlingmayer’s contribution to the KU/Kauffman Foundation Early Stage Investing Conference. His analysis on the role of venture capital in finance is worth a look, and he deserves praise for his work as faculty editor of this publication. Thank you, George! I continue to travel the country, meeting devoted alumni and friends who are excited about our future here at the School of Business. As alumni in finance, everything you do, every success you achieve, contributes to the Jayhawk brand. Thank you for your continued support! As always, Rock Chalk!

Table of contents

05 The ABCs of Personal Finance 06 Close Calls & Rebounds in Real Estate 08 Honing Finance & Presentation Skills on the National Stage 09 Follow the Data in Research & Practice 10 Finance Internships

Neeli Bendapudi Dean

14 Troubled Venture Capital: Causes & Cures 17 Life After KU

students to obtain finance certificates – more in depth study in focused areas of finance. Kara Tan Bhala and Dieter Schrader have worked hard to continue the success of the school’s Finance Scholars program, which provides enrichment and internship opportunities for our most gifted students. Bill Beedles, in his new role as director of the undergraduate program, has worked to establish an honors program in the school, which is also open to talented students of finance. As you can see, my colleagues have been instrumental in leading the way in making the school even better. I’m personally grateful for their help and support. More changes in the school are in store in the upcoming year. Of course, the support of our alumni continues to be a key factor in our success; your efforts have made, and will continue to make, the school a better place to learn, teach, and serve.

19 Student Initiative Above & Beyond Coursework 20 The Hectic, Aggressive & Challenging World of Trading

crimson & Blue sponsors

21 Grounded Investing Advice from the Heartland 22 Preventing Future Financial Meltdowns 23

2011-2012 Awards & Recognition

24 Donor Recognition 25 Finance Advisory Board

Steve Hillmer Area Director Finance, Economics and Decision Sciences

26 Faculty Awards & Publications

The finance faculty and the KU School of Business thank these companies and individuals for their sponsorship of the Annual Report of KU Finance.

Dean Neeli Bendapudi

The ABCs of personal finance

Area Director for Finance, Economics and Decision Sciences Steve Hillmer

It’s easy for people to be persuaded to buy things they don’t need or can’t afford, and most don’t understand the long-term

Faculty Editor George Bittlingmayer Director of Communications Toni Dixon Communications Coordinator Austin Falley


Writer Kim Gronniger Project Manager Suzanna Hicks Photographers Ann Dean University of Kansas archives Design Friesen Design, Inc. Printing Sun Graphics

CONTACT US The University of Kansas School of Business Summerfield Hall 1300 Sunnyside Avenue Lawrence, Kansas 66045-7601 P: 785-864-7500

Out of sight, out of mind. One of the unexpected ways the Annual Report of Finance has helped me – and our students – is by providing reminders of the varied and interesting work that KU alumni and other members of our “KU Finance Community” undertake. For example, in working on this issue, I got a chance to speak with Dana Anderson and become better acquainted with his career and involvement at Macerich, a real estate investment trust (REIT). His story is captivating, and the issues and lessons that came out of that story and this industry have substantial relevance for our students. Thus, when a student in my investments class asked about possible topics for a presentation, I didn’t hesitate to suggest a close look at REITs and the dramatic events described by Dana Anderson. It’s a story not in any textbook and provides very useful knowledge and an application of key course concepts, as well as inspiration and a positive example. As the articles in this issue on current and recent students confirm, the record of achievements pioneered by Dana Anderson and many others will continue. I was especially pleased to read about the team KU fielded for the CFA competition and the efforts of the Finance Club to engage students and alumni. And yes, faculty also play a role in KU’s luster, and this issue features three with special luminescence: former JPMorgan trader Steve Koenig, who brings a huge amount of “street cred” and enthusiasm to our students; Bill Lewis, whose course on personal finance will no doubt save many students much grief; and Felix Meschke, who brims with ideas and knowledge about the world of finance.

implications. That won’t be true for the students who take Personal Finance, taught by William (Bill) Lewis, a former oil company executive. They receive sound financial advice to help them establish a budget, resist impulse buying, and reap the benefits of compound interest long after they pass through the Campanile. Most of the 100 or so students who take the course each semester know little about managing money, and only about a third are business majors. A quiz given the first day of class typically reveals that students don’t know the interest they pay on credit cards or the auto insurance coverage they carry. Lewis, who was a financial executive with Exxon and is now a popular lecturer in finance, encourages students to take charge of their finances and prepares them for negotiating with banks, car dealers and mortgage companies. Unlike many financial advisors, he urges students to use credit cards instead of debit cards, provided they pay off the balance each month. With credit card charges and payments, students have about 45 days to take advantage of the time value of money and to build a credit history. “If you make a mistake and misjudge your finances, you still have time to correct the situation if you’re using a credit card,” he says. After completing the Personal Finance course, a student proudly reported to Lewis that she and her grandmother had negotiated a better price and successfully thwarted a car salesman’s attempts to assess unnecessary administrative fees. One student encouraged her boyfriend to take the course during a subsequent semester to gain “tools in life” and demonstrate that he was serious about a more permanent relationship. A business major told Lewis that while his core courses taught him the fundamentals of taking care of other people’s money, they didn’t show him how to take care of his own. Lewis, who earned bachelor ’s degrees in mathematics and business administration and a master’s degree in finance from KU, emphasizes that students’ money is their own and encourages them to be prepared and assertive. “You should always be professional and well prepared in any transaction. There is no reason you can’t ask direct questions or feel free to shop around for a better deal,” he says.

He also advises them to consider the implications of any purchase. For example, discretionary spending of $500 on speakers today may be potentially worth $15,000 at retirement with investing. “Eventually the speakers are going to stop working, but if you invest that same money it will continue to grow through compounding and be much more valuable in the future,” he says. He advocates self-discipline and sticking to a budget “even if it means eating rice and beans” and resisting discretionary spending. “Truly, everything is important and contributes to financial wellbeing, whether it’s half a percentage point on an interest rate or two percent back on credit card purchases,” Lewis says. His practical pointers for managing money include using tools such as Quicken and to track income and expenses. His course also encourages reading books and personal finance blogs and always negotiating lower rates. Lewis’ goal is to ensure all students leave with a clear personal financial roadmap and a vision for achieving financial independence. His bottom line advice? “Save early and save often.”

bill lewis Ask questions, shop around, and save

George Bittlingmayer Wagnon Distinguished Professor of Finance Faculty Editor of Annual Report of KU Finance

THe annual report of ku finance I 05

Close calls & rebounds in real estate Dana Anderson understands reinvention, whether it’s recovering from near bankruptcy as a young real estate

developer or his company’s recent transformation of an

enclosed mall into a LEED Gold-certified, open-air upscale shopping destination.

rafted in the spring of 1956 six hours short of a marketing degree, Anderson left KU and an executive training program with Kansas Power and Light to join the military. Anderson completed those six hours and rejoined KPL in 1959, working with builders on allelectric homes before saving “a modest amount of money” and going into business with a partner to develop subdivisions for returning GIs. Soon after, the Air Force moved a large part of its operations out of Topeka, resulting in a glut of houses and “a very painful lesson about undercapitalization and overaggression,” recalls Anderson.

