The MBA Oath

Apparently 300 graduating MBAs from Havard have taken the "MBA Oath" this year and pledged to make a positive impact on society.

While this seems a positive development, it is worth remembering that MBA programs have historically had a bit of an ethics problem. A study done in 2006 reported that 56% of MBA students admitted to cheating.

Financial numeracy and subprime defaults

The Economist reports on a recent study that shows sub-prime mortgage defaults are more common among people with lower financial numeracy - basically folks who can't do the math too well.

You can take the numeracy test as well. It's not very long.

Note to my MBA students - if you didn't score 5/5 then I don't want to know.

How are corporations taxed?

I'm teaching Financial Management to MBAs for the next 5 weeks. Last night we talked a little about corporate tax rates. This graphic shows nicely the taxes paid by some well known corporations.

Germany expanding short sale ban?

Germany is thinking of expanding its short sale ban to include all stocks.

Personally, I don't think short sellers are the problem here.

What happens if you ban short selling?

Common wisdom is that stock prices should rise. But this doesn't always happen as Felix Salmon notes.

Germany cracks down on shorting

Germany bans naked shorting. Rather than go after the root cause of the euro problem - they go after the hedge funds.

On a related note, my co-authors and I are just putting the finishing touches to a paper that shows that short sale restrictions in one country lead to more shorting elsewhere, and cause prices to deviate from fundamentals more often. Perhaps I'll send Merkel a copy.

Are stocks overvalued?

Fortune seems to think so.

I have no crystal ball, but it seems reasonable to assume that stocks are not going to earn returns of 5-6% over long treasuries in the future. Somewhere in the 2-4% range seems more reasonable.