Haas NewsWire

Haas NewsWire, April 26, 2004

UC Berkeley Business Plan Competition to Choose Winners, April 29
New Accounting Professor Studies Earnings Management for IPO Firms
Outsourcing Expert Bardhan to Speak, April 27
Deloitte Chairman to Lecture on Diversity in Business, May 5
Entrepreneurship Program Ranked Among Top in the Nation
Sign Up Now for Reunion Weekend and Haaski Open, May 8 and 10
Management of Technology Enrollments Continue to Climb
Celebrate the End of Another Great Year at Haas on May 7
Faculty News
Staff News
Haas in the News
Happening at Haas

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UC Berkeley Business Plan Competition to Choose Winners, April 29 UC Berkeley Business Plan Competition

Seven finalist teams competing in the UC Berkeley Business Plan Competition will present their pitches to the public and receive final awards at the Berkeley Entrepreneurs Forum, hosted by the Lester Center for Entrepreneurship & Innovation, on Thursday, April 29, at 6:00 p.m. in the Arthur Andersen Auditorium.

This event is open to the public. The general public may register online for $35 in advance at http://entrepreneurship.berkeley.edu/Reg&Park.asp. Tickets at the door are $45.

Current UC Berkeley faculty, staff, students, Lawrence Berkeley Laboratory employees, and those associated with the UC Office of the President, may call 510-642-4255 or e-mail lester@haas.berkeley.edu for special registration rates.

This year's prizes include $25,000 for first place, $10,000 for second place, and a $5,000 third-place prize. The People's Choice Award of $5,000 will be voted on by the public audience attending the April 29 event.

New this year is the Best of UC Berkeley/UC San Francisco Prize. The $7,500 prize will go to the team that best uses current UC Berkeley or UCSF research as an integral part of its plan and promises significant benefit to society now or in the future.

This year's seven finalists are:

The competition, now in its sixth year, is organized by Berkeley MBA students and hosted by the Lester Center for Entrepreneurship & Innovation in collaboration with the College of Engineering, the School of Information Management and Systems, and the University of California, San Francisco.

This year's competition enjoyed the support of more than 40 judges from leading venture capital firms and donations from 14 sponsors. The sponsors include: Gold Sponsor: Sevin Rosen Funds (which is also sponsoring the Technology Prize); Silver Sponsors: Allegis Capital and Intel Capital; Bronze Sponsors: Foundation Capital, Hummer Winblad Venture Partners, New Path Ventures, Pillsbury Winthrop, Qualcomm, Reed Smith, Ritchey Fisher Whitman & Klein, Sirenza Microdevices, Versant Ventures; In Kind Sponsor: PaloAlto Software; Other Contributors: Kevin Warnock of Silveroffice and Silicon Valley Bank.

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New Accounting Professor Studies Earnings Management for IPO Firms

With all of the attention focused in recent years on the Enron and WorldCom debacles, it should come as no surprise to anyone that companies sometimes fudge their earning figures when it's convenient. Qintao (pronouced "chin-tao") Fan, assistant professor of accounting, has looked at such activity, known somewhat euphemistically as "earnings management," particularly in cases where firms prepare for IPOs. She explores whether companies are indeed trying to pull the wool over investors' eyes by reporting inflated earnings figures, and whether such inflation renders accounting reports totally meaningless or serves a useful purpose.

Fan is one of seven new faculty members who joined the Haas School in fall 2003.

Fan, a freshly minted graduate of Stanford University's doctoral program in accounting, has found that, surprisingly, earnings management can be an effective way for "higher-quality" firms - those with potential to generate a higher stream of earnings -- to separate themselves from lower-quality firms in the eyes of investors.

Accounting reports can be manipulated only to a certain extent, Fan maintains, simply because inflating figures is ultimately costly to any firm. "If you report a high earnings figure now, you are essentially borrowing against your future," she explains. "Subsequent reports will have to be lower because eventually your total reported earnings have to equal your total cash flows. This can potentially trigger litigation and an increase in the cost of capital."

Lower-quality firms will overstate their earnings during the IPO process to make themselves appear on par with higher-quality firms. Higher-quality firms will follow suit in part to separate themselves from the lower tier, overstating their earnings at a level that's prohibitively costly for a lower type to mimic.

