Business & Entrepreneurship

GuptaLessons learned by startups during the dot-com hiring frenzy may have lasting benefits, according to a study conducted by Washington University Olin School of Business professor Mahendra Gupta. His paper, “Venture Capital Financing and the Growth of Startup Firms,” which focuses on the role human capital plays in starting a company, has been accepted for publication in the Journal of Business Venturing. Journal editor Sankaran Venkataraman called the paper noteworthy in its comprehensive examination of how human capital relates to success, the internal processes of a firm, and team characteristics. Companies able to get venture capital funding had an advantage over those who were able to find funding resources but not thru v.c. funding.

Panchapagesan”Decimalization” – the pricing of stocks in dollars and cents instead of fractions – lauded by proponents to be a good thing for investors when it was adopted by the U.S. stock markets in early 2001, is under fire. Critics say it costs institutional investors big. But in a study co-authored by Venkatesh Panchapagesan at Washington University’s Olin School of Business, direct institutional trading costs appear to have declined by about 23 basis points (roughly 5 cents a share) after decimalization. In economic terms, this decrease translates to an average monthly savings of about $133 million in institutional trading costs, the study finds.

PooleIn a wide-ranging analysis of bond market fundamentals, St. Louis Fed President William Poole said the focus should be on long-term interest rate basics. “Longer-run fundamentals tend to get lost in a welter of short-run considerations that fade into oblivion quickly as a new set of short-run concerns dominate the news,” he said. Poole spoke to a group of financial analysts at Washington University’s Olin School of Business on”Prospects and Risks in the Bond Market,” Sept. 4.

Photo by Mary Butkus / WUSTL PhotoStudy finds that the larger the bill, the smaller the tip percentage that food servers, hair stylists and cab drivers receive.In the world of gratuities, the bigger they are, the harder they fall. Psychologists at Washington University in St. Louis have shown that the larger the bill, the smaller the tip percentage that food servers, hair stylists and cab drivers receive. Compiling data from nearly 1,000 tips left in restaurants, hair salons and with cab drivers, the researchers found that the percent of the tip actually decreases with the amount of the bill across all three tipping situations. Their findings also indicate that with bills more than $100, the percent of the tip levels off — if the bill is $200, the server is likely to receive the same amount as if it were $100.

Business, Law & Economics Tip Sheet

ThakorAnjan V. Thakor, Ph.D., has been named the John E. Simon Professor of Finance at the John M. Olin School of Business, it was announced by Olin Dean Stuart Greenbaum. Thakor joins the Olin School from the University of Michigan, where he served as the Edward J. Frey Professor of Banking and Finance from 1996 to 2003 and as the chairman of the finance department from 2000 to 2003.

Washington University is among 15 universities across the country selected by the Ewing Marion Kauffman Foundation of Kansas City, Mo., to participate in the Foundation’s Kauffman Campuses Initiative, a new program aimed at making entrepreneurship education a common and accessible campus-wide opportunity. The new Kauffman program builds on an emerging trend among colleges and universities to expand entrepreneurship education beyond business schools so that entrepreneurship training and experiences are available across the University’s schools and academic departments and to students of diverse disciplines.

WarrenThe administrative costs of federal regulation are budgeted to reach an all-time high of $30.1 billion in 2003, as more money is devoted to the environment, transportation security, and securities regulation, according to a new report issued jointly by the Weidenbaum Center at Washington University in St. Louis and the Mercatus Center at George Mason University. The budget request for 2004 suggests a slight decline from the 2003 peak to $28.9 billion.

Older workers enrolled in a computer training class.Some economists predict that by 2030, the United States could experience a labor shortage of 35 million workers. Many businesses, including retail giants such as Wal-Mart and McDonalds, have responded to a looming labor shortage by encouraging older workers to remain in the workforce. But a recent study issued by the U.S. General Accounting Office finds that many of the government’s existing employment assistance programs are not providing computer training and other high-tech skills to workers over the age of 55, a demographic that may soon constitute roughly one-third of the entire American workforce. Nancy Morrow-Howell, Ph.D., a professor of social work at Washington University in St. Louis and a leader in the emerging field of productive aging research, contends that America’s economic future may well hinge on our ability to help older adults continue making contributions to society.

Experimental economics — a fast-growing branch of economics that involves the creation of a microeconomic environment in a laboratory — is being widely used at the John M. Olin School of Business. Applications of the experimental research have multiplied, spanning many industries and producing results that have impacted everything from how airlines price their tickets to how companies manage their employees. Ronald R. King, Ph.D., is helping to lead the burgeoning new area of research at the business school.