dana anderson vice chairman Macerich board of directors

06 I THe annual report of ku finance

At 28, he was flat broke. An attorney advised him to file for bankruptcy, but Anderson made arrangements with creditors and stayed in real estate. A chance meeting with two New York entrepreneurs put him on a new path. Mace Siegel and Richard Cohen, successful strip mall developers, came to Topeka in 1965 and Anderson brokered a deal to create a stand-alone

discount store that survives to this day, most recently as a Richman Gordman’s. Anderson joined Macerich in 1966, ultimately helping build 17 centers throughout the Midwest and in Annapolis, Maryland. Eventually the company invested in the White Lakes Mall in Topeka, thus entering the shopping mall business. The company invested much of the $2.5 million obtained from refinancing White Lakes Mall to acquire, renovate and expand other malls, over time cultivating a new niche that has since evolved into upscale portfolio properties anchored by retailers like Nordstrom and Bloomingdale’s. Macerich went public as a REIT (real estate investment trust) in March 1994 and now holds interests in some 70 shopping centers in 18 states. There have been tense moments. The company’s existing enclosed mall in Santa Monica, California was in process to be demolished and negotiations were well under way with anchor stores and

other tenants when the recent economic downturn hit. “We were already off the diving board,” recalls Anderson. “It was just a question of how we would hit the water.” The completely new Santa Monica Place opened in August 2010. In addition to aesthetic, accessibility and comfort factors inherent in creating highcaliber structures, Macerich also integrated sustainability and environmental principles through energy efficient applications and repurposed materials. For example, the former enclosed parts of Santa Monica Place were converted into concrete used to pave parking areas, a move “that makes economic and environmental sense,” says Anderson. More than 90 percent of construction materials, totaling 68.5 million pounds, was diverted from landfills, and the open-air construction now reduces or offsets more than 3 million kWhs in electricity consumption. Anderson, who earlier served as Macerich’s chief operating officer and executive vice president, is now vice chairman of its board. “Experience is a great and sometimes punishing teacher for those of us who are strong headed,” Anderson says with a laugh, but he’s grateful he stayed in real estate despite his first inauspicious foray into residential subdivisions. In fact, the lessons he learned then and with the “outstanding group

macerich complexes Left: Queens Column 2: Santa Monica Place, Santa Monica, Calif. Column 3: The Oaks, Thousand Oaks, Calif. Right: The “ball” at Danbury Mall

of individuals” at Macerich helped him persevere through the recent recession. Macerich stock, which peaked at over $100 in February 2007, dropped to $5.80 in May 2009. The company laid off about 200 people in two waves a couple of years ago. Commercial rents dropped, tenants went bankrupt, and the company’s diminished cash flow forced it to pay dividends in stock instead of cash. Today, however, the stock has rebounded to a respectable $58 a share and the cash dividend has been restored, says Anderson. The ever-evolving company is currently capitalizing on a trend toward large off-price centers featuring retailers like Saks Off Fifth Avenue, Last Call by Neiman Marcus, Bloomingdale’s Outlet, Banana Republic, Cole Haan and others. While entrepreneurs often fling themselves wholeheartedly toward their passion, Anderson underscores the importance of relying on the expertise of others, especially when the going gets tough. “Most people are really competent in a limited number

of areas, and it’s not good to think you can do everything,” he says. The same can be said for companies. Whether it’s expertise, advice, or a financial contribution, Anderson believes “the best thing we can do is pass what we have on to help someone else.” While School of Business graduates comprise a small portion of the University’s alumni base, Anderson says collectively “they give much more than other graduates, in part because many of them can. If we want America to truly be the land of opportunity, then we need to do what we can to help others achieve their goals and do whatever is necessary to have it stay that way.” Anderson has certainly done his part, from helping pay for college educations for several individuals to pledging $4 million in 2001 for the KU’s

strength and conditioning center. Additionally, he and his wife, Sue, made a $10.5 million gift in 1996 for the Dana, Sue and Justin Anderson Family Athletics Building and the Dana, Sue and Justin Anderson Family Business Opportunity Fund to be used for unrestricted purposes by the School of Business. Justin, one of Anderson’s three sons, is also a KU Business School graduate and a Lawrence dentist. Anderson has also donated to the Kenneth Spencer Research Library’s Kansas Collection. As he became “older and more successful,” Anderson, an admirer of Winston Churchill, discovered a quote that continues to resonate with him: “We make a living by what we get, but we make a life by what we give.” Anderson is serving on Dean Neeli Bendapudi’s business school capital campaign committee to raise funds for a new building and is hopeful that his peers will join the effort to “make it happen quickly” to continue to draw highcaliber students and faculty to Lawrence in the years to come.

Follow the data, in research & practice Curious and quick-witted, KU professor Felix Meschke loves sparring with colleagues over

lunch or a game of pingpong and coming up with serendipitous research topics that are

KU Team Wins CFA Kansas City Challenge Thad Sieracki, John Pecis, Jake Painter and Sean O’Neill

Honing finance & presentation skills on the national stage Students make their case to investment professionals

Four KU students reached the semifinals in the Regional Americas portion of the global CFA

Institute Research Challenge. The Challenge provides an opportunity for university teams from 55

countries to compete on the quality and depth of their equity analysis through a written investment report and oral presentation.

The group won the 2011-2012 Kansas City Challenge, beating competitors from five area universities, before competing with 44 teams in the Regional Americas Challenge in New York City in April.

professionals in the investment community “who perform equity analysis every day as part of their job, and provide feedback and guidance from an industry perspective,” Lytle says.

Laurian Lytle, Ph.D., CFA, president of the Kansas City CFA Society, directs the local competition, and Dieter Schrader serves as the KU faculty adviser. Lytle began coordinating area participation in 2010 and continues to build on the enrichment opportunity for students interested in a career in the investment industry.

The 2011-2012 teams analyzed Garmin Ltd. Team members typically spend about 150 hours or more on the research challenge, “indicating a level of passion and interest to prospective employers,” Lytle says. “The teams compete on the quality of their analysis, which involves analyzing the company and the industry in which it operates, projecting future financial results and estimating the company’s future value, as well as other areas of analysis.”

Te a m s c o m p r i s i n g undergraduate and graduate students are given “a realistic equity research experience” and are mentored by

Since the Kansas City-area

program’s inception, both KU teams have advanced to the semifinals of the Regional Americas Challenge. Lytle, who earned her doctorate at KU, notes that the level of research undertaken thus far by teams competing in the CFA Institute Research Challenge has “clearly surpassed my expectations.” In addition to honing their analytical and presentation skills and gleaning expertise from competition judges and graders, participants also benefit from interacting with Kansas City CFA Society members. Thad Sieracki, a northern California native who completed a master’s degree in finance last spring, works as a strategy analyst for Santander

US/Sovereign Boston. “The experience allowed me to meet people and have a basis of conversation to frame a perspective about what I’m looking for in a career,” he says. “As a graduate student living in Kansas City and attending most of my classes at the Edwards Campus, it was also really nice to be more connected to the university and Lawrence in this way.” J o h n P e c i s , a To p e k a native and an investment analyst with Palmer Square Capital Management in Leawood, Kansas, says the most gratifying aspect of participation for him was “working with classmates and faculty to put the presentation together piece by piece and performing well in New York City to do our part in showing the finance community the caliber of faculty present at KU. This was really a testament to our team’s hard work and the faculty’s superior mentorship.”

relevant for practice and resonate with “more people than just a handful of academics.” To that end, he and two Minnesota colleagues, Tracy Wang and Rajesh Aggarwal, started with sandwiches and ended with an intriguing research paper; they found that for publicly traded companies, political contributions have been bad investments. “Corporate Political Donations: Investment or Agency?” appeared in Business and Politics and created an international sensation, with coverage in major periodicals like Wall Street Journal, Financial Times, The New York Times,TIME Business and others clamoring to report on results that Meschke describes as “counterintuitive.” “My theory was that companies that make political contributions have good reasons for doing so and get some sort of benefit, but my co-author thought CEOs use their positions to donate to causes they like, which may or may not benefit their companies.” After sifting through Federal Election Commission political

donation data, the authors discovered that the 13 percent of companies that make political contributions actually underperform compared to peers that do not give. Quick to emphasize that “correlations don’t imply causality,” Meschke tried to come up with several “but wait” scenarios before ultimately succumbing to the results. “I thought that for companies doing business with government entities, political donations wouldn’t hurt or contributing to candidates who won their elections would have some positive effect, but we didn’t find evidence for that either,” he says. “In general, giving money to politicians doesn’t improve stock performance.” CEO motivations for political giving could run the gamut from supporting pet causes, positioning for a new post, “spending the night in the Lincoln bedroom or securing a wife’s ambassadorship to

