Assistant Professor of Real Estate Urban Land Economics Morris Davis is critical of a recent move by Congress to extend a tax credit for first-time homebuyers and offer a new credit to people who already own a home but are looking to move.

Davis told the Milwaukee Journal Sentinel that home prices were stabilizing without further intervention and cautioned that extending the first-time buyer credit will be costly and only pull forward home sales that would have happened at a point in the future anyway. “There’s just a fixed pool of potential first-time homebuyers. So that means if you incent them to buy today, they are not going to be available to buy tomorrow,” said Davis.

Read more.

Morris Davis, assistant professor of Real Estate and Urban Land Economics, was a guest on Marketplace radio to discuss Federal Reserve Chairman Ben Bernanke’s call to action on financial regulation.

Davis discussed with host Bill Radke the implications of regulation and why he believes it will be difficult to monitor systemic risk.

Listen here.

Brian Hellmer, director of the Stephen L. Hawk Center for Applied Security Analysis, reacts to the new investor.gov website sponsored by the U.S. Securities and Exchange Commission (SEC) in SmartMoney magazine.

According to Hellmer, the website could help investors avoid mistakes and better understand the risks and costs of their investments.  “A lot of people even in their 40s or 50s who have been investing for a while wouldn’t necessarily know what red flags to look for when they talk to investment advisers,” says Hellmer.

Read more.

Ankit Agarwal, 2009 Wisconsin Entrepreneurial Bootcamp (WEB) graduate, has secured one of 13 awards given by the Kauffman Foundation national postdoctoral competition for his research in biomedicine.  He will become part of the first class of Kauffman Postdoctoral Fellows, a new program that aims to empower postdoctoral students to commercialize their scientific discoveries.

Agarwal is a postdoctoral researcher at the University of Wisconsin-Madison in the Department of Chemical and Biological Engineering. He obtained his BS and MS degrees in biochemical engineering and biotechnology from the Indian Institute of Technology in Delhi, India in 2002, and a PhD in chemical engineering from Iowa State University in 2007. Agarwal primarily works on translational research projects combining a variety of advances in material sciences with applications in biomedicine. His work was recognized as an “outstanding contribution by a graduate student” at the annual meeting of the Society for Biomaterials and Gordon Research Conference – Polymers (West) in 2007.  Agarwal’s research has been published, and has resulted in one patent application and two intellectual property disclosures filed in 2009.

Professor François Ortalo-Magné, Real Estate and Urban Land Economics, is being given the “Lauriers de la recherché” award, which translates to “research laurels,” by the mayor of Toulouse, France, for his research in real estate and economics.

Ortalo-Magné received an MS in Agricultural Technology and Management from Ecole Supérieure d’Agriculture de Purpan in Toulouse, France, and his PhD in Economics from the University of Minnesota.  He holds the Robert E. Wangard chair in Real Estate at UW-Madison.  He is a fellow of the Royal Institute of Chartered Surveyors, and a member of the editorial boards of the Journal of Urban Economics and the Journal of Housing Economics, among other affiliations.  His work has been printed in numerous publications, including the New York Times, Journal of Urban Economics and The Review of Economic Studies.

Assistant Professor Philip Kim, Management and Human Resources, was given the 2009 “Outstanding Reviewer Award” by the Journal of Business Venturing.  Kim primarily reviewed papers in the field of entrepreneurship for the journal.

Kim earned his MA and PhD in Sociology at the University of North Carolina at Chapel Hill and his BS (Economics) and BAS (Materials Sciences) at the University of Pennsylvania. His research interests include entrepreneurial team and social network configurations, political economy of entrepreneurship, and entrepreneurship in highly regulated industries. His research has been published in Strategic Entrepreneurship Journal, Small Business Economics, and American Behavioral Scientist.

The essence of the WI-FUR plan is to attach a housing “voucher” to each unemployment check that could be directly applied to a mortgage payment.

The U.S. Treasury, according to top Fed officials, is beginning to concentrate very closely on the effect of unemployment on the housing crisis and foreclosures. There is increasing concern that the foreclosure problem cannot be addressed without providing financial assistance to unemployed homeowners.

Proposals to prevent foreclosures by attaching government housing vouchers to unemployment checks is gaining traction among officials. Recent discussions for relief plans have been along the lines of a foreclosure relief plan proposed by three Wisconsin School of Business real estate professors earlier this year. Read recent USA Today coverage here.

“The Wisconsin Foreclose and Unemployment Relief Plan” (WI-FUR), was developed in the Graaskamp Center for Real Estate by Professors Morris A. Davis, Stephen Malpezzi and François Ortalo-Magné. WI-FUR calls for the rapid expansion of two established programs—unemployment insurance and housing vouchers—to prevent a wave of foreclosures among recently unemployed workers.

