article thumbnail

What Private Equity Investors Think They Do for the Companies They Buy

Harvard Business Review

In particular, we are interested in how many of their responses correlate with what academic finance knows and what it teaches. Our research shows that private equity investors don’t seem to rely on the financial tools taught at business schools. the notion that debt financing can be “cheap” at certain times).

CAPM 8
article thumbnail

Stop Trying to Predict Which New Products Will Succeed

Harvard Business Review

Though there are multiple types of prediction, the gold standard is the prediction of precise outcomes.

article thumbnail

Why Those Guys Won the Economics Nobels

Harvard Business Review

He got his PhD at Yale under Shiller’s supervision in 1984, but since then he has also done a lot of work expanding on Fama’s ideas about risk and return, some of it co-authored with Fama’s son-in-law and University of Chicago finance colleague, John Cochrane. And the theory that was available then was CAPM. It goes back to the 1970s.

CAPM 8