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SUMMARY:Seminar by Prof. Michael G. Jacobides\, London Business School
DTSTART:20160321T120000
DTEND:20160321T133000
DTSTAMP:20260430T015033Z
UID:9d2207f76c3e29bfc40bdd594c7ca932dc058b5da81a2aeecc44bd89
CATEGORIES:Conferences - Seminars
DESCRIPTION:Prof. Michael G. Jacobides\, London Business School\n"Scale\, 
 Scope and Performance Dynamics: A population study of the evolution of Ban
 k Holding Companies and their performance changes\, 1990-2014"\nMichael G.
  Jacobides\, London Business School and New York Fed\nIn this talk\, Prof.
  Jacobides will present joint work with Nicola Cetorelli and Sam Stern of 
 the New York Fed\, on their analysis of a new database\, which looks at th
 e entire population of Bank Holding Companies in the US\, from 1990 to 201
 4.\nThe last quarter-century has marked a drastic change in the nature of 
 financial intermediation. Bank Holding Companies (BHC) have changed their 
 scope\, shifting from narrow financial institutions based in commercial ba
 nking to much broader corporate entities expanding into both financial and
  non-financial segments\, from insurance\, asset management\,  broker dea
 lership or SIVs\, to real estate companies\, consulting\, and energy and a
 mong others. But\, what lies beneath this aggregate shift to a new type of
  BHC and a new business model for banks? And\, what are the performance im
 plications of banks’ change of scope?\nThis presentation provides early 
 evidence from a new database\, which has just been compiled by the authors
 \, that covers the universe of all US-registered Bank Holding Companies an
 d all their subsidiaries\, wholly or partly owned\, on a quarterly basis\,
  from 1990 to 2014. Our evidence tracks the evolution of scope\, complexit
 y\, organizational structure\, M&A\, mode of entry and exit by BHCs in eac
 h segment they operate on\, as well as their performance in terms of risks
  and returns. In particular\, we focus on the impact of changes in scope\,
  presenting the large-scale first population-level study with scope as a k
 ey variable\, regardless of sector. We consider not only entry into\, but 
 also exit from NAICS codes\, so as to shed light to the dynamics of bank e
 xperimentation with new segments. We also look at the timing of adoption o
 f new NAICS\, comparing and contrasting early to late adopters\, and consi
 der the impact of “trendy” adoptions.\nUnlike research on diversificat
 ion which has looked at cross-sectional comparisons of narrow and broader 
 corporate vehicles\, our evidence allows us to drill down directly into th
 e dynamics of how firms change their scope\, and when. First\, we consider
  the differences between “trailblazers” (ie\, early adopters of new NA
 ICS)\, and “laggards”\, ie\, the last quartile of the firms adopting a
  new segment. We find that trailblazers\, over a two to four year period\,
  benefit from their innovation in terms of ROA and ROE\, more than laggard
 s do. We also uncover systematic evidence to show that the profile of earl
 y movers differs from that of late movers\; and find that early movers are
  three times more likely to expand via majority-owned subsidiaries than la
 ggards\, who prefer minority participations. Furthermore\, laggards who op
 t for majority participations end up faring worse off in the three to five
  year horizon. We also examine the impact of exits on profitability and se
 e that exits\, even those by liquidating subsidiaries\, tend to be positiv
 ely correlated with profitability. We also find that trailblazers tend to 
 both enter many more segments\, and to exit more decisively and quickly th
 an laggards\, especially three years post-entry onwards.\nFinally\, our ev
 idence considers how BHC which move closer to the “New Financial Interme
 di-aries” archetype fare when compared to narrow\, conservative BHC (in 
 terms of scope)\, or banks which experiment with different configurations\
 , and how these results change over time. Our database structure allows us
  to compare and contrast the growth years (1990-99)\, the boom years (2000
 -2007)\, the crisis years (2008-2010) and the new normal (2010-2014).\nPle
 ase note: As this is an early draft\, there will be no paper\, but the sli
 des will be available shortly before\, and after the seminar upon request
LOCATION:EPFL\, ODY 4.03\, VIP Room http://plan.epfl.ch/?zoom=19&recenter_
 y=5863800.12869&recenter_x=731560.22521&layerNodes=fonds\,batiments\,label
 s\,information\,parkings_publics\,arrets_metro\,transports_publics&floor=4
 &q=ODY_4.03
STATUS:CONFIRMED
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