Firms can also demonstrate their value to investors by strategically combining earnings inflation with another "signal" -- such as retaining a certain degree of ownership in the company. The more ownership the IPO insiders retain, the greater a sign it is to the outside world that they believe in the IPO firm's future earnings potential. "It's like putting their money where their mouth is," says Fan. Her explorations of how IPO firms use both ownership retention and reported earnings to signal firm value have generated a rich set of empirical implications regarding market efficiency and the strategic use of earnings management. Data on IPO firms from 1987 to 1997 confirm that investors do pick up on signals such as earnings inflation and ownership retention in valuing an IPO firm.

Fan's most recent research examines the capital market implications of fair value accounting versus historical cost accounting, and how effective contracts can be designed to best motivate managers. She came to the United States from China in 1996, after completing a BA in international economics from Renmin University in Beijing. She holds an MA in economics from the University of Maryland and also an MS in statistics from Stanford.

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Outsourcing Expert Bardhan to Speak, April 27

The trend of off-shoring white-collar jobs to cheaper labor markets will be the topic of a public talk by Ashok Deo Bardhan, coauthor with Cynthia Kroll of the much-cited study "The New Wave of Outsourcing," to take place at the Haas School on Tuesday, April 27.

The entire Haas School community is invited to attend this talk tomorrow at 4:00 p.m. in the Wells Fargo Room. This event is part of the Clausen Center for International Business and Policy Speakers Series.

Bardhan's talk "Globalization, Technology, and Outsourcing: Challenges and Opportunities" will include discussion of his ongoing research on the causes and consequences of business process outsourcing, its challenges and opportunities for US firms, and the potential impact on the US labor market as well as some policy implications.

Bardhan and Kroll, both researchers at the Fisher Center for Real Estate and Urban Economics, published a study in October 2003 warning that as many as 14 million jobs in the US fall into the category of jobs at risk for being outsourced to countries such as India, China, and Russia.

Their study has been cited by media outlets across the country including The New York Times Sunday Magazine, CNN, US News and World Report, Time Magazine, the Los Angeles Times, and USA Today, and continues to draw media attention. More information on the study and a copy of the study itself are available at http://www.berkeley.edu/news/media/releases/2003/10/29_outsource.shtml.

Elements of the outsourcing study are also incorporated in a book, co-authored by Bardhan, Kroll, and Dwight Jaffee, the Willis Booth Professor of Banking and Finance, titled "Globalization and a High-Tech Economy: California, the US and Beyond." The book further analyzes the impacts of the globalization of high technology on job opportunities, wage distribution, community resources, regional growth patterns, the prospects for new business development, and the very structure of these businesses. More information on this book can be found at http://www.berkeley.edu/news/media/releases/2004/02/11_trio.shtml.

For more information about Bardhan's talk, contact Sebastian Teunissen at teunisse@haas.berkeley.edu.

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Deloitte Chairman to Lecture on Diversity in Business, May 5

Sharon Allen, the first woman to be named chairman of the board of directors at Deloitte & Touche USA and the highest ranking woman in the firm's history, will speak on the importance of diversity in business at a special lecture on Wednesday, May 5, at 5:00 p.m. in the Wells Fargo Room at the Haas School of Business.

The event, which is co-sponsored by UC Berkeley's Student Achievement Guided by Experience (SAGE) Scholars Program and the Haas School of Business Dean's Speakers Series, is free and open to the entire UC Berkeley community. A reception will be held after the talk.

Prior to being named chairman, Allen was a member of the Deloitte & Touche board of directors and managing partner of the Pacific Southwest practice, based in Los Angeles. She has over 30 years of experience in auditing and consulting at the firm. She served on the firm's Client Service Standards Task Force, on the Partner Admissions Committee, and in many other committee capacities.

For more information on this event, contact Marjorie Weingrow, director of the SAGE Scholars Program at 510-642-2203.

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Entrepreneurship Program Ranked Among Top in the Nation

The Haas School's entrepreneurship program, managed by the Lester Center for Entrepreneurship & Innovation, was ranked in the top tier of the top 50 national entrepreneurial colleges for 2004, according to a ranking published in Entrepreneur Magazine's May issue.

The top tier included 13 universities and business schools, including Columbia Business School, Babson College, and Massachusetts Institute of Technology (MIT). The ranking was based on a school questionnaire and surveys of entrepreneurship faculty and recent alumni.

The survey grouped schools into national, regional, entrepreneurial emphasis, and limited entrepreneurial program categories. Schools in each category were ranked according to the strength of each institution's academic program, entrepreneurship centers, faculty, and alumni feedback.

