Timothy Luehrman

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Timothy A. Luehrman is a finance academic, formerly a Senior Lecturer at Harvard Business School. [1] He is best known for his work on valuation and real options; specifically, he conceived the idea of treating business strategy as a series of options, [2] and his papers here [3] [4] are widely quoted.

Finance Academic discipline studying businesses and investments

Finance is a field that is concerned with the allocation (investment) of assets and liabilities over space and time, often under conditions of risk or uncertainty. Finance can also be defined as the art of money management. Participants in the market aim to price assets based on their risk level, fundamental value, and their expected rate of return. Finance can be split into three sub-categories: public finance, corporate finance and personal finance.

Harvard Business School business school in Boston, Massachusetts

Harvard Business School (HBS) is the graduate business school of Harvard University in Boston, Massachusetts. The school offers a large full-time MBA program, doctoral programs, HBS Online and many executive education programs. It owns Harvard Business Publishing, which publishes business books, leadership articles, online management tools for corporate learning, case studies and the monthly Harvard Business Review. It is home to the Baker Library/Bloomberg Center.

Option (finance) right to to buy or sell a certain thing at a later date at an agreed price

In finance, an option is a contract which gives the buyer the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price prior to or on a specified date, depending on the form of the option. The strike price may be set by reference to the spot price of the underlying security or commodity on the day an option is taken out, or it may be fixed at a discount or at a premium. The seller has the corresponding obligation to fulfill the transaction – to sell or buy – if the buyer (owner) "exercises" the option. An option that conveys to the owner the right to buy at a specific price is referred to as a call; an option that conveys the right of the owner to sell at a specific price is referred to as a put. Both are commonly traded, but the call option is more frequently discussed.

His research focuses on international corporate finance, advanced valuation techniques, and long-horizon financial management. He has published numerous books, research articles and case studies for both scholars and practitioners. [1]

He has held appointments at the MIT Sloan School of Management, IMD and the Thunderbird School of Global Management. He was also a Managing Director at Standard & Poor’s Corporate Value Consulting division and a partner at PricewaterhouseCoopers. During 2003-2004 he was a member of the Financial Accounting Standards Board’s Option Valuation Group. [1]

MIT Sloan School of Management business school of the Massachusetts Institute of Technology

The MIT Sloan School of Management is the business school of the Massachusetts Institute of Technology, in Cambridge, Massachusetts, United States. MIT Sloan offers bachelor's, master's, and doctoral degree programs, as well as executive education. Its MBA program is among the most selective in the world. MIT Sloan emphasizes innovation in practice and research. Many influential ideas in management and finance originated at the school, including the Black–Scholes model, the Solow–Swan model, the random walk hypothesis, the binomial options pricing model, and the field of system dynamics. The faculty has included numerous Nobel laureates in economics and John Bates Clark Medal winners.

International Institute for Management Development university

International Institute for Management Development (IMD) is a business education school located in Lausanne, Switzerland. It is not part of a university, and only offers MBA and Executive MBA programs.

Thunderbird School of Global Management management school

Thunderbird School of Global Management at Arizona State University is a management school located in the United States and a part of Arizona State University. The school offers bachelor's degrees, master's degrees, executive education programs, and MicroMasters in global management. The main campus was formerly located in Glendale, Arizona, at Thunderbird Field No. 1, a former military airfield from which it derives its name. Thunderbird relocated to a new building at Arizona State University's Downtown Phoenix Campus.

He received his B.A. in Economics from Amherst College (1979), MBA from Harvard Business School (1983), and Ph.D. in Business economics from the Harvard Graduate School of Arts and Sciences (1986). [1]

A Bachelor of Arts is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, sciences, or both. Bachelor of Arts programs generally take three to four years depending on the country, institution, and specific specializations, majors, or minors. The word baccalaureus should not be confused with baccalaureatus, which refers to the one- to two-year postgraduate Bachelor of Arts with Honors degree in some countries.

Amherst College liberal arts college in Massachusetts

Amherst College is a private liberal arts college in Amherst, Massachusetts. Founded in 1821 as an attempt to relocate Williams College by its then-president Zephaniah Swift Moore, Amherst is the third oldest institution of higher education in Massachusetts. The institution was named after the town, which in turn had been named after Jeffery, Lord Amherst. Originally established as a men's college, Amherst became coeducational in 1975.

Business economics is a field in applied economics which uses economic theory and quantitative methods to analyze business enterprises and the factors contributing to the diversity of organizational structures and the relationships of firms with labour, capital