E change For Friends
of the
Tippie College
of
Business Department
of
Finance
Summer 2015
Ranked
Worldwide
Exchange is an annual publication for alumni and friends of the Department of Finance, Henry B. Tippie College of Business, and the University of Iowa. Department Executive Officer Erik Lie erik-lie@uiowa.edu Editor Misti Huedepohl misti-huedepohl@uiowa.edu Design Benson & Hepker Design Contributing Writers Lesanne Fliehler Misti Huedepohl Ruth Paarmann Ashish Tiwari Contributing Photographers Misti Huedepohl Impact Photo/Joe Photo Alex Kroeze Eric Learned/Indianapolis Business Journal Executive Director of Development Greg Lamb gregory-lamb@uiowa.edu Contact Us Your feedback is always welcome. Direct correspondence to: Misti Huedepohl Editor, Exchange 108 Pappajohn Business Building S208 PBB University of Iowa Iowa City, IA 52242-1994 Phone: 319-335-1554 misti-huedepohl@uiowa.edu Address Changes Email: alumni-records@uiowa.edu U.S. Mail: Alumni Records, UI Alumni Association, 100 Levitt Center for University Advancement University of Iowa, Iowa City, IA 52242-1797 The University of Iowa prohibits discrimination in employment, educational programs, and activities on the basis of race, creed, color, religion, national origin, age, sex, pregnancy, disability, genetic information, status as a U.S. veteran, service in the U.S. military, sexual orientation, gender identity, associational preferences, or any other classification that deprives the person of consideration as an individual. The university also affirms its commitment to providing equal opportunities and equal access to university facilities. For additional information on nondiscrimination policies, contact the Director, Office of Equal Opportunity and Diversity, the University of Iowa, 202 Jessup Hall, Iowa City, IA, 52242-1316, 319-335-0705 (voice), 319-335-0697 (TDD), diversity@uiowa.edu.
Inside this issue of Exchange
Cathy Zaharis: Two degrees hang on her wall, yet Cathy Zaharis feels she has been paid to study every day for nearly 30 years. “I have always felt I get paid to learn. The more I learn about companies and industries and their valuation, the better investor I could be,” says Zaharis, who completed an undergraduate degree in finance at the University of Iowa in just three years. She returned to her hometown of Des Moines for an MBA degree from Drake University. Zaharis was a portfolio manager and analyst with Principal Global Investors for 23 years before filling the position of business director of the MBA Finance Career Academy and adjunct lecturer in the Department of Finance in 2008. She enjoyed working at Principal Global Investors where every day was different and it fed her constant curiosity. Zaharis answered questions like what company is the best investment opportunity and why, and she reveled in digging deeply to find the answers. As a result, she treated every day as a learning opportunity. Zaharis’s first day on the job in August 1982 nearly coincided with the start of one of Wall Street’s most momentous bull markets. This strong market paved the way for Principal Global to expand its products. “I was at the right place at the right time but I was also able to demonstrate my work. I progressed from an analyst to a portfolio manager to managing different kinds of products— mostly on the value side of the shop,” she explains.
Departments Finance News Alumni News
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Always Learning She received her CFA Charter in 1986, and eventually served as president of the CFA Society of Iowa. In 1989, Zaharis was instrumental in establishing the Tippie College of Business as a CFA Program Partner, the only institution in the state designated as one. Spending 23 years in financial markets means Zaharis witnessed some very good times as well as traumatic ones. She remembers the crash of 1987 as an “interesting time,” and she was there for the dotcom bubble, too. “It’s interesting because my mentor at Principal would say, ‘Experience means so much in this industry and you can’t get it until you have it.’ Now I know what it means.” She relocated to Iowa City and was chair of the Investment Committee at the University of Iowa Foundation, a role she thoroughly enjoyed because she was working beyond the scope of value equities to include a wide variety of asset classes. Today, she is the chair of the University of Iowa Foundation Board of Directors. When the Tippie College developed the educational model that is today’s MBA Finance
Career Academy, Zaharis was tapped to fill the new role of business director. “It was a lot like a startup. I hadn’t worked in higher education, but I had a passion for finance and a love for sharing it.” Zaharis admits she learned by doing, much like the MBA students she guides through the two-year full-time program. After decades working in an environment where she felt she was paid to learn every day, it’s fitting Zaharis is surrounded by students who learn from her significant industry experience and knowledge. “I am jazzed every single time I see a student understand financial concepts. I can almost see them processing the information, and then the light bulb goes on; they discover finance is what they’re meant to do,” she says. What’s next for Zaharis? Starting next fall, she plans to recreate her role for undergraduate students so they can benefit from career advice, mentoring and academic guidance from someone who has been in the investment community for decades. There is definitely more learning ahead for her and undergraduate finance students.
“I am jazzed every single time i see a student understand financial concepts.”