Italy,” Meschke surmises, “but that’s not measurable. We can only infer indirectly that that is what’s going on. The data suggest, though, that political contributions do not benefit shareholders.” Additionally, Meschke and his co-authors found that companies with more agency conflicts (i.e., abnormally high executive compensation or poor acquisitions) typically give more to political causes without yielding any discernible corporate or shareholder benefit. German-born Meschke thrives on the rigorous data review and “robust” discourse with cohorts and peer reviewers through each step of the publication process. “It’s a little like negotiating with a home inspector,” Meschke says, laughing. “You have to convince them or wear them down, whatever it takes.” One of his most gratifying presentations regarding the political contribution study was to the KU Finance Advisory

The questionable value proposition of corporate political contributions Board. He presented highlights of the work and was impressed by the level of inquiry and insights offered, noting how fortunate the business school is to “have an interface with people like this in the business and finance community who are providing valuable perspectives.” Meschke also strives to cultivate spirited exchanges in his undergraduate and MBA classrooms, encouraging students to “hone their skills to deal with an incredible amount of data.” Although Berkshire Hathaway chairman Warren Buffet “used to read 10-Ks in the bathtub to determine whether to buy companies like Coca-Cola,” Meschke says, “today’s stocks are traded in nanoseconds based on computer algorithms. Understanding data and algorithms is essential for all business majors, not just for finance students. This is how Netflix and Facebook know what to recommend to users.” After earning a doctorate degree in Arizona (too hot) and a former teaching position in Minnesota (too cold), he describes Lawrence and the University of Kansas as “just right.”

Felix meschke’s “Corporate Political Donations: Investment or Agency?” appeared in Business and Politics, Wall Street Journal, The New York Times, Financial Times, TIME Business and others.

THe annual report of ku finance I 09

Wichita senior John Bartak worked for Cerner Corp. in Kansas City setting up client bank accounts in a system designed to highlight cash position visibility and foreign currency exposure. Majoring in finance with concentrations in international business and information systems, he also assisted in creating a model to better regulate and analyze bank service fees and helped assess internal audit procedures for the legal department.

Finance Internships

“The internship opened my eyes to opportunities beyond stocks and bonds and helped me figure out how to network within that kind of industry,” Bartak says. “It gave me a solid overview of finance.” Bartak is a teaching assistant and past president of Sigma Nu fraternity, a member of the Interfraternity Justice Board, a Finance Scholar and a volunteer for Natural Ties, a student-run organization that pairs children with disabilities with a mentor.

Each summer KU students get a chance to work in professional settings across the country. The internships help

them cultivate skills and determine strengths and preferences

so they can make informed career decisions. An extra bonus often includes interaction with KU alumni.

Dan Bjornson worked as a summer analyst at Bank of America Merrill Lynch Investment Banking in New York City. A finance major, he assisted colleagues in advising companies, creating road-show pitches, packaging initial public offerings and facilitating mergers and acquisitions. Bjornson worked in the industrials group, which comprised real estate businesses and packaging, chemical and steel companies. He found the work “rewarding,” especially his participation in a $750 million bond offering for a steel company, which should come to fruition soon. Bjornson credits a corporate finance class taught by Bill Beedles, a futures and options class taught by Kelly Welch and proficiency in Excel with providing him the fundamentals to be a productive member of the team. A teaching assistant for Dieter Schrader’s Finance Scholars class, he adds that the program’s intensive career preparation also helped him “acclimate to the working environment and adjust to changing situations.” Participation in the Finance Scholars program in combination with the internship “have shown me what I can learn and where I can go,” he says.

Connor Blankenship’s internship comprised a “culmination of everything learned” at KU through finance and accounting classes and participation in the Finance Scholars program. The Tulsa senior worked at Grant Thornton in Chicago in the transaction advisory services group, learning more about buy side/sell side initiatives and due diligence applications. His varied responsibilities included helping with engagement letters, researching potential clients for business development and contributing to financial reports. “The best part was working as a team with all kinds of people, including partners and senior associates, from different groups within the company,” he says. “I’m interested in finance, accounting and law, so one of the main reasons I wanted to have an internship was to see which business area to pursue,” he says. Blankenship is a teaching assistant for Finance 310 and Business 110 and previously served as treasurer/academics chair of Delta Chi fraternity. 10 I THe annual report of ku finance

Kirsan Caswell, a finance intern for Hallmark Cards’ season card and gift presentation division, assisted other analysts and cost controllers with a full costing run of standard product costs, completed an ad hoc analysis of P&Ls for different areas of the company, and created a consolidated financial template for the finance team to use when presenting gross revenue to the business units. The Shawnee native and Finance Scholar especially enjoyed developing a template for the new product development team. “It required that I collaborate with a lot of different people in the organization, and I got to see how a product comes to life and the financial impact of decisions made throughout the process,” Caswell says. Lisa Bergeron’s valuation class gave her an idea about how Hallmark conducts its financial analysis, and information systems technology 301 provided a “strong background in Excel.”

Michael Cray’s internship at Great Range Capital, Kansas City, involved conducting financial modeling and industry research and compiling investment decks presented to potential co-investors. Great Range Capital is a middle market private equity shop with four principals, three of whom are KU graduates. “They fostered a great learning environment and answered my questions every step of the way,” says Cray, a Prairie Village native. “I felt like I was able to make a real connection with them and appreciated their mentorship and advice.” His overarching internship project was to build a detailed investment deck including key risks, competitive landscape and a three-statement leverage buyout model for potential acquisition of a company in the portable storage industry. “Working with a KU graduate and mentor to prepare a presentation with the potential to generate millions of dollars was an amazing experience,” Cray recalls.

Overland Park senior Jordan Cordry worked as a business development intern for Koch Equity Development, a division of Koch Industries, in Wichita. His responsibilities included screening a variety of American and European acquisition prospects to assess their financial positions and fit with Koch’s core principles before preparing recommendations on which companies to pursue. Appreciative of the opportunity, Cordry says understanding Koch’s sophisticated modeling capabilities and metrics used to support decisions complemented his efforts to earn dual degrees in finance and accounting. “The work I did was finance related, but it was helpful to have an accounting background to better understand the information in the 10-Ks,” he says. Cordry, a Finance Scholar, works as an assistant in the business school’s financial trading lab where he assists students interested in getting certified to use Capital IQ and Bloomberg. Familiarity with Capital IQ was especially beneficial to his efforts to extract and evaluate company data during his stint with Koch.

Erin Murphy, an intern with Robert W. Baird & Co.’s investment banking division in Milwaukee, Wisconsin, worked with industrial, business services, consumer and health care clients. She assisted in valuing companies and preparing external transaction materials including pitch books, confidential information memorandums and management presentations. She also participated in financial and business due diligence and facilitated client relationship management by keeping track of buyer update logs, conversations between buyers and bankers, and confidentiality agreement negotiations. Finance 310 and Finance 410 classes were especially useful in providing necessary background information, enabling her to spend more time “experiencing real world problems and circumstances.” A dual major in finance and marketing, the Overland Park senior and Finance Scholar says the most gratifying part of her internship was seeing components of a presentation she had worked on included in the final version given to a client.

Senior Joe Viviano worked as a financial analyst intern for Allied Business Group in his hometown of Overland Park. He performed valuations and wrote offering memorandums for small, privately held businesses in the insurance, health care and manufacturing sectors. In addition to applying principles gleaned through a corporate finance class to the tasks at hand, an unexpected chance to write blog posts for the company website proved especially rewarding. An avid writer with his own blog, Joe’s Musings, the Finance Scholar began writing a couple of finance pieces each week with his manager’s encouragement. Website traffic increased 280 percent over the summer as readers checked back to view educational posts about mergers and acquisitions, valuation methodologies and finance headlines. “I have nothing but positive things to say about the people at Allied Business Group. They provided several opportunities for me to make meaningful contributions and learn. While all my responsibilities this summer were diverse and intellectually stimulating, the analytical writing was the aspect of the internship I enjoyed the most,” Viviano says. Viviano has served as president of Alpha Kappa Psi business fraternity and is currently a teaching assistant for accounting and finance classes and a member of the Finance Club.