To view the entire ranking, go to http://www.entrepreneur.com/topcolleges/results/1,6454,,00.html? mode=type&list=NT&tier=2

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Sign Up Now for Reunion Weekend and Haaski Open, May 8 and 10

All faculty, students, and staff are cordially invited to attend the Haas School's All-Alumni Reunion Conference on May 8 for a chance to mingle with alumni from across the country and take part in the "Perspectives on the World Economy" conference.

This event is free for students, faculty, and staff but registration is required. For more information and to register, go to http://www.haas.berkeley.edu/alumni/reunions.

Reunion alumni will kick off the weekend at class-year dinners on Friday, May 7. On Saturday, May 8, everyone is invited to attend the day-long conference capped off by an all-alumni cocktail party at 5:30 p.m. at the top of Barrows Hall to watch the sunset.

The conference keynote speaker is Robert Heller, Ph.D. 65, former governor of the Federal Reserve Board and former president and CEO of VISA. Four panel discussions are planned over the day:

After the weekend of celebrating, the second annual Haaski Open takes place on Monday, May 10, at the Claremont Country Club in Oakland. For information about the tournament, contact Jeff Rhode at 510-642-1907 or rhode@haas.berkeley.edu.

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Management of Technology Enrollments Continue to Climb

The Management of Technology (MOT) program continues to expand at UC Berkeley, having grown steadily from only 26 courses in fall of 1999 to 44 courses being offered to business, engineering, and information management students this spring semester.

These courses are offered through the interdisciplinary Management of Technology (MOT) program, a partnership between the Haas School of Business, the College of Engineering, and the School of Information Management and Systems (SIMS). MOT is the single largest interdisciplinary program on the Berkeley campus as measured by class enrollment, reporting 1,442 course enrollments in 2003-2004, up from 850 in 1999-2000. 104 students received a MOT Certificate this year for having completed four or more MOT courses, more than any other certificate program.

In addition to offering courses, MOT helps students find internships and hands-on projects in technology companies, organizes a lectures series with prominent business and technology leaders, and grants a wide range of fellowships, including the Mayfield Fellows Program, Hitachi Fellows Program, China Fellows program and the MOT-UNIDO Fellows Program, as well as organizing the joint MOT - UNIDO "Bridging the Divide" conference at UCB each spring. Presently, more than 50 UC Berkeley graduate students are MOT Fellows.

For more information on MOT, visit http://mot.berkeley.edu/.

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Celebrate the End of Another Great Year at Haas on May 7

Faculty, staff and students from all of the academic programs are invited to the Haas School's annual End of the Year Party on Friday, May 7, at 4:00 p.m. in the Haas Courtyard.

Hosted by Tom Campbell, the party gives the Haas community a chance to recognize the hard work of faculty, staff, and students over the past year. At the party the Cheit Award for Excellence in Teaching, the GSI Award, the MBA Service Award, the Ph.D. Hayase Award, and the Outstanding Staff Award winners will be announced. The students leading the MBA 2004 Lifelong Giving 101% and the undergraduate Feed the Bear campaign will announce their results as well.

Complimentary food and beverages will be served. For more information, contact Susie Hanna at hanna@haas.berkeley.edu.

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Faculty News

Roberts Appointed to Review Committee on Health Effects of Manned Space Missions

Karlene Roberts, professor in the Organizational Behavior and Industrial Relations group, has accepted an 18-month appointment to a special committee formed by the Institute of Medicine at the National Academy of Sciences to review the National Aeronautics and Space Administration's (NASA) strategy for promoting astronaut survival and health on planned future missions to the moon and Mars. The Review of NASA's Bioastronautics Roadmap, in which Roberts will participate, is part of its Institute of Medicine's ongoing effort to study health in extreme environments.

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Staff News

Gerardo Campos Joins Facilities Management

Gerardo Campos joined the Haas School in February as the facilities coordinator.

Campos previously worked at Nanomix, where he provided administrative support to the company as it grew from 10 to 26 employees. He served as purchasing agent for the company and coordinated the office move into a newly designed 20,000 square foot office and nanotechnology lab facility. He holds a BA in psychology from UC Santa Cruz.

A native son of Mexico, Campos immigrated to the Bay Area in 1976 and has lived in San Francisco since 1980. "My time away from Haas is usually spent raising -- though it's more like chasing -- my 3-year-old son," says Campos. "I am an avid gardener with an infant bonsai collection and a vegetable/fruit garden plot. I also enjoy cooking and experimenting with new foods." Campos' office is in F514. He can be reached at gcampos@hotmail.com or 510-642-4617.