Features High Ranking
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Trust
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Martial Art
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in Agreement
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tippie college of business
Department of finance News
Ph.D. Program Update
Ashish Tiwari
During the 2014-2015 academic year, we had 13 students in residence in the Tippie finance Ph.D. program. We welcomed three new students who joined the program in fall 2014—Dennis Hamilton, Eric McKee and Jue (Julie) Wang. Prior to joining our program, Dennis Hamilton obtained a Bachelor of Science degree in business from Indiana University (Bloomington, Indiana) where he majored in finance and accounting. Dennis subsequently obtained his MBA degree from Indiana University-Purdue University, in Indianapolis, with a concentration in finance. His corporate experience includes stints as staff auditor at Ernst & Young LLP, in Indianapolis, and as financial analyst at the Indianapolis campus of Franciscan St. Francis Health, a part of the Franciscan Alliance health care network. Eric McKee obtained an undergraduate degree in actuarial science from North Central College (Naperville, Illinois) followed by an M.S. in applied mathematics with a concentration in actuarial science from the University of Illinois at Urbana-Champaign. Eric is an avid tennis player and represented North Central College as a member of the varsity tennis team. Jue (Julie) Wang received her undergraduate degree from Peking University with double majors in economics and biological science. She subsequently joined the Peking University HSBC Business School as part of the dual master’s program and obtained graduate (M.S.) degrees in finance from Peking University and economics from Chinese University of Hong Kong. We are happy to announce three students completed the doctoral program in 2014 and all accepted tenure-track appointments. Lin Tong graduated in May and joined the Gabelli School of Business at Fordham University in New York. Kyeong Hun Lee also received his degree in May and accepted a faculty position at the Higher School of Economics in Moscow, Russia. Tingting Que completed her degree requirements over the summer and joined the faculty at the College of Business Administration, University of Alabama in Huntsville, Alabama. During the past year, we welcomed back an alumna, Jennifer Marietta-Westberg (PhD00), to campus during her visit in October 2014. Jennifer is currently the deputy director and deputy chief economist, Division of Economic and Risk Analysis at the U.S. Securities and Exchange Commission, and we are pleased that she has agreed to serve on the Finance Department Advisory Council. (See page 18 for more about Jennifer’s career.) At the end of this academic year, I will step down as the program director and will hand over the reins to Associate Professor Art Durnev, who I know will do an excellent job leading our program. Over the years, the opportunity to work with wonderful and talented doctoral students has been one of the most satisfying and rewarding aspects of my role at the University of Iowa. On behalf of the Department of Finance, I would like to take this opportunity to express my sincere thanks to the alumni and friends who have supported us over the years and have helped us in identifying and recruiting promising students to the Ph.D. program. Your continued support is vital to our ability to maintain a high-quality doctoral program which we can all be proud of. —Ashish Tiwari, Director, Ph.D. Program in Finance and Henry B. Tippie Research Fellow Thirteen students are in residence in the finance doctoral program. (Top row) Bo Meng, Jin Sook Lee, Ke Shen, Eric McKee. (Middle) Jue Wang, Dennis Hamilton, Jie Ying. (Front) Keyang Yang, Yuliya Ivanova, Colin Swaney. Not pictured Mahmut Ilerisoy, Christopher Penney, Qianying Xu.
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Career
Fair
Last October approximately 130 students readied their resumes and dressed to impress for employers seeking talented students to fill internships and full-time positions. The Actuarial Science, Insurance and Risk Management Career Fair was held at the Iowa Memorial Union where 31 organizations participated. A sample of participating employers recruiting at the fair include: • Allianz Life • Aon Hewitt • Berkshire Hathaway Homestate Companies • Cigna • Cigna Corporation • Lincoln Financial Group • Pinnacle Actuarial Resources Inc. • PricewaterhouseCoopers • Principal Financial Group • Prudential • Securian • Sentry Insurance • Towers Watson
The Fall Job and Internship Fair for all majors is September 24, 2015 at the Iowa Memorial Union.
To take part in any of the university’s career fairs, contact the Pomerantz Career Center at 319-335-1023. The next actuarial science, insurance and risk management career fair will be held September 30, 2015 in the Iowa Memorial Union. Space is limited.
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tippie college of business
Department of finance News
Tippie MBA Consulting Proj
Congratulations, Viana Rockel Viana Rockel, associate director, Emmett J. Vaughan Institute of Risk Management and Insurance, was recognized by the Tippie College of Business with the 2015 Edith Ennis Award. This is an annual designation awarded to one Tippie faculty or staff member who exhibits selfless commitment to the college and its mission, accessibility, optimism and cheerfulness, and teaching or service effectiveness. Letters of recommendation were prepared on Viana’s behalf in support of her nomination. One letter read, “Perhaps what sets Viana apart is her willingness to commit countless hours making herself available to students, arranging professional trips and coordinating relevant guest speakers for students. She has contributed far beyond the scope of her job description.” Another recommender said Viana has an incontrovertible devotion to all around her, and “she has never allowed a clock to get in the way of her job.” Congratulations to Viana for this welldeserved award.
Employers tell us they want students who can hit the ground running. In order to get MBA students ready to perform on day one, the Tippie MBA Finance Career Academy requires students to complete consulting projects in both the first and second years of the program. “What employers want are students who can apply their fundamental knowledge and technical skills to solve problems and have an immediate impact on the company,” explains Tom Rietz, professor and faculty director of the Finance Career Academy and Leonard A. Hadley Research Fellow. “Through our consulting projects, we implement a deliberate experiential curriculum that develops these skills. It’s an all-around win with tremendous benefits for the students, the client companies and future employers,” he says. Clients work with the Tippie College to provide students with a clear project objective and access to the information needed to produce the desired output. Students will periodically contact clients regarding project questions and progress. At the close of the consulting project, students share innovative, research-based solutions the client may act upon while students gain hands-on experience to be competitive during the job search.
