Did infectious leverage cause the financial crisis?

Banks and borrowers went on a leveraged consumption binge that led to the financial crisis in 2008 according to Anjan Thakor. And the entire economy is still feeling the hangover pain from the credit-fueled party that caused bank failures and forced foreclosures across the country. Thakor’s new research examines the cycles of leveraged borrowing by banks and consumers as a possible cause of the crisis. His new theory of ‘infectious leverage’ could help prevent future financial meltdowns.

Olin Business School profs earn top rankings in study of prolific authors

Professors ranked among the most prolific writers don’t need to worry about the ‘publish or perish’ warnings in academia. Four business professors at the Olin Business School, Washington University in St. Louis, are ranked among the most frequently published authors in the field of finance according to a new study. The data collected over the past 50 years suggests that getting published in the top journals is difficult and getting published more than once is an achievement attained by a small minority.

Corporate governance has dark side and bright side

Executive pay is sometimes appropriate, often not.In a perfect business world, corporate governance and decision-making would follow sound and rational processes. And, indeed, Professor Todd Milbourn has discovered that, at times, executives are compensated appropriately and appropriate decisions are taken. This finding is from what he calls the “bright side” of his research. But, the real world can also serve up Disneys, Enrons, and WorldComs. Not all mismanagement, however, makes the front pages or drives companies into bankruptcy. More commonly it goes on unnoticed or as accepted practice, says Milbourn, associate professor of finance at the Olin School of Business at Washington University in St. Louis. His collaborative research also reveals a “dark side,” where companies reward chief executive officers simply for being lucky and where “yes men” often rule.