Brian Simpson, a Mission Hills native, completed an internship with Edge Hill Capital Partners, a private equity firm in Kansas City, Missouri. The company primarily invests in, acquires or obtains an operating interest in start-up companies in insurance, oil and gas, marketing and other fields. Simpson spent the summer conducting market research and modeling scenarios, collecting historical performance information and analyzing data to help identify potentially profitable investments. Additionally, he helped oversee companies in which Edge Hill had operating interests. Majoring in finance and accounting with plans to pursue graduate studies, Simpson appreciated his first professional business exposure. Simpson serves as president of Phi Delta Theta fraternity and studied abroad in Italy through the CIMBA program. While those extracurricular activities have helped enhance his communication skills, he relied on information gleaned through Tim Shaftel’s Accounting 200 course and Kelly Welch’s Finance 310 class to perform his internship responsibilities. In addition to praising the applicability of course content, he adds, “I got the most out of the Finance Scholars program, which helps shape participants into more polished business people.”

Sarah Hageman, a native of Woodlands, Texas, worked as a strategic planning intern for Centerpoint Energy, a Houston natural gas company. With majors in finance and management and leadership, and a concentration in human resources, Hageman was placed in a division that received projects from five different business units seeking internship assistance for initiatives they otherwise would not have had the resources to pursue. She worked on a weather model for natural gas usage. The only undergraduate intern amongst MBA students, Hageman says, “I pushed myself to limits I haven’t known before.” Hageman benefitted from interaction with professional colleagues and appreciated advice the chief executive officer and the chief financial officer dispensed at breakfast and lunch meetings, respectively. “Hearing about their career paths and then seeing them take time to make sure we were getting the most out of our experience was very valuable,” she says.

As a truck logistics intern for Koch Fertilizer in Wichita, Courtney Sheldon was tasked with tracking and scheduling loads of industrial ammonia, vetting carriers and assessing how to make the process faster and more efficient. Additionally, she helped Koch Agronomic Services optimize procedures for tracking where product is mixed, maintained, and then made available for customer delivery in the most cost-effective manner. The Goodland senior and Finance Scholar adds, “The most gratifying thing about my internship was knowing I had created value for the company.” Kelly Welch taught her how fertilizer is bought and sold and provided her with an understanding of futures and options that enhanced her confidence. Communication principles that Roger Woody shared during a capstone class enabled her to maximize interaction with co-workers and interns from 26 schools. She also assisted with supply chain plans for European markets, discovering that she’s more interested in “making a whole process more efficient rather than just working with numbers.”

As a Finance Scholar, Hageman found the tools, models and mock interviews emphasized in class beneficial in helping her execute her summer responsibilities, “giving purpose to the material.” Hageman belongs to Kappa Kappa Gamma sorority and served as vice president of member relations for the Student Alumni Leadership Board (SALB), which connects past, present and future Jayhawks. She praises faculty and alumni for being “so willing to tap resources” to help students succeed and credits Sheri Hauck, a California finance group controller who served as her SALB mentor, for also helping prepare her for professional employment. Eveline Wang spent the summer working as an intern at Ernst & Young Risk Advisory in Minneapolis, Minnesota, where she assessed clients’ internal control structures and attested to their effectiveness. “I tested the controls to determine whether they were operating as designed,” she says. An unexpected highlight of her eight-week internship was the opportunity to perform SOX testing at the client’s Irvine, California, division. Wang was born in Nanking, a large city near Shanghai. Her father, who had worked for NASA, encouraged her to earn a degree in the United States. Her search brought her to KU, a decision she is glad she made. As a finance and accounting major, she found the courses she took in the spring regarding SOX and internal controls especially relevant to preparing her well for risk assessment work. “The courses I took, including Mark Best’s Accounting 311 class, laid a foundation that singled me out among the internship class at Ernst & Young,” she says. A Finance Scholar and Outstanding Finance Senior, Wang plans to pursue a career in strategic management consulting after graduation.

THe annual report of ku finance I 13

With the generous support of the

Kauffman Foundation, KU’s School of

Business organized a

conference held March 30 on the current

challenges facing early stage investing and venture capital.

Angels provided the majority of funding for startups in 2010, particularly in the early stages. The remainder was provided by venture capital firms, which invest funds on behalf of pension funds, endowments and wealthy individuals.

14 I THe annual report of ku finance


venture capital


Early Stage Venture Investing: Sources, Terms and Trends Joint KU/Kauffman Foundation Conference Kauffman Foundation, Kansas City, MO • 3/30/12 Panel Discussion Fred Coulson, Five Elms Capital Steven St. Peter, MPM Capital Marianne Hudson, Angel Capital Association Brad Bernthal, Silicon Flatirons Center

8,000 4,000

Moderator: Matthew McClorey, Bioscience and Technology Business Center

0 Seed




Returns on venture capital used to be strong, but lately have lagged a popular small stock index. TVPI, which is “total value paid in capital,”for Kauffman Foundation venture capital investments and investments in the Russell 200 index of publicly traded stocks, used as a benchmark. Investments with zero return have a value of one. Source: Diane Mulcahy, Bill Weeks and Harold S. Bradley, “We Have Met the Enemy…and He Is Us,” Kauffman Foundation, May 2012.

Luncheon Presentation “Teaching Early Stage Investing,” Brad Bernthal, Silicon Flatirons Center Research


Ola Bengtsson, University of Illinois – “Different Problem, Same Solution: ContractSpecialization in Venture Capital.” Discussant: Jide Wintoki, University of Kansas


Susan Chaplinsky, U. of Virginia, “Exit Returns and

3.5 3.0

net tvpi

bench tvpi

2.5 2.0 1.0 0


According to Hudson, the emerging issues in this sector include the increase of syndication among angel groups and increased connections with universities and economic development organizations. The 2012 JOBS Act also has the potential for changing the landscape, in particular through provisions that enable“equity crowdfunding,” which allows non-accredited investors (individuals who do not qualify for membership in angel groups) to take equity investments in startups.

Broken Model? While venture investing may be exciting and useful in the life of companies that ultimately deliver major innovations, the record of venture investing has been dismal for the last decade. Three authors from the Kauffman Foundation provided some of the reasons in an early presentation of their research paper, “We Have Met the Enemy…And He Is Us.” They draw heavily on the experience of the Foundation’s own endowment, which invested substantial sums in venture capital. While the Foundation’s venture capital portfolio outperformed the Russell 2000 index of small publicly traded companies for investments made in the early and mid-1990s, it has largely lagged for investments made since then.



their money.

Relatively little is known about angel investor activity, but Marianne Hudson, executive director of the Angel Capital Association, located in Overland Park, threw light on the topic by presenting the association’s “Halo Report,” a rare, detailed look at the activities of angel groups. The number of such groups has increased from fewer than 100 in 1999 to over 350 in 2011. Like the venture capital industry, angel groups are located disproportionately in California and the northeast.


risk and tying up


returns for taking on


investors expect hefty


marketplace, and

Gerard Hoberg from the University of Maryland presented research based on an unusual case that flushed much of this hidden information to the surface. The bankruptcy of the prominent California law firm Brobeck, Phleger and Harrison in 2003 resulted in its records being made available to researchers. This included the records for 182 early-stage financing rounds that included venture capital firms, angel investors or both. Intriguingly, more than half the deals included both angel investors and venture capitalists. While having both types of investors did not seem to matter much for outcomes, having both angels and VCs on boards of directors was associated with worse outcomes (lower likelihood of being acquired), providing some support for the view that unhealthy conflict may erupt between the two types of investors.


takes research to the

“Angels” invest in early stage companies, either directly or through angel groups. Investments by individuals may be very informal and involve little more than a handshake, while angel groups may have dozens or even hundreds of members and retain professional managers.


expect funding that


creation, universities

The authors conclude that pension funds and other investors have been lax in their oversight, monitoring and stipulation of terms. “Investment committees and trustees should shoulder blame for the broken LP investment model, as they have created the conditions for the chronic misallocation of capital.” Specifically, the “2 and 20” rule – by which investors pay venture capitalists 2 percent of the value of assets under management and 20 percent of any gain in value-guarantees that venture capitalists make money even for mediocre investments. In addition, many investors naively invested in venture capital, pushing the industry into ever weaker investors and lower returns. The authors, Diane Mulchay, Bill Weeks and Harold Bradley, advocate that investors like themselves demand greater transparency and exercise more discipline, allocating less money to the category.