IDx Medical Technology: Financing Medical Innovation
IDx, an innovative medical technology company, partnered with the Finance Career Academy to seek viable solutions to some very real situations. Through smart retinal imaging, IDx captures high-resolution photos of the back of the eye, and then automatically analyzes these images for markers of diabetic retinopathy, glaucoma and cardiovascular diseases—all in real time. By automating the interpretation of images, IDx’s products can help frontline medical providers detect, measure and screen for disease more effectively and efficiently. When considering additional financing to prepare for product launch, IDx worked with a team of Tippie MBAs to write a private placement memorandum to raise equity financing. The team created a comprehensive and flexible tool that IDx can use, which included: • development of the business description and financials; • analysis of IDx’s future potential including forecasting demand, as well as both a competitive analysis and risk analysis; and • creation of a structure for IDx to describe its offering. “In most MBA programs, the curriculum avoids private finance because private markets are a bit of a mystery relative to public markets,” explains Rietz who advised the team. “But, private equity is an extremely important tool for innovative businesses. Through this project, the students learned firsthand about making the case for private financing.”
“Through our consulting projects, we implement a deliberate experiential curriculum that develops these skills. It’s an all-around win with tremendous benefits for the students, the client companies and future employers.” Tom Rietz, professor and faculty director of the Finance Career Academy and Leonard A. Hadley Research Fellow 4 | Exchange | Summer 2015
ects Deliver Jarom Dilworth, a student who assisted IDx, says, “I was able to work on an exceptional finance project. I think few programs in the country give MBA students the opportunity and autonomy in writing a private placement memorandum for a client as Tippie does.” The outcome was an asset to Gary Seamans, CEO at IDx. “In my career, I have had the opportunity to work with the largest investment banks and mega law firms. The five talented team members from Tippie created a document that would rival anything I have experienced from these national and global firms,” he says. “Suffice it to say, the leadership team and I were most impressed. These fine men and women are ready to make their mark in the business world of their choosing. Their
excellence reflects great credit upon themselves and the Tippie MBA program.”
VazTec: Giving Power to an Innovative Idea
Another consulting project centered on start-up technology company VazTec, based in North Carolina, which had a big idea: a valveless engine design that would improve engine efficiency and durability without losing engine power. But cutting-edge technology has little impact on emissions and fuel consumption unless it can be brought profitably to market. That’s where Tippie’s Finance Career Academy could help. Tippie MBAs performed a financial analysis that would help realize the owners’ ambitions to commercialize their innovation. The student consultant team created: • a customized, flexible cost of capital model for the industry; • a valuation model for end users of the engine technology; and • a financial projection based on a number of potential development situations.
Armed with this information, VazTec’s leaders are actively seeking equity partners and licensees, and they are more confident now that their technology will become commercially viable. Money aside, there’s a corporate social responsibility upside to this project: adoption of VazTec’s technology will mean less reliance on fossil fuels and fewer greenhouse gas emissions around the world. “Working with a startup, and all the ambiguity associated with it, was a fantastic learning opportunity,” explains Rietz, who also advised this student team. “Without a doubt, this experience has developed my technical and client relations skills, and I am confident that it’ll be an asset to my career,” says secondyear MBA Valerie Bustle. “Doing complex forecasting meant we needed an intimate understanding of the industry to predict its value. I applied concepts that I learned here at Tippie over the course of my MBA.” Abel Nazareth, second-year finance MBA, explains how the team accomplished their goal despite roadblocks. “Working with a lot of uncertainty and limited input from the client taught us to develop flexible models that could work with various inputs. Class time was used for brainstorming ideas, which helped us look at the problem from different perspectives. It was exactly the type of real-world experience I didn’t expect from an academic environment, but it boosted my confidence significantly.”
For more information For more information about Finance Career Academy consulting projects, or to learn how the Finance Career Academy can assist you, contact Tom Rietz at thomas-rietz@uiowa.edu or 319-335-0856.
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tippie college of business
Department of finance News
Welcome to Finance Boot Camp No drill sergeant barks orders. No marching in formation. This is a new kind of boot camp and it’s offered at the Tippie College of Business. The concept of a Finance Boot Camp was developed by Todd Houge, lecturer and Curt and Carol Lane Research Fellow. Houge, wanted a one-day program for undergraduate and MBA students so they could gain exposure to the possibilities a finance career could offer. He conferred with Cathy Zaharis, the Full-time MBA Program’s Finance Career Academy business director. Together, they developed a plan to bring boot camp to life. The Finance Boot Camp was designed to extend learning beyond the classroom, with focused topics and presentations delivered by professionals. “Our students frequently have opportunities to interact with guest speakers, but we wanted a forum where practitioners shared details of how they approach their job,” explains Houge. “In essence, the boot camp took the theory that we teach in our finance courses and showed how it was applied in practice from the professionals who are on the front lines of the investment world,” he says.