Ramona Ellerbe Joins Young Entrepreneurs at Haas

Ramona Ellerbe has joined Young Entrepreneurs at Haas (YEAH) as a program assistant. She comes to the Haas School's outreach program with over eight years experience as an educator, working with a diverse group of under-served youth both on the East Coast and in the Bay Area. Most recently, she was a faculty advisor for the National Youth Leadership Forum in Boston, linking high school students with professionals in the medical field.

Ellerbe is an avid reader and traveler. Her office is in F410. She can be reached at 510-642-0923 or via e-mail at rellerbe@haas.berkeley.edu.

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Rodrigo Rato, MBA 74, was the subject of two news articles discussing his emergence as the favorite candidate to become the next managing director of the International Monetary Fund:
* The Washington Post on April 20, titled "Spaniard Is Favorite to Head IMF: Rato Stands Alone as Frenchman Bows Out." For the full story, http://www.washingtonpost.com/wp-dyn/articles/A25990-2004Apr19.html (registration required).
* Reuters on April 20, titled "Rato gets EU backing for top IMF position" at
http://www.reuters.com/financeNewsArticle.jhtml? type=bondsNews&storyID=4882359.

Severin Borenstein, the E.T. Grether Professor in Public Policy and Business Administration, was quoted in the Contra Costa Times on April 21 in an article titled "California Public Utilities Commission Gets Earful on New Power System." Borenstein commented on the need to expand competition without protecting big users from competitive market risks. For full text: http://www.contracostatimes.com/mld/cctimes/business/8482137.htm.

Eugene E. and Catherine M. Trefethen Professor of Business Administration Janet Yellen's appointment as president of the San Francisco Federal Reserve Bank continued to make news this week, including Market News International on April 16 and 21 in articles titled "City Lines: Market Movers in FX, Fixed Income and Credit" and "Fed Funds Must Move Up Significantly at Some Point." Yellen's appointment was also listed on April 20 in the Berkeley Daily Planet's "Briefly Noted" section.

Dennis Wu, MBA 67 was profiled in the San Francisco Chronicle on April 21 in an article titled "A Citizen of the World: With His Background in the Far East and US Education, Deloitte Exec is Building Trade Networks in the Pacific Rim." For full text:
http://www.sfgate.com/cgi-bin/article.cgi? file=/chronicle/archive/2004/04/21/BUGHT686KO1.DTL

Cynthia Kroll, senior regional economist at the Fisher Center for Real Estate and Urban Economics, was quoted in the San Jose Mercury News on April 21 in an article titled "Lack of Reliable Data Plagues Offshore Debate." Kroll commented on the need to distinguish the number of US jobs that could be outsourced from those that will be. For full text: http://www.mercurynews.com/mld/mercurynews/news/opinion/8481935.htm? 1c

Kenneth Rosen, California State Professor of Real Estate and Urban Economics and chairman of the Fisher Center for Real Estate and Urban Economics, was quoted in the San Francisco Chronicle on April 20 in an article titled "Record Home Sales: Housing Prices Soar, But How Much Longer?" Rosen commented on how stagnate or reduced Bay Area incomes could result in lower home prices. For full text:
http://www.sfgate.com/cgi-bin/article.cgi? file=/chronicle/archive/2004/04/20/BUG7J67JPK1.DTL&type=printable

John O'Brien, adjunct professor and executive director of the Master's in Financial Engineering Program, was recognized on Yahoo! Finance on April 19 in an article titled "IMCA (R) to Present Three Prestigious Awards at National Spring Conference." O'Brien was one of the three recipients. For full text:

Dean Tom Campbell was hailed as "a standout" in the firmament of business world superstars in the Metro West Daily News on April 18 in an article titled "Golden: Beware The Rice Paddy Bond Bust." For full text: http://www.metrowestdailynews.com/columnists/view.bg? articleid=66025

Peter Sealey, adjunct professor in the Marketing group, was quoted in the Los Angeles Times on April 17 in an article titled "Red Bull Is Determined to Defend Its Territory." Sealey commented on branding in the competitive beverage industry. For full text:

Laura Tyson, former dean, currently on leave at the London Business School, was the subject of an article in The Times on April 16 titled "Is Typhoon Tyson heading to Harvard?" The article mentioned that Tyson is on the short list for the deanship of the Kennedy School of Government at Harvard University.

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Alumni Events

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