Politicians expect job

Mixing Angels and VCs. Because much angel investing is undertaken outside the regulatory framework that governs the investment world, and even outside the voluntary disclosures that often take place in venture capital, little is known.


of venture capital.

Angels and Angel Groups. The dominant theme at the conference was that earlystage investing has undergone some stresses and is changing. One important source of change is the rise of angel investors, typically individuals who meet the criterion of “accredited investor.”


Much is expected

By George Bittlingmayer

1997 1998

The role and effect of angels


Causes & Cures


Troubled Venture Capital:

Panel moderator Matt McClorey and panelists Brad Bernthal, Marianne Hudson, Steven St. Peter and Fred Coulson. Bernthal, St. Peter and Coulson are KU alumni. Coulson also serves on KU’s Finance Advisory Board.

Venture Capital Investment Opportunities.” Discussant: Felix Meschke, University of Kansas Thomas Chemmanur, Boston College & MIT - “Venture Capitalists versus Angels: The Dynamics of Private Firm Financing Contracts” Research Presentations Gerard Hoberg, U. of Maryland, “Does Angel Participation Matter? An Analysis of Early Venture Financing” Discussant: Brad Bernthal Brian Broughman, Indiana – “Do VC’s Use Inside Rounds to Dilute Founders? Some Evidence from Silicon Valley.” Discussant: Na Dai, SUNY Albany. Harold Bradley, Diane Mulcahy, Thom Ruhe Kauffman Foundation, “A Discussion -- The Breakdown in Alignment Between Entrepreneurs, Investors and General Partners in Private Finance.”

Chris Brito Southwest Securities Dallas Matt Farmer JP Morgan Investment Bank New York City Dominik Hertzler JP Morgan Private Bank New York City Megan Hicks Invista Wichita

Dev vrat Khanna Robert W. Baird Investment Bank Chicago Danielle Kopp Robert W. Baird Investment Bank Milwaukee David Larson Mission Peak Capital Kansas City

Richard Linkesch Morgan Stanley London Bat-Ulzii Luvsansharav Deutsche Bank New York City Jacob Painter Merkit Capital Dallas

Megan Hicks works as a business analyst for Invista, a subsidiary of Koch Industries, in Wichita. She is assigned to a team responsible for product, profitability and customer analysis of the Nylon Intermediates business. A dual major with bachelor’s degrees in finance and accounting, Hicks says, “Combining my business knowledge in finance and accounting will be important to being successful in my role. Information I learned in my Business Valuation class helps me explain the ‘why’ behind things,

Life after KU

which is a question I’m asked every day.” While at KU, Hicks, an Oxford native, also participated in Delta Epsilon Iota, Finance Scholars, Beta Gamma Sigma, Sigma Kappa and Finance Club, often serving in officer positions that cultivated leadership skills. Hicks worked as a teaching assistant for Finance 310 and the Financial Trading Laboratory. She believes that every experience-classes, work, or extra-curricular activities-enables her to develop valuable career skills.

Jayhawk finance grads land jobs worldwide

Great students find great jobs. A still tepid economic recovery notwithstanding, KU’s finance grads found employment at top employers worldwide, continuing testimony to their talents and training.

John Pecis Palmer Square Capital Management Leawood Erin Robinson Deloitte Consulting Kansas City Julia Valentine Federal Reserve Bank of Kansas City

David Webb Citi Investment Banking New York City Zach Zarda Graduate School Arizona State University John Zecy Morningstar Inc. Chicago

Dev vrat Khanna is an investment banking analyst for Robert W. Baird & Co. in Chicago, where he provides analytical support on mergers and acquisitions, equity offerings and other financial advisory services. His duties include providing detailed financial analysis on companies, assisting clients in achieving a fair market value for their firm and providing access to capital for companies across the globe. He enjoys “the uniqueness of clients and tailored solutions, the fact that as a banker I get to work on deals that impact the economy and the lives of many people.”

Khanna has a bachelor’s degree in finance and a minor in economics. The Finance Scholar, who grew up in Pune, India, worked as a teaching assistant, was inducted into Beta Gamma Sigma and Phi Kappa Phi, and participated in the University Scholars program, the Finance Club, the Global Awareness program, and the Cultural India Club@KU. He has found his KU experience beneficial in preparing him for professional responsibilities, from the classes he took to the clubs he belonged to, along the way “making friendships that will last a lifetime.”

THe annual report of ku finance I 17

Danielle Kopp is an investment banking financial analyst for Robert W. Baird & Co. in Milwaukee. “I love the fast-paced environment at an investment bank,” she says. “Deals are constantly coming in and out, and you have a part in creating value for many different types of companies.” Kopp, who earned bachelor ’s degrees Richard Linkesch works in the Emerging Markets M&A group for Morgan Stanley’s Investment Banking Division in London. He builds financial models, assists with day-to-day John Pecis, a Topeka native, works as an analyst for Palmer Square Capital Management, Leawood, where he works on the investments side of the business, spending the majority of his time maintaining the company’s books and acting as a credit analyst as the business transitions toward direct credit investing. “My job gives me the ability to always think about another puzzle,” Pecis says, who graduated with bachelor’s degrees in finance and economics. “There is no textbook on the job, so learning to think critically around problems is key. I believe John Zecy works as an associate equity analyst primarily for industrial companies at Morningstar Inc. in Chicago. His duties include valuation, modeling and creating company reports aimed both toward individual and institutional investors. He is awaiting permanent assignment to a sector, but has requested Industrials or Healthcare. “What I enjoy most about my position is being able to really dissect a company and understand the mechanics beneath the surface,” he says. “It brings my work closer to home and allows me to become all the more familiar with the inner workings of a business.”

in finance and accounting, adds, “Participating in the Finance Scholars program really helped me get a head start on the interview process for investment banking positions, and taking the Applied Portfolio Management class enhanced my financial modeling skills, very important to get a grasp on before starting work at a bank.” execution of M&A deals, briefs senior management about regional and industry developments and prepares presentations, pitch books and company profiles. A native of Presov, Slovak Republic, Linkesch was a teaching assistant for DSCI 301 and Finance 410, a Finance Scholar and a member of the KU rowing team.

the ku finance club

the upper level finance classes at KU go a long way in forcing students to find outside-the-box solutions quickly and effectively.” He praises the School of Business for emphasizing the importance of writing in its curriculum and underscores the necessity of developing computer skills, especially Excel expertise, to prepare for a full-time position. “You can either get a task done in five hours with Excel shortcuts or get it done in 10 hours without them,” he says.

Zecy, a Leawood native, received a bachelor’s degree in finance and found most beneficial the networking capabilities developed through his experience with the Finance Scholars Program and the Business Career Services Center, as well as upper level finance courses like Business Valuation. While at KU, he was a m e m b e r o f S i g m a C hi Fraternity and Mortar Board Senior Honor Society and worked as a Business Statistics teaching assistant. He also served as the Business Manager for Rock Chalk Revue, which raised $64,000 for the Douglas County United Way in the 2011-2012 school year.