“Our goal was to kick-start student interest in finance with a day of immersion for all students, And we accomplished that and more.” Cathy Zaharis, the Full-time MBA Program’s Finance Career Academy business director
These tactics resulted in tremendous student interest. “Response from students was phenomenal for our inaugural offering,” explains Houge. “We were forced to suspend registration after reaching room capacity.” A total of 140 undergraduate and graduate students registered, and others remained on a waiting list. Boot camp took place in early October in the Pappajohn Business Building, making it convenient for business students to attend. During a panel discussion, finance professionals answered questions and shared advice with students curious about careers in the finance or investment profession. They also guided students through case studies and presentations. Scott Bennett (BBA86, MBA88), portfolio manager at Principal Global Investors in Des Moines and a board member of the CFA Society of Iowa, was one of several Tippie alumni who contributed to programming for the day. “The boot camp exposed students to fixed income asset management,” says Bennett. “Professor Houge’s vision was to feature real-world examples of analysis that fixed income professionals undertake in making investments and managing portfolios.” Bennett says that the fixed income sector provides many employment opportunities but is not covered as extensively in formal business school curriculum. “While the afternoon boot camp did not make anyone an instant expert in fixed income asset management, our hope is that by exposing the students to this part of the financial markets, they will consider it as a career option,” says Bennett. Topics presented at boot camp included: • The Current Market Environment: Bulls v. Bears • Accounting Forensics: Financial Statement Analysis and the Investment Research Process • Fixed Income Portfolio Management: Managing Risk, Return and Cash Flows • Case Study: Industry, Company and Investment Research for Target Corp. “Our goal was to kick-start student interest in finance with a day of immersion for all students,” explains Zaharis. “And we accomplished that and more.” Special thanks to the CFA Society of Iowa, Principal Global Investors, and AEGON for their support of this event.
Finance Boot Camp Presenters Scott Bennett (BBA86, MBA88), CFA, Portfolio Manager, Principal Global Investors Bradley Dyslin (MBA90), CFA, Global Head of Credit, Managing Director, Aflac Global Investments Ross Junge (MBA96), CFA, Associate Wealth Management Advisor, Director of Investments, Northwestern Mutual Wealth Management
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Christine McElvania (MBA14), CFA, Partner, Quad Cities Investment Group Todd Nelson (MBA07), CPA, CFA, Vice President, Goldman Sachs Calvin Norris (MBA07), CFA, Director of Liquid Markets, AEGON Jonathan Perez (MBA07), CFA, Senior Fixed Income Analyst, Principal Global Fixed Income Bert L. Zimmerman (BBA00, MBA05), CFA, Senior Fixed Income Analyst, Principal Global Fixed Income
MBA Case Competition Results Teams of Tippie MBA students have performed well in recent national case competitions. By participating in case competitions, students improve their analysis, critical thinking, collaboration and presentation skills through a series of competitive rounds against other MBA schools. The case method of study is an integral part of any top MBA academic curriculum.
First Place
ACG Cup—Allan Dantas, Karen Rubel and Chris Jin took first place at the February event in Minneapolis, sponsored by the Association for Corporate Growth. CFA Research Challenge (regional)—Michael Fleagle, Michael Emgarten, Nick Viner and Adam Walter took first place out of four teams in the regional Iowa Society competition.
Jim Kain, Jake Johnson, Karen Rubel and Rachel Haaland Watson took third place among the 5 teams that made the final cut (out of 25 teams). This was the second year in a row that a Tippie MBA team competed in the Aspen Institute Business & Society International MBA Case Competition finals in New York City.
Allan Dantas, Chris Jin, and Karen Rubel took first place at the February event in Minneapolis, sponsored by the Association for Corporate Growth.
Third Place
Aspen Institute Business & Society International MBA Case Competition—Jim Kain, Jake Johnson, Karen Rubel and Rachel Haaland Watson took third place among the 5 teams that made the final cut (out of 25 teams). This was the second year in a row that a Tippie MBA team competed in the finals in New York City. Michael Emgarten, Michael Fleagle, Cathy Zaharis, Brian Johnson, Casey’s General Stores, investor relations, Nick Viner and Adam Walter took first place out of four teams in the regional Iowa Society competition.
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R anked No. 2 Worldwide Tippie’s MBA finance progr am gets noticed by Financial Times
T
Iowa named #31 nationally, #1 in U.S. salary increase
hanks to the Financial Times, the Tippie Department of Finance has more to celebrate than usual. That’s because the Financial Times annual ranking published in January declared the Tippie MBA finance program #2 in the world. A first for the program. Despite the small size of Tippie’s Department of Finance and the fact that Iowa City is not a financial center, the gems of the program like teaching excellence, hands-on real-money investment management, and the MBA Finance Career Academy deliver a quality education students and employers value. “This is a reflection of our exceptionally talented and dedicated faculty combined with the college’s culture of teaching excellence,” explains Erik Lie, departmental executive officer and Henry B. Tippie Research Professor. This is a four-spot improvement from the 2013 program ranking when the Financial Times ranked it sixth in the world.
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smu: cox university of toronto: rotman
carnegie mellon: tepper
London business school
University of Pennsylvania: Wharton
University of Rochester: Simon
columbia business school
New York University: Stern
University of Iowa: Tippie
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University of Chicago: Booth
Attention-grabbing
Numbers
In addition to the top overall rankings, the University of Iowa MBA topped the Financial Times MBA ranking in two categories among U.S. MBA programs: #1 in the U.S. for percentage salary increase and #1 in the U.S. in value for the money. The Tippie program received its top salary increase ranking after Iowa full-time MBA alumni reported a 117% salary increase since the start of their studies. Further, Tippie was recognized by alumni for effectiveness in supporting student job searches, achieving a rank of #35 in the world in placement success. The Financial Times 2015 ranking places the University of Iowa Tippie MBA among the top 5 percent of all AACSB-accredited programs in the U.S.