“In a nutshell, the WI-FUR plan gives unemployed people a housing voucher to enable them to make their mortgage payment,” says Davis. “It doesn’t require any mortgage modification and it’s temporary in nature. You receive a voucher when you are unemployed and then when you are employed, you stop receiving a voucher.”

Davis says the other foreclosure proposals currently being debated, including the “Making Home Affordable” plan put forward earlier by the Obama Administration, have focused on mortgage modifications—to take a person who has a bad or ill-suited subprime mortgage and convert it to a more appropriate 30- year, fixed rate mortgage.

“Those plans really do to nothing to help the unemployed who have completely sensible mortgages but simply can’t afford to make payments on them,” says Davis. “Our plan is the only plan that we know of, outside of one by the Boston Fed, that helps people make mortgage payments while they are unemployed.”

The essence of the WI-FUR plan is to attach a housing “voucher” to each unemployment check that could be directly applied to a mortgage payment. The amount of the voucher would be based on the Fair Market Rent, which is already computed for each county by the U.S. Department of Housing and Urban Development.

The cost of the WI-FUR plan has been calculated by the faculty members, but would depend on parameters set by policymakers in terms of size of the voucher, number of people eligible, and the length of time an individual could receive the vouchers.

“Right now the U.S. is experiencing the greatest housing crisis in its history since the Great Depression, “ Davis says. “As members of one of the top real estate programs in the country, we felt it was our responsibility to come up with a potential solution for this housing crisis and that’s why we developed a foreclosure relief plan.”

Read details on WI-FUR here

Morris Davis, an assistant professor in real estate at the Wisconsin School of Business, maintains three databases that he created (with coauthors) over the 2004-2006 period while serving at the Federal Reserve Board.

Davis created the databases to provide estimates of data he viewed as key to understanding house prices that were not available elsewhere at the time. The data is being published in detail by the Lincoln Land Institute of Land Policy.

Realtor Magazine wrote about the new databases.

Read the article here

Learn more about the databases here

While illegal insider trading has high visibility in the mass media, there are surprisingly few empirical studies about it.

New research from the Wisconsin School of Business seeks to improve understanding of the behavior of informed traders and the impact of their trading on prices and liquidity. Elizabeth Odders-White, associate professor of Finance, Investment and Banking, recently shared snippets of her ongoing research on the topic as part of the school-sponsored Rays of Research faculty seminar series.

Odders-White, along with fellow Wisconsin Finance Professor Mark Ready and Associate Professor Diane Del Guercio of the University of Oregon, is examining specifics surrounding more than 200 insider trading civil cases filed by the U.S. Securities and Exchange Committee (SEC) between January 1, 2002 and December 31, 2007 on trades occurring as far back as August 1996.

Their research analyzes specifics of each illegal trading case filed including the type of inside information obtained, date the illegal trading occurred, firm or firms involved, date and time the information became public, specific type of securities and quantities traded and any profits earned.

Among key findings she presented:

•  The nature of informed trading is broader in scope than in the 1980s, and cases range from single, small episodes to vast, multi-year schemes with profits varying from $0 to $15.8 million per case. 
• Typical trading cases garner average profits of $52,000 per trader—a marked increase from the $24,000 average cited in the 1980s by previous research. 
• Insider strategies include trading in both stock and options and potentially attempting to conceal trades among non-insider trading.
  Seventy-seven percent of cases reviewed involve trading in only stock, 16% involve both stock and options, 6% involve options only and 1% involve bonds. 
• Some price discovery occurs on insider trading days, but much of the information remains private until the announcement.
•  Evidence seems to support insider trading on higher-volume days.
•  Liquidity is not reduced by insider trading.

 Topics still to be explored include whether prices and/or liquidity can be used to detect or predict illegal insider trading.

 Click here to watch her talk.

[Read more]

Companies can reduce unintended effects of downsizing, according to research conducted at the Wisconsin School of Business that was recently featured in BusinessWeek. 

The BusinessWeek article examined ways for companies to reduce the negative effects of downsizing. It included research on the topic by Charlie Trevor, an associate professor of management at the Wisconsin School of Business, and Anthony Nyberg, a former PhD candidate at Wisconsin, who is now an assistant professor at the Moore School of Business at the University of South Carolina.  

As BusinessWeek summarized their research findings: “Companies that had a history of harboring HR practices that were aimed at assuring procedural fairness and justice—such as having an ombudsman who is designated to address employee complaints; confidential hotlines for problem resolution; the existence of grievance or appeal processes for nonunion employees, etc.—did not see their turnover heighten after a downsizing effort. Apparently, remaining employees were confident that, in such a company, the downsizing effort had been fair and unavoidable.” 