18 I THe annual report of ku finance

helping hands all around

Inspiring talks by finance professionals, field trips,

travel, social outings and charitable opportunities are all included in an

annual Finance Club

membership fee that repays participants with valuable insight, connections and

camaraderie. An important addition to coursework and interaction with instructors, the club

exposes members to a

wide variety of additional

perspectives and facilitates friendships with others

who share their interests.

Evan Fowler, club president for 2012-2013 and a member since his freshman year, says, “The lecturers have offered real-world examples and shared information about the difficulties they’ve encountered and what they might have done differently, which benefits any club member, regardless of major, looking for insights into the business world.” Charles Matthews, a St. Louis, Missouri, native and a former club president who graduated with a finance degree in 2012, describes his club experience as “first and foremost, the highlight of my time at KU.” He developed skills “working with friends, organizing groups of people and networking with speakers,” all of which enabled him to obtain a position as a contractor operations representative with ISN Software Corp. in Dallas. Last year, Matthews strived to offer a dozen speakers from every sector of finance, hosting commercial and investment bankers, attorneys and private equity firm representatives willing to offer expertise, encouragement and advice. He praises club support from faculty members, alumni and professionals willing to share their time and expertise with members. “One of our speakers, Frank Sciara with Grandbridge Real Estate Capital LLC,

above & beyond coursework

emphasized the importance of upholding your reputation, because you never know who you might run into,” says Matthews. “I’ve only been out of school a short time, but I’ve been surprised by the number of people I’ve crossed paths with already.” Fowler, a senior from Wichita, Kansas, majoring in finance with a concentration in entrepreneurship, has taken to heart repeated messages regarding resilience and redirection. “Many speakers have encouraged us to leverage ourselves, to not be afraid to pursue a certain angle,” he says, noting that his current focus is investment banking and commercial real estate. “Even if we select a field that turns out to not be what we want, the speakers have reassured us that we’ve still made important connections that can help us move to another realm of business.” During Matthews’ tenure, members attended the Berkshire Hathaway shareholders meeting in Omaha, Nebraska; visited the Chicago Board of Trade and Options Exchange and interacted with club alumni; and toured the Federal Reserve Bank of Kansas City, topping the day off with beer and bonding at Boulevard Brewing Co. Fowler has similar intentions for the club, which meets every other Thursday at 7 p.m.

steve koenig professor with ‘street cred’

Brian Kaufman

Grounded investing advice from the power of staying curious Heartland The and showing interest Brian Kaufman, a managing director of Prairie Capital Management LLC’s Kansas

The hectic, aggressive and challenging

world of trading Even at the age of 10, New Jersey native Steve Koenig understood the power of investment as he listened intently to his grandfather’s advice on which stocks to buy and sell. His

early exposure to the world of finance led him to a prestigious career with JP Morgan that culminated in his retirement in 2011 as a managing director at 48. Now in his third semester as KU School of Business professor of the practice, he passes along what he’s learned to another generation by lecturing to a different business class each week and overseeing the Financial Trading Lab. With a big screen TV and computer terminals equipped with Bloomberg, Capital IQ, Morningstar and other trading software, the lab replicates the “hectic, aggressive, challenging” environment Koenig still loves. He is so passionate about preparing KU students for success through discourse and simulations that he donated funds to expand the lab’s capabilities. For 90 minutes, Koenig presides at the weekly lab over pizza he provides for participants. On average, a dozen intrepid students,

willing to be pushed and pressured in a trading room environment, come together to determine whether the career path they are considering is right for them. Senior Jordan Cordry says, “I went from having a limited understanding of derivatives to being confident enough to use them to manage risk in my portfolio. The labs provided a perspective that you cannot get in a typical classroom environment or a book because Steve has that raw, in-depth knowledge that comes from an incredibly successful career.” Koenig spent 25 years working in New York, 11 for Bank Brussels and 13 for JP Morgan. He spent another year with JP Morgan in London, where he was responsible for European,

Middle Eastern and African emerging markets. In New Yo r k , h e c o - h e a d e d t h e Latin American sales and trading business. With global expertise and an extensive network, Koenig strives to instill in students realistic expectations regarding the risks and rewards of an investment career. “Steve inspires students and makes them think,” Professor Kelly Welch says. “In Steve’s tutorials, every student has to share a viewpoint, and each can learn from the others’ contributions. For example, if you believe the Euro is going to weaken, then how do you place the trade? Or how would you use futures and options? He makes students apply what they’ve learned, often out of context.” Whether in the lab or a lecture

room, Koenig is comfortable not only asking difficult questions but answering them as well.

“Young people always want to know how to make a lot of money, which can be done, but there are positive and negative aspects too,” he says. “Students want to know what it’s like to manage risk, so I share examples from my experience.” Koenig has been a committed mentor for KU students for many years, both in the classroom and as an avid supporter of the Finance Scholars program when he was still working in New York. “If you’re going to have a career in financial markets, then you need to meet with traders and gain exposure and contacts to get opportunities,” he says, adding that it was “easier to get jobs” on a trading room floor when he began his career in 1986. One of the aspects Koenig enjoyed most in his career

was meeting “smart people from around the world,” and he appreciates the global extension of that enrichment opportunity at KU. “I love hearing other people’s perspectives,” he says.

Koenig was drawn to teaching following a lecture he gave at the University of Michigan. He reluctantly took on the assignment to fulfill a recruiting obligation “intangible” necessary to pursue his managing director title. He discovered to his delight that “it was a lot like acting, something I had done a little of previously,” he says. Having honed his craft in the world’s most renowned financial centers, he is intent on enabling others to find their niche just as his mentors did for him. “I’m proud to be here,” he says. “Many people helped me throughout my career, and coaching others let’s me give back.”

City, Missouri, office, founded the firm in 1995 with two colleagues interested in creating an independent asset and wealth management consulting firm. With offices in Denver, Chicago and Philadelphia, Prairie Capital’s client base spans 28 states and

includes high-net-worth private clients, family offices, trusts, corporations, foundations and endowments.

Kaufman attributes the company’s success to several factors, including its Midwest roots. “Midwesterners are known for a strong work ethic and are perceived as trustworthy, grounded and practical,” he says. “We’re truly independent of the investment opportunities we recommend because we have no in-house managers and conflicts. Clients tell us that we understand complex investments more than most.” These traits, in combination with proven performance, garnered the attention of UMB Financial, which bought the company in 2010, referring to the principals as “premier” providers of investment management expertise. “UMB was seeking a partner with expertise in alternative investment and high-networth clients, and through a national search, contacted us,” Kaufman says. “It’s been a good fit.” Prairie Capital has helped clients “identify asset classes that can achieve positive returns during volatile times,” which is especially important for endowments and foundations dependent on steady investment returns to meet their objectives. Kaufman, a certified public accountant who once practiced with a Big Six firm, notes that the effort has required more education regarding risks and returns, but he says the company has been able to help clients meet their allocations “even during the downturn.”

Graduating from KU with a bachelor’s degree in accounting and business administration with highest distinction, Kaufman earned a juris doctorate from Stanford Law School and spent more than a decade practicing tax law, securities law and venture capital. He credits his success, in part, to “intellectual curiosity” and a commitment to high ethical standards instilled in him by KU professors and his Kansas City law firm mentor. “He taught me the importance of getting things right and doing the right things for clients,” Kaufman says. Kaufman extends that same service philosophy to charitable organizations for which he volunteers, including board positions with the Menorah Legacy Foundation and the Salvation Army. While at KU, Kaufman was a member of Phi Delta Theta Fraternity, undertook research for professors and managed a liquor store. “Although working in a liquor store didn’t have a direct impact on my career,” Kaufman says, laughing, “no matter what the job is, learning how to interact with people in a business environment is essential.” Kaufman, a guest lecturer at the Edwards Campus, adds the following advice for those in school or just out of school: “Making connections, raising your hand for opportunities and showing interest during internships and early jobs can make a difference. Hard work does matter.”

