This Month from Knowledge@Wharton

Business Wire, Feb 6, 2008

Stories this month include "'Advice to Investors: Sit Tight and Batten Down the Hatches " and "How Investing in Intangibles -- Like Employee Satisfaction -- Translates into Financial Returns "

Plus: Podcasts Including "It's a Bird ... It's a Plane ... It's a Recession, or Is It? "

PHILADELPHIA -- This past month some of the timely stories from Knowledge@Wharton , the Wharton School's online research and business analysis journal, which will soon launch a new India Knowledge@Wharton edition, include:

Advice to Investors: Sit Tight and Batten Down the Hatches

The worldwide collapse of stock prices has many victims -- pension funds, insurance companies, hedge funds, financial services firms. But those are players who, if they are smart, have the wherewithal to withstand a steep sell-off. What about the small investor, the individual who is socking away modest sums for retirement or college costs? Should small investors rush for the sidelines? Or should they view this as a buying opportunity? Knowledge@Wharton asked six experts for advice on investment strategy.

http://knowledge.wharton.upenn.edu/article/1884.cfm

How Investing in Intangibles -- Like Employee Satisfaction -- Translates into Financial Returns

Contrary to management theories developed in the Industrial Age, employee satisfaction is an important ingredient for financial success, according to a new research paper by Wharton finance professor Alex Edmans. His findings also challenge the importance of short-term financial results and may have implications for investors interested in targeting socially responsible companies. The paper is titled, "Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices."

http://knowledge.wharton.upenn.edu/article/1873.cfm

'Framing Contests': When Companies Face Uncertainty, Internal Wrangling Can Lead the Way

After riding a wave of unprecedented industry growth, an established technology manufacturer experiences a sudden market downturn. What should it do? Whereas managers often push for quick, bottom-line analysis when facing uncertainty, Wharton management professor Sarah Kaplan says that the best move might be to encourage employees to engage in "framing contests," in which they champion alternative strategy scenarios. In a new research paper titled, "Framing Contests: Strategy Making under Uncertainty," Kaplan looks at how employees' frames shape strategic decisions, calling into question traditional notions about hierarchy and power in firms.

http://knowledge.wharton.upenn.edu/article/1879.cfm

Beneath India's Choppy Stock Markets, Index Funds Gain in Strength

The Indian stock markets seesawed last week between fears of a U.S. recession, the Fed rate cut, President Bush's $150 billion stimulus package and a strong show by domestic investors. In a striking undercurrent, passive index funds are gaining popularity as Indian mutual funds grew 80% to $140 billion in the past year. India Knowledge@Wharton spoke with fund managers and faculty from Wharton and the Indian School of Business about the Indian mutual fund industry's recent growth, and whether active or passive investment vehicles will come out ahead.

http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4255

Is One Global Model of Corporate Governance Likely, or Even Desirable?

In Germany, labor unions traditionally have had seats on corporate boards. At Japanese firms, dozens of loyal managers cap off careers with a stint in the boardroom. Founding families hold sway on Indian corporate boards. And in China, Communist Party officials are corporate board fixtures. But as companies continue to globalize, should they consider adopting one uniform model of corporate governance? Or do global investors benefit from diverse governance structures? Wharton faculty and others offer their opinions.

http://knowledge.wharton.upenn.edu/article/1877.cfm

Podcasts

It's a Bird ... It's a Plane ... It's a Recession, or Is It?

It's been quite a week. Stock markets around the world showed sharp declines on Monday; on Tuesday, the Federal Reserve cut its benchmark interest rate by three-quarters of a percentage point. The rate cut helped stem the losses on some indexes, but by January 23, the volatility had returned. The obvious fear is one of recession -- a possibility that the White House and Congress are trying to avert by coming up with a stimulus package that will keep the economy off life support. How effective will the Fed's interest rate cut be, and what is the outlook for the Asian and European economies? Knowledge@Wharton asked finance professors Jeremy Siegel and Franklin Allen to comment on these issues.

http://knowledge.wharton.upenn.edu/article/1887.cfm

The Global Auto Industry: New Cars, Old Problems

The rise in delinquencies on auto loans is one sign that America's auto industry is in trouble -- along with the rest of the economy. How hard are the auto makers being hit and what should the Big Three do to stem the damage? Meanwhile, the global auto industry has seen some interesting developments, including the introduction in India of Tata Motors' Nano and the arrival of five Chinese auto manufacturers at the India of Tata Motors' Nano and the arrival of five Chinese auto manufacturers at the Detroit auto show earlier this month. Will China and India be big players in the global market for cars? And what is the current state of Europe's auto industry? Knowledge@Wharton asked Wharton management professors John Paul MacDuffie and Mauro Guillen to steer us through the turmoil.