Protecting your firm from FX risk
Journal of Corporate Accounting & FinanceMichael Ehrlich, Asokan Anandarajan
2018
Recent oil‐price hikes are hurting U.S. businesses. But Europe seems protected—perhaps by the rising value of the euro against the U.S. dollar. So U.S.‐based managers need to compensate for the falling value of the dollar when planning their business strategies.
How can U.S. managers protect their companies from rising foreign exchange (FX) risks? The authors offer some vital tools and strategies—and discuss what perils the future may hold.
View more
Does High-tech Business Incubation/acceleration Work? A Cluster Development Approach
Frontiers of Entrepreneurship ResearchMichael Ehrlich, Annaleena Parhankangas
2016
The rapid introduction of technological innovations since the 1980’s has fostered the shared perception among policy makers, practitioners, and academics that high-tech innovations generate wealth and employment. The desire to increase the population of small high-tech firms has attracted substantial private and public funding of incubators, accelerators, science parks, and co-working spaces. The National Business Incubation Association (NBIA) reports that in 2012 there were over 1250 incubators in the U.S., up from only 12 in 1980 and internationally, thousands more incubation initiatives have recently been established in Europe and Asia.
Yet these institutions remain little understood, without an agreed underlying theoretical framework or established metrics for evaluation. We utilize a novel theoretical framework, adapted from cluster theory, to establish sound metrics for evaluation of incubation/acceleration institutions. We undertake an empirical incubator evaluation using a new dataset as a model for systematic incubator evaluation.
This paper develops and tests a set of hypotheses on how high-tech firms benefit from participation in a business incubator. First, building on cluster development theory, which focuses on a geographically proximate group of interconnected companies linked by externalities of various types, we expect incubator participants to demonstrate enhanced employment growth and innovation metrics. Second, we develop the concept of a networked incubator, which fosters territorial synergy, relational symbiosis, and economies of scope, based on network theory and social capital theory, to explain the link between employment/innovation performance and human/network capital measures.
View more
How entrepreneurs seduce business angels: An impression management approach
Journal of Business VenturingAnnaleena Parhankangas, Michael Ehrlich
2014
This paper develops and tests a set of hypotheses concerning how impression management strategies deployed by entrepreneurs affect their likelihood to secure funding. We test our propositions on a sample of nascent ventures seeking business angel funding in the New York metropolitan area. Our results suggest that business angels prefer investment proposals characterized by the moderate use of positive language, moderate levels of promotion of innovation, supplication and blasting of competition, and high levels of opinion conformity.
View more
International lessons for US housing finance
Journal of Corporate Accounting & FinanceMichael Ehrlich, Asokan Anandarajan
2011
The United States has not recovered from the effects of the recent housing bubble. Nor is there an optimistic forecast for the future of housing—which is characterized by lack of demand, falling prices, and foreclosures. This is not a problem for other Organisation for Economic Co‐operation and Development (OECD) countries, which are recovering far more quickly. But why is this so?
View more
Structured investment vehicles: The unintended consequences of financial innovation
Bank Accounting & FinanceMichael Ehrlich, Asokan Anandarajan, Benjamin Chou
2009
Twenty years ago, structured investment vehicles (SIVs) did not exist. During the two decades since their inception, SIVs grew to more than $400 billion in assets and represented about five percent of the U.S. corporate debt market. By the end of 2008, SIV assets had become virtually extinct. There are currently no remaining SIV assets that are not in bankruptcy or rating agency enforcement. What happened? SIVs are offshore investment companies that manage banking assets that are not displayed on a bank's balance sheet. A bank- or hedge-fund-sponsored SIV typically invests in complex asset-backed credit market instruments. In theory, the investments are high quality. In practice, they can be illiquid and hard to value. The SIV sponsor earns management fees that are based on the difference between what the assets earn and the cost of financing the assets. In essence, SIVs are unregulated companies that engage in the banking business. Without deposit insurance, SIVs became subject to the rapid loss of funding that is generally known as a run on the bank. In the last year, the SIV business collapsed. The remaining SIV assets are either in bankruptcy or facing rating agency enforcement.
View more