THe annual report of ku finance I 21

Hire a Hawk Our Business Career Services Center invites you to consider internships or full-time opportunities for our outstanding business students. Employers consistently recognize our students as high performers, ready to make an immediate impact in the professional world.

Preventing Future Financial Meltdowns:

KU Co-Sponsored Conference on Lessons Learned Even as the economic

aftershocks from the global financial crisis are still

being felt, economists and

regulators around the world have been hard at work

trying to better understand it. Addressing the new

realities of global finance was the theme of the Post-Crisis Banking conference held in June at the Dutch Central Bank in Amsterdam.

Eric Rosengren, president of the Federal Reserve Bank of Boston, addresses the conference.

The KU School of Business, in partnership with the Dutch Central Bank, the European Banking Center, and the Journal of Money, Credit and Banking, brought together experts from Europe, Asia and North America to share their views on “Post-Crisis Banking.” Bob DeYoung, the Capitol Federal Professor in Financial Markets and Institutions at KU, organized the conference. DeYoung is an expert in banking and bank regulation, and is co-editor of the Journal of Money, Credit and Banking.

the financial crisis, “all over the world, banks pulled back on international lending. They saved their resources for their best domestic customers, letting some of their international customers go without credit,” DeYoung said. “The research suggests that this happened everywhere, at banks in all countries.” The lesson from this, he pointed out, is that “if you own a business and you have international financing, you might count on that drying up during a recession.”

The conference featured new research and informed opinion on the genesis of the financial crisis, its impact on the supply of financial services and economic activity, and policy changes that might reduce the chances of similar crises occurring in the future.

“One reason this is so interesting,” DeYoung said, “is because finance has become global so quickly. During deep recessions in the 1970s and ‘80s, businesses were more dependent on their domestic banks.” That had changed by 2008.

Although the conference was titled “Post-Crisis Banking,” DeYoung said that there was “a difference of opinion, depending upon where you sat, about the words ‘post-crisis.’ The U.S. still has a weak economy, but the crisis is clearly over, here. We’ve done our part at passing new laws and regulations.” That is not the case for other countries. “Europe is still in crisis. They are not quite as ready to pass new laws and regulations, because they are still putting out fires.”

Another important finding presented at the conference was a Bank of England study concluding that large banks are not necessarily more efficient than mid-sized banks. “The study concludes that the very largest banks in the world don’t experience scale economies,” DeYoung said, and this is significant because many of the world’s largest banks have used the scale economy argument to justify their huge size.

However, there were some points of agreement that were underscored by the research presented at the conference. In the midst of

22 I THe annual report of ku finance

DeYoung said the information shared at the conference “touched on a large portion of the lessons we need to learn in order to limit the damage caused by future financial downturns.”

Your support can expand the opportunities for our students. That’s especially important in today’s challenging job market. Make a difference in the future of a Jayhawk.

To learn more, contact Dave Byrd-Stadler or 785-864-8047

2011-12 Awards & Recognition JUNIOR FINANCE SCHOLARS John Bartak Daniel Bjornson Connor Blankenship Kirsan Caswell Jordan Cordry Michael Cray Sarah Hageman Erin Murphy Courtney Sheldon Brian Simpson Gabriel Valdez Joseph Viviano Eveline Wang SENIOR FINANCE SCHOLARS Christopher Brito Matt Farmer Dominik Hertzler Megan Hicks

Dev Vrat Khanna Danielle Kopp David Larson Richard Linkesch Robert Lohse Bat-Ulzii Luvsansharav Jacob Painter John Pecis Erin Robinson David Webb Zach Zarda John Zecy


MARK HIRSCHEY SCHOLARSHIP Connor Blankenship FINANCE ADVISORY BOARD GRADUATE STUDENT AWARDS Boone Bradley Ben Gaydess-Hodgins FINANCE ADVISORY BOARD SENIOR AWARDS Dominik Hertzler Dev-Vrat Khanna, Richard Linkesch Marci Mauch Abby Reichenberger John Zecy OUTSTANDING SENIOR AWARD Bat-Ulzii Luvsansharav

DONOR RECOGNITION We gratefully acknowledge the following alumni, friends and corporate partners who supported the Finance program during the 2012

fiscal year, July 2011 through June 2012. Some graduates and employees do not designate their gifts specifically for Finance. These are included in the School of Business Dean’s Report. Also, this list does not include matching gifts. DEANS CLUB AMBASSADORS (Gifts of $10,000 or more)

1865 CLUB (Gifts of $100-$299)

Todd E. Preheim & Colleen K. Preheim

G. Thorne Daimler

Steven G. Koenig & Anastasia M. Condron

DEANS CLUB BENEFACTORS (Gifts of $5,000 to $9,999)

Ryan M. Sprott & Molly E. Maxwell

DEANS CLUB PATRONS (Gifts of $3,000 to $4,999) Michael D. Hagedorn

DEANS CLUB (Gifts of $1,000 to $2,999)

Brodie A. Beck

Meghan C. Gockel

Sydney J. Pohl

Jade M. Shopp

John M. Thompson & Karen L. Thompson

Inergy Propane, LLC

Tradebot Systems, Inc.

Mission Peak Capital, LLC United Parcel Service, Inc. WMS Technologies, Inc.

Ronald R. Mau & Rochelle K. Mau

Patrick V. Musick & Mary Beth Musick

Matthew C. Paquette & Amy C. Paquette

Amber Wilson Peschka & Ryan J. Peschka Joshua R. Schoenfelder

Erik D. Zimmerman

Matthew T. Norris

Entertainment Properties Trust

Kathryn M. Kelm

Frederick N. Coulson IV & Lucy Coulson

Jeffrey B. Morrison & Mary Margaret Morrison

For questions or to learn more, please contact: Brian Moore Development Director KU Endowment-School of Business 785.832.7462

DST Systems, Inc.

Shawn M. Jung

Susan Scholz & Curtis Scholz

Brett P. Leeth & Heather Leeth

Tabb Group

William D. Hannen & Lori Kay Hannen

George Bittlingmayer & Beth Ann Bittlingmayer Shane C. Brethowr, CRCP & Jill A. Brethowr

ORGANIZATIONS (Under $10,000)

Dianne J. VanBeber & Jay R. Watkins

DONORS (Gifts to $99) Matt C. Brunner

Keith W. Chauvin & Teresa Chauvin Jonathan M. Dorsey

Joelle S. Ford & Allen Ford

Finance Advisory Board

William L. Fuerst

Todd Banks Blackthorn Investment Group

Cory Lagerstrom Frontier Wealth Management

Jade Shopp Deloitte

Douglas A. Houston & Pamela Houston

Fred Coulson Five Elms Capital

Brett Leeth Koch Fertilizer, LLC

Al Simmons Wells Fargo Advisors

Andrew D. Limbocker

Daniel Drake Liberty Asset Management

Kent McCarthy Jayhawk Capital Management

Ryan Sprott Great Range Capital

Alexander T. Mack Frank E. Marshall

Steven Dykeman Industry Capital

Marc Naughton Cerner Corporation

Matthew Taylor Frontier Wealth Management

Michael V. Moore

Joseph D. Onofrio

Jeff Fahler Commerce Bank

Matthew Norris Waddell & Reed

John (Mike) Thompson UBS Financial Services, Inc.

Christopher W. Anderson & Shari Roberts Anderson

Shane C. Parr

John B. Dicus & Brenda Roskens Dicus

Frank A. Sciara

James Finch Credit Suisse

Brent Padgett The Citizens National Bank

Jami Waggoner American Century

Daniel V. Drake & Kendall Price Drake

Catherine Smith Shenoy & Prakash P. Shenoy

Vincent A. Grisell & Kelly Little Grisell

Alfred J. Simmons & Anne Cortopassi Simmons

Michael Hagedorn UMB

Todd Preheim Campanile Capital

Carol Zoellner Hallmark

Galen L. Oelkers

Brady L. Wilborn & Sarah Heeb Wilborn

Thomas L. Sanford

Brett A. Young

Zachary Hamel Tortoise Capital Advisors, LLC

James Schier Security Benefit

Jami D. Waggoner & John A. Waggoner

Angela Jacobson Watson & Wendell C. Watson Carol Blubaugh Zoellner

CAMPANILE CLUB (Gifts of $500 to $999)

Charles D. McCarthy & Marie Schumacher McCarthy Sandra Blome Reddin & Timothy W. Reddin

CRIMSON & BLUE CLUB (Gifts of $300-$499)

Harry H. Herington Jr. & Cindy Herington Richard W. Kelley Jr. Jason P. Lindshield

Associate Members Vince Grisell Intergy Paul Gregory Five Elms Capital Nick Holmes Tortoise Capital Advisors Aaron Mesmer Block Funds Thomas Sanford Tradebot Systems

Elizabeth A. White

THe annual report of ku finance I 25

Finance Faculty Committed to Teaching

Paul Koch

Robert DeYoung International Finance and Banking Society

Christopher Anderson

Informed Trading through the Accounts of Children, with Henk Berkman and Joakim Westerholm, Journal of Finance, forthcoming 2013. Paying Attention: Overnight Returns and the Hidden Cost of Buying at the Open, with Henk Berkman, Laura Tuttle, and Ying Zhang, Journal of Financial and Quantitative Analysis, forthcoming 2012.

FDIC Fall Banking Conference

Wisconsin Public Radio on JPMorganChase trading losses

Conference on Competition, Efficiency and Financial Stability, Bank of England

Felix Meschke

Doctoral Student Mentor Award, Association of Business Doctoral Students

William Beedles MBA Outstanding Educator Award, 2012

Kelly Welch

The Effect of the Hedge Horizon on Optimal Hedge Size and Effectiveness when Prices are Cointegrated, with Ted Juhl and Ira Kawaller, Journal of Futures Markets, (2012), forthcoming.

Henry A. Bubb Teaching Award, 2012 Beta Gamma Sigma Outstanding Educator, 2012 Alpha Kappa Psi Professor of the Year, 2012

Finance Faculty Committed to Research AWARD Jide Wintoki

Guy O. and Rosa Lee Mabry Best Paper Award, 2012


Christopher Anderson Frothy housing markets and local stockprice movements. Journal of Real Estate Finance & Economics, with Eli Beracha, 2012, Vol. 45, No. 2.

Robert DeYoung How Big Should a Bank Be? American Banker, April 20, 2012, p.9. A Commentary on “Measuring Systemic Risk,” Journal of Financial Services Research, October 2012. Executive Compensation and Business Policy Choices at U.S. Commercial Banks. Journal of Financial and Quantitative Analysis, with Emma Peng and Meng Yan, forthcoming 2012. Economies of Scale in Banking, in Efficiency and Productivity Growth: Modelling in the Financial Services Industry, ed. Fotios Pasiouras, John Wiley & Sons, forthcoming 2012.

Felix Meschke Structural Models and Endogeneity in Corporate Finance: The Link Between Managerial Ownership and Corporate Performance, with Jeff Coles and Mike Lemmon, Journal of Financial Economics, 2012, Vol. 103, No. 1.

Bank of Canada, Financial Stability Department

Southern Finance Association Economies of Scale in Banking Bank of England, Financial Stability Directorate Federal Reserve Bank of Kansas City Conference on Bank Structure and Competition, Federal Reserve Bank of Chicago University of Limoges Groningen University

Paul Koch

Corporate Political Donations: Investment or Agency? with Raj Aggarwal and Tracy Wang, 2012, Business and Politics, Vol. 14, No. 1.

Southern Finance Association

Jide Wintoki

Asian Financial Management Association Conference, New Zealand

Implications of Data Screens on Merger and Acquisition Analysis: A Large Sample Study of Mergers and Acquisitions from 1992—2009, with Jeffry Netter and Mike Stegemoller, Review of Financial Studies, 2011, Vol. 24. The Size, Concentration and Evolution of Corporate R&D Spending in U.S. Firms from 1976 to 2010: Evidence and Implications, Journal of Corporate Finance, with Mark Hirschey and Hilla Skiba, 2012, Vol. 18. Endogeneity and the Dynamics of Internal Corporate Governance, Journal of Financial Economics, with Jeffry Netter and James Linck, 2012, Vol. 105.


Rawls College of Business, Texas Tech University

Financial Management Association Conference ANU Microstructure Meeting, Australian National University

Felix Meschke American Finance Association AAA Financial Accounting and Reporting Section Fifth Singapore International Conference on Finance Financial Management Association

Kara Tan Bhala Heidelberg Institute for Latin America, Santiago, Chile

Jide Wintoki

Finance Faculty in the News Robert DeYoung

Financial Times, New York Times, Wall Street Journal, CFA Institute, Huffington Post, TIME Magazine on corporate political donations Wall Street Journal on portfolio pumping

Kara Tan Bhala Interview in Estrategia (Chile) on the euro crisis

Jide Wintoki Associated Press, CBS News Moneywatch, New York Times, Freakonomics on forecasting abnormal stock returns from online search

Finance Faculty Committed to Service Christopher Anderson

Investment Committee for the Bert Nash Community Mental Health Center Consulted with CFA Institute on curriculum and exams

William Beedles Investment Committee for the Bert Nash Community Mental Health Center Leads School’s MBA Essentials program for the American Business Women’s Association Director, Undergraduate Programs, School of Business

Eastern Finance Association

George Bittlingmayer

American Real Estate Society

Organized the conference on “Early Stage Investing” Kauffman Foundation

Early Stage Investment Conference, Kauffman Foundation

Member of the organizing committee and presenter for KU Summit on the Strategic Initiative: “Sustaining the Planet, Powering the World”

Kara Tan Bhala

Jide Wintoki

Editor, Moral Cents: The Journal for Ethics in Finance

Discussant, Early Stage Investing Conference, Kauffman Foundation

Official delegate, Qatar Law Forum

Program Committee, Southern Finance Association

Robert DeYoung


“How Big Should Your Bank Be?” Industry event sponsored by the KU Center for Excellence in Banking “Post-Crisis Banking,” conference cosponsored by the Dutch Central Bank, the European Banking Center, and the University of Kansas School of Business. Amsterdam, June 2012 Co-editor, Journal of Money, Credit and Banking President, Southern Finance Association Adjunct Faculty, University of Limoges, Ph.D. Program in Banking

Full Professors William Beedles, director of undergraduate programs George Bittlingmayer Robert DeYoung Paul Koch

Associate Professor Christopher Anderson

Assistant Professors

Paul Koch

Ferhat Akbas

Associate Editor, Journal of Financial Research

Bradley Goldie*

Associate Editor, Accounting and Finance

Lei Li* Felix Meschke

Southern Finance Association, National Conference Program Committee

Felix Meschke Discussant, Early Stage Investing Conference, Kauffman Foundation

Jide Wintoki

Professor of Practice Steven Koenig

Full Time Lecturers

Kelly Welch

Lisa Bergeron

KU Business-Faculty Connection Program

Kelly Welch

Investment committee, Bert Nash Community Mental Health Center Presentation to Finance Club on curriculum and CFA Institute programs

Catherine Shenoy

Part Time Lecturers Todd Banks

Presentation on “Investing Behaviors to Avoid” at KU Mini College

Julia Chappel

Member, Board of Directors, Infegy

Jon Lill

Co-director of KU’s CFA Partnership Program Editorial Board, Pearson Corporate Finance Online Reviewed chapters of a new text on futures, options and risk management

John Hense William Lewis Jeffrey Morrison Geoffrey Parker Tony Rock Dieter Schrader, director of finance scholars in service Kara Tan Bhala * New Hires, 2012

26 I THe annual report of ku finance

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Annual Report of KU Finance  

In the fall 2012 edition, Annual Report of KU Finance profiles alumnus Dana Anderson on his career in real estate; finance professors prove...

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