Delivering teaching excellence is a top priority for the Department of Finance.
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The Financial Times MBA global ranking evaluates the world’s best full-time MBA programs. A record 149 schools were evaluated and all had to meet strict entry criteria and international accreditation. The London-based global financial daily compiled data from the schools and survey results from alumni who completed full-time MBA programs in 2011. The Financial Times survey ranked such elements as salary increase after receiving the degree, quality of teaching and employment rate within three months of graduation. For schools to be ranked, 20 percent of their alumni must respond to the survey. This year, about 9,700 global alumni completed the survey—a response rate of 40 percent. Although some faculty exchanged high-fives and fist bumps, nobody uncorked the champagne or added too much swagger to their step. “We are extremely pleased that our alumni shared such positive feedback about our MBA finance program and we greatly appreciate the high ranking,” says Lie. “Yet, we realize that rankings are volatile and imperfect indicators of program quality, and we will continue to do what we believe is in the interest of our students, prospective employers, and the greater community, even if doing so does not specifically cater to the ranking criteria.” The Financial Times ranking lists the University of Iowa’s overall Tippie MBA Program as #31 in the U.S. and #63 in the world. Tippie’s overall position is up 11 spots from the 2013 ranking and up 33 spots from 2012. “Tippie’s place on the 2015 MBA ranking puts it in good company with the best MBA programs in the world. Notably, Tippie’s ranking bests several Big Ten MBA programs,” explains David Frasier, Tippie School of Management’s associate dean. Since the Financial Times ranking hinges on alumni feedback, remaining connected to alumni is extremely important for the University of Iowa. “This latest Financial Times ranking demonstrates how our alumni value the education they received at Tippie,” says Frasier. “It is very important that alumni maintain their contact information in our databases so they can be contacted when media organizations request their input for surveys. This is critical to the continued reputation of the Iowa programs, which benefits everyone affiliated with them,” he says. To ensure the Tippie College has your alumni contact information on file, visit tippie.uiowa.edu/alumni/update.
TRUST is the name of the game
T By Ruth Paarmann
ransparency in financial transactions is important to transactional efficiency, but who benefits most from seeing who invested and gave back? When the recent financial crisis had adverse effects on intermediated markets, such as the mortgage industry, the U.S. government began calling for greater transparency in publicly regulated markets. However, many wondered if transparency between the parties in the transaction would improve trust and transactional efficiency. MBA Finance Career Academy Faculty Director and Professor Thomas A. Rietz was among them. He and several researchers from Chapman University decided to study the effect of transparency on trust in intermediated transactions. As the
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Leonard A. Hadley Research Fellow, Rietz has performed a number of studies related to trust and financial transactions. “In general, I’m looking at how people behave in financial contexts. At some point, you realize how much of your life depends upon trusting other people,” Rietz says. “Driving to work, I trust all other drivers to stay on their side of the road. When I put my money in the bank, I trust that they won’t run off with it. Trust is important to a wellfunctioning economy. “In the mortgage crisis, the people who created mortgage loans didn’t perform proper due diligence on borrowers,” he says. “This in turn affected numerous borrowers, banks and mortgage lenders.”
Changing the Dynamic
To research transparency in an environment similar to an intermediated market, the researchers used The Trust Game, a two-player investment research tool used since 1986. To imitate the intermediated market, their game involved three players: an investor, an intermediary and a borrower. The investor received $10 that he could keep or give to the intermediary. In turn, the intermediary could give money received to the borrower. The money tripled in value with each exchange. Then, the borrower could voluntarily “repay” some of the money to the intermediary and the intermediary could voluntarily pass some back to the investor. In these voluntary exchanges, the money did not grow. According to Rietz, trust is inherent to making the greatest profit, but at the onset of the game, the three players do not have any good reason to trust the others. “Studies have shown that changing the rules of The Trust Game changes things dramatically,” says Rietz. “We focused on discovering the answer to: ‘How does changing how much I know change the dynamic?’ We expected transparency to affect the three parties in different ways.”
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Transparency Results in Efficiency
The researchers altered the transparency of exchanges between the parties. What they found was that transparency in the borrower/intermediary transaction increased initial investments and overall financial gains. Transparency to the investor increased efficiency and payoffs to all parties. And investor/intermediary transparency did not significantly affect welfare. In summary, everyone can benefit from transparency, but the borrower—the consumer equivalent— gains the most from transparency within the transactions. “Transparency matters, but this suggests that not all transparency is created equal. It doesn’t always improve market outcomes,” says Rietz. “Investor trust is increased when exchanges between the intermediary and borrower can be seen, and this increases efficiency and payoffs to all parties. But when the borrower’s moves are transparent to the other parties, it’s the borrower who gains the most.” “It’s an interesting result, but this would require giving up the privacy of borrowers to intermediary organizations, which is not the transparency currently proposed,” says Rietz. “The transparency proposed by the government and boards of directors— the transparency between investors and intermediaries in the capital market—had no significant effect on efficiency.”