Earlier this year, Trevor and Nyberg received the Scholarly Achievement Award from the Academy of Management’s Human Resources Division for an article they authored on their research findings.  

From high-tech flavored plastics and eco-friendly vending machines to medical devices for emerging countries, students at the University of Wisconsin-Madison are pursuing solutions to everyday problems.

Thirty students and a record number of 18 teams competed in this year’s G. Steven Burrill Business Plan Competition at the Wisconsin School of Business for the chance to win more than $20,000 in prize money.

Students presented their original business plans on Friday, April 17, in Grainger Hall on the UW-Madison campus. The top prize of $10,000 was won by the team for City Dictionary, which offers information on local culture, and language for cities around the world.

“Entrepreneurship leads to innovation — it answers questions and provides solutions to real and emerging needs,” says Anne Miner, professor of Management and Human Resources at the Wisconsin School of Business and director of the competition. “Through this annual event students have the opportunity to come together and create answers to society’s most challenging problems. It is exciting to see these young minds develop the next generation of innovative ideas that will drive tomorrow’s business.”

Since its inception in 1998, more than 300 students have participated in the competition while thousands have attended skill-building seminars to develop their business planning expertise. BusinessWeek and other national media have recognized competition alumni for their successes.

The competition is named for sponsor G. Steven Burrill, a longtime supporter of student innovation and entrepreneurship. Burrill is CEO of Burrill & Company, a life sciences merchant bank with more than $950 million under management. He earned a BBA degree from the Wisconsin School of Business in 1966.

2009 COMPETITION WINNERS

1st  place ($10,000)
City Dictionary

2nd place ($7,000)
Add the Flavor

3rd place ($4,000)
Ecostream

4th place($1,000)
Cultured Kids Immersion Schools LLC

ERLC Choice Award ($100)
VirtuWill

Mini-Competition Award ($250)
PosiPair

Nelson Sustainable Venture Award ($1000)
Ecostream

Social Impact Award ($1,000)
A+ Mission

Read about this year’s competition

Charlie O. Trevor

Anthony J. Nyberg

An article by Charlie Trevor and Anthony Nyberg of the Wisconsin School of Business has received the 2009 Scholarly Achievement Award (best article of the year) from the Human Resources Division of the Academy of Management for: “Keeping Your Headcount When All About You Are Losing Theirs: Downsizing, Voluntary Turnover Rates, and the Moderating Role of HR Practices.”

Trevor is an associate professor in Management and Human Resources at the Wisconsin School of Business. Nyberg  worked on the study while earning his Ph.D. from the school; he graduated in 2008 and is now an assistant professor at the Moore School of Business at the University of South Carolina.

Their article was printed in the April/May 2008 issue of the Academy of Management Journal. In it, they describe their findings about downsizing and turnover rates at 200 companies. The research has been highlighted by U.S. News & World Report, TIME magazine, BusinessWeek and Harvard Business Review.

According to their study, downsizing can set off an exodus among retained employees that in some cases is much greater than the reduction achieved through the layoffs.

“The downsizing-turnover relationship suggests a sad irony in that employees are laid off by companies that may subsequently find themselves understaffed,” write Trevor and Nyberg in the article. “To the extent that turnover rates hinder organizational performance, the performance of downsizing companies may well suffer further through the leaving behavior that the layoffs generate.”

Perhaps the most striking finding in their study of quitting rates in some 200 companies was the considerable exodus that even a small downsizing could set off. For example, companies that laid off a mere 0.5% of their workforce sustained, on average, a turnover rate of 13%, a rate that was 2.6 percentage points higher than the average turnover rate of non-downsizing firms. In other words, an extra 2.6% of the workforce left of its own accord, more than five times more workers than were laid off.

“Employers sometimes use downsizing as a way of getting rid of undesired workers. Our findings ought to persuade them that this could very well result in the loss of even more employees whom they want to keep,” added Trevor.

Learn more

Members of the real estate faculty at the Wisconsin School of Business increasingly are quoted in the national media on aspects of the nation’s challenging housing situation.

The popular business-news radio program, “Marketplace,” which airs on public radio stations nationwide, is among the national outlets that often turn to Wisconsin School of Business faculty for input on real estate issues.

Stephen Malpezzi was  recently interviewed on the role apartments may play in leading the recovery of the U.S. housing market.

Listen to or read, “Apartments lead housing market back?”

Morris Davis spoke on the impact of a possible Fed rate cut.

Listen to or read, “Will the Fed cut rates again?”