Rules & Trust
Rietz also follows his curiosity about the interaction of rules and trust. In other research, he and partners from Chapman University examined how minimum standards increase or damage trust in financial transactions. Rietz is intrigued by the question: Do rules encourage or replace trust in financial transactions? “We find that minimum standards actually break trust, and, regardless of how high the standards are, trust and reciprocity never return,” Rietz says. “By trying to prevent the most egregious trust violations, we can make people less trusting.” Rietz points out that free-will donation jars at concession stands or benefit suppers are often much more effective than posting a set donation amount. He also refers to the Monderman Principle, which suggests that removing traffic controls such as stop signs and pavement markings can improve traffic efficiency and safety. “Dutch traffic engineer Hans Monderman had no budget for signs in his city, so he took away the traffic controls. This forced people to pay attention, look at each other and use common courtesy. This is like the traffic roundabouts you are starting to see in suburban areas, where you have to look at the other driver and let him go or wait until he has passed.” Through his research, Rietz continues to explore these possibilities and test the boundaries of financial regulations and the human capacity for trust.
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Martial
ART
hat does judo have to do with business education? Everything. Just ask Art Durnev, associate professor and Henry B. Tippie Research Fellow in the Tippie College of Business Department of Finance. “‘Judo economics’ is not a new business strategy, but I have personally witnessed the usefulness of judo and I see how the application of its fundamental principles like exploiting the weaknesses of larger competitors is advantageous in business and in life,” explains Durnev. For the last three years Durnev has studied judo at the University of Iowa Judo Club, progressing to a brown-belt skill level. He has competed in 20 tournaments across the U.S., and won the Midwest Championships in 2015, and he aspires to compete in the World Championship in Amsterdam this fall. Judo, a Japanese term, means “gentle way.” Compared to other more aggressive martial arts like karate, judo is founded on a strategy of movement and balance to overcome opponents. “Using skill to defeat size is paramount in business and in a physical competition,” says Durnev. He cites the example of the recent rivalry between taxi ridesharing companies Uber and Gett that makes excellent fodder for class discussions in his undergraduate international finance course during the spring semester. “Comparatively, Uber is the larger company, and arrived first to market. The smaller company, Gett, is trying to outmaneuver Uber by taking advantage of Uber’s weaknesses by providing better pay for drivers and stricter driver background checks,” he says. When students meet with Durnev during office hours, they can’t help but notice his display of medals and ribbons from competitions from the last three years. Durnev joined the University of Iowa Judo Club where he met men and women who are also passionate about judo. Derek Ikoma of Naperville, Illinois, is a business student majoring in finance and marketing at Tippie who happens to be a black belt and Durnev’s coach. Ikoma, a regional judo referee, was ranked 6th in the nation, and has trained with former Olympians. “Judo has influenced my life in many ways but especially as a student,” explains Ikoma. “It has helped me develop interpersonal skills. I’m a better communicator, and as a business student, that is really beneficial to my academic career.” 14 | Exchange | Summer 2015
Applying Judo Principles in Business
Judo is a full contact sport with arm bars, chokes and many injuries; anything but gentle. Durnev’s injuries last year included a torn shoulder and a broken toe. He is a frequent visitor of the Sports Medicine Clinic in Iowa City. Summer 2015 | Exchange | 15
Derek Ikoma
Like most undergraduate business students, Ikoma maintains an active campus life. He is president of the Iowa Judo Club, director of Brotherhood of Delta Lambda Phi fraternity, a full-time student and holds a part-time job. “Judo has also helped me with time management and to learn determination and persistence. I’ve learned to not give up and constantly push myself to be better, which I think has been helpful with the pursuit of a double major,” he says. Although judo is deemed a less aggressive art than other martial arts, it features throws, takedowns, pins, joint locks and chokes. Injuries are not uncommon. Durnev admits the positives outweigh the negatives and judo is deeply embedded in his life. “I’ve adopted a new life philosophy because of judo and I use it any time I make decisions; sometimes five times a day,” he explains. “I ask, ‘Will this help my judo?’ If the answer is yes, then I will do it.”
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When the answer is no, then he leaves it behind. At one time Durnev was a social drinker, but has decided drinking alcohol doesn’t support his judo performance, so he eliminated it from his life. As an international sport, judo is recognized around the world, which makes training easy for Durnev, a Russian native. He travels the globe teaching in the Tippie MBA Program. His areas of expertise include corporate finance, corporate governance, energy sector, exchange rates, financial crises, politics and finance. His most recent research interests are in the area of corporate social responsibility. “Everywhere I go, I find a club where I can train. I have trained in England, Hong Kong, Canada and Russia.” Durnev has met hundreds of people through judo. He says no matter where the judo club, he’s always asked his rank, and not necessarily any other information, then he’s welcome to train and practice.
The Hong Kong MBA Did you know the Tippie College of Business offers a MBA program for working professionals in Hong Kong? The convenience of weekend classes allows students employed full-time to complete the program in less than two years. Last summer while Professor Art Durnev was in Hong Kong teaching Managerial Finance in the MBA program there, he found himself at the epicenter of a political hotbed. Prodemocracy protestors clashed with pro-China demonstrators very near the Tippie Hong Kong MBA classrooms. Durnev traveled the streets where protestors, many whom were students from a variety of universities, crammed the city. “Protests continued for many days,” Durnev explains. Many protestors were students, impassioned by a cause, yet dedicated to their studies. Durnev explains, “Where some small areas of protestors bred chaos, other areas had structure.” Groups of students collected in study corners with desks on the street where they would study and complete school work. “As an instructor, I volunteered to help them. I didn’t know them, but I helped them with their finance homework.”
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In Agreement hen Jennifer MariettaWestberg, PhD00, reflects on the trajectory of her career at the U.S. Securities and Exchange Commission, she recognizes the importance of one simple three-letter word: YES. “My career grew largely because I said ‘yes’ when asked to do different things,” says Marietta-Westberg, deputy director and deputy chief economist of the Division of Economic and Risk Analysis (DERA) at the SEC. For example, early in her career she was asked to explore a topic not many economists engaged in surrounding broker-dealers. Minimal data was available and the subject was complicated by many technical rules. “When I was asked to work on a project related to this, I said yes.” Despite the challenges of a new complex subject, Marietta-Westberg’s thorough study progressed to an area of expertise. Her experience and depth of knowledge qualified her for a new position as assistant director in the recently created DERA. She continued to participate in many opportunities to support the division throughout her career, so when another advancement opportunity became available, Marietta-Westberg had great experience, knowledge and the network necessary to fill the role of assistant deputy. “My advice to anyone wishing to grow their career is to be open to trying different things because it will create options you didn’t know you had,” she says. She warns not to over extend your commitments, but don’t avoid the word “yes.” Today she oversees the provision of economic analysis in support of commission policy and rule making in the areas of asset management, broker-dealers, credit rating agencies, market microstructure and financial innovation.
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“In my position, I oversee the economic analysis created by the division in the areas of market structure and financial intermediaries,” she explains. She was elected vice-chair of the International Organization of Securities Commission’s Committee on Emerging Risks in 2014, and she oversees many of DERA’s economic analyses in support of international initiatives. Her research interests include initial public offerings and universal banking and investments. She has been published in the Journal of Accounting and Economics, the Journal of Corporate Finance, and European Financial Management. Last fall, Marietta-Westberg was invited to join the Finance Advisory Council in the Tippie College of Business and again she agreed. She was happy to continue to have a link to the University of Iowa and the Department of Finance where she received her doctoral degree in finance in 2000. “As a council member, I have the opportunity to understand how curriculum
“My career grew largely because I said ‘yes’ when asked to do different things. My advice to anyone wishing to grow their career is to be open to trying different things because it will create options you didn’t know you had.”
is decided and what funding challenges the finance department faces,” she says. “I also feel I can share my regulatory experience, and I may provide recommendations which would bring a unique perspective to the council.” Marietta-Westberg is not in unfamiliar territory in academia. She spent six years at Michigan State University as an assistant professor. Though she enjoyed her work as a professor, she desired an opportunity to conduct research and see the visible application of that research. She found the SEC provided the environment she was searching for in 2006 when she joined the commission as a visiting scholar.
Finance Advisory Council The Finance Advisory Council is an integral link between the Department of Finance and the professional sector. Representing a broad scope of financial industries, council members serve to assist the department and faculty to best understand the needs of an emerging workforce. Council members also connect valuable internship and employment opportunities to Tippie finance students. Frederick J. Crawford (MBA87), Executive Vice President & Chief Financial Officer, CNO Financial Group, Carmel, Indiana James Dixson (BBA96), Vice President, Corporate Strategy, Nasdaq OMX, New York, New York John Falb (BBA84), Managing Director, The Private Bank, Minneapolis, Minnesota Allen Hamood (BBA90), Executive VP and Chief Financial Officer, Transunion Corporation, Chicago, Illinois Tim Larsen (BBA04), Senior Vice President, Houlihan Lokey, Chicago, IL Eric Malchow (BBA89), Managing Director and Co-President, Lincoln International LLC, Chicago, Illinois Jennifer Marietta-Westberg (PhD00), Deputy Director, Division of Risk, Strategy, and Financial Innovation, Securities and Exchange Commission, Washington, D.C. Sridip Mukhopadhyaya (MBA08), Principal Analyst, ERM, Exelon, Chicago, Illinois Daniela Spassova (MBA96), Managing Director, Global Projects, Consultant, Principal Capital Management, Des Moines, Iowa Mark Traster (MBA96), Portfolio Management, Equities, Nuveen Asset Management, Minneapolis, Minnesota
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Department of finance alumni News
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Amos E. Hill
Alex Boyce, BBA05, was promoted to vice president at HCF International Advisers Ltd., a corporate finance advisory boutique focused on the global metals and mining sector. He lives in London. Nicholas O. Cooper, BBA01, an attorney with the Whitfield & Eddy law firm in Des Moines, received recognition for his pro bono work from the Polk County Bar Association. Fred Crawford, MBA87, chief financial officer for CNO Financial Group, was named the 2014 CFO of the Year by the Indianapolis Business Journal. Brian W. Crotty, BBA02, and Beth (Weber) Crotty welcomed a son, Connor William, on June 8, 2014. Matt Devore, BBA85, is CEO of the Cascade Pacific Council Boy Scouts of America. He lives in Happy Valley, Oregon. Derek Foster, BBA13, completed an M.S. in finance from the University of Arizona. He is a research analyst in the senior loan group of Voya Investment Management (formerly ING USA) in Scottsdale, Arizona. Amos E. Hill, BBA06, an associate with the Whitfield & Eddy law firm in Des Moines, is a member of the American Bar Association Young Lawyers Division Affiliate team, co-chair of the Polk County Young Lawyers Division and president of the Iowa State Bar Association Young Lawyers’ Division. Daniel Hoppestad, BBA10, is an auditor with PricewaterhouseCoopers in Charlotte, North Carolina. Todd Houge, PhD98, was named Faculty Member of the Year by the Tippie Student Senate at the Tippie College of Business. Todd E. Hutchison, BBA93, is a senior vice president and chief financial officer of Health Alliance Plan in Detroit.
The Golf Network The ninth annual Dana Ramundt Insurance Education Foundation Golf Outing will take place on Thursday, August 20 at Finkbine Golf Course in Iowa City. Insurance and risk management professionals are invited to take part in this event to network with Tippie risk management and insurance students. “People from all over the Midwest and beyond participate, as it is an opportunity for them to meet their future interns and associates before the students enter the job market,” explains Dana Ramundt (BBA74), who created the outing in 2006. He reminds employers the insurance industry is in a “war for talent” and this networking event provides a leg up on the competition. Funds from the event support scholarships and other RMI activities for students enrolled in the Vaughan Institute. For more information, contact Amy at abadger@thedanaco.com or Dana at dramundt@thedanaco.com.
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Mark L. Keenan, BBA85, is an attorney with the McKenna Long & Aldridge law firm in Atlanta. Katherine Knight, BBA13, is a graduate student in higher education at Loyola University in Chicago. Kim C. Korn, BBA78, MBA80, has published The Laws of Managing with coauthor B. Joseph Pine II, and the Harvard Business Review published their article, “The 7 Laws of Regenerative Enterprises.” Nathan W. Lamb, BBA97, a partner with the Ulmer & Berne law firm in Chicago was named a Rising Star in the 2014 Illinois Super Lawyers list. Benjamin Lederer, BBA14, is a client services associate with Fisher Investments in Camus, Washington. Travis J. Leo, BBA98, is chief executive officer of Residential Systems, a home technology provider in Lakewood, Colorado. Mike P. Locher, BBA02, is a financial advisor for Edward Jones in Phoenix. Robert C. Love, BBA85, was appointed vice president, Middle Market Segment for Prudential Group Insurance. He previously was vice president and head of Group Benefit Distribution at The Guardian Life Insurance Company of America. He lives in Warren, New Jersey. Shaner Magalhães, MBA94, is a realtor with Skogman Realty in Coralville and president of the board of directors for the Iowa City Area Association of Realtors. Akshay Mishra, BBA12, is currently enrolled in Tippie’s MBA for Professionals and Managers Program in the Quad Cities. Inspired by entrepreneurship, he is looking for ways to share his poetry with businesses as a way to motivate and increase happiness among employees. He lives in Davenport, Iowa.
John Morgan, MBA14, is a mergers and acquisitions analyst with the F2 Intelligence Group in Minneapolis. Karl J. Morgan, BBA76, is author of the fantasy novel Two Doors. Gary Moss, BBA83, is a business collections manager at Citizens Equity First Credit Union in Peoria, Illinois. Clay Ottman, BBA11, received an award at the 2014 Charter Property and Casualty Underwriter Conference for scoring the highest average on the CPCU exams of 1,900 new CPCU designees. He is a senior underwriter with national accounts at Sentry Insurance in Stevens Point, Wisconsin. Sean D. Phelan, BBA10, is a student at the Loyola University Chicago College of Law. Mark A. Pignotti, BBA95, is senior vice president of investments for the Wells Fargo Advisors Union Station office in Chicago. Ronald E. Rolwes, BBA74, is a certified public accountant and fraud examiner for the Mayer Hoffman McCann accounting firm in Irvine, California. Joe Schuhow, BBA2005, was named vice president, senior sales manager at FactSet Research Systems in New York City. Edward Wayne Schwertley, BBA85, serves on the board of directors for the Coalition for the Homeless in Louisville, Kentucky. Dave Sheppard, MBA04, was promoted to director of client development with Sidley Austin in Chicago. Brad Strader, BBA75, executive director of the Buena Vista Regional Healthcare Foundation in Storm Lake, Iowa, is one of the Iowa Hospital Association’s 2014 Iowa Hospital Heroes for his support of the Buena Vista Regional Medical Center and Buena Vista University premedical students. Julie A. (Thorndyke) Franklin, MBA08, is chief financial officer of Commercial Resources, a small business administration services provider in Centerville, Iowa. Jessica (Thorsheim) Newton, BBA07, was named director of investor relations for Healthcare Trust of America Inc., of Scottsdale, Arizona. Mitchell Vogt, BBA13, is a commercial auto underwriter with National Indemnity Co. in Omaha. Steve D. Weiss, BBA86, is vice president of the Century City branch of the Charles Schwab brokerage company in Los Angeles. Shera D. Wiegler, BBA00, is a partner with the Swanson, Martin & Bell law firm in Chicago. John A. Winga III, BBA90, is business manager for the Arbor Court retirement home in Mount Pleasant, Iowa. Robert C. Yoerger, MBA14, is global order fulfillment manager for John Deere in Moline, Illinois.
Todd Houge
Benjamin Lederer
Shaner Magalhães
John Morgan
Joe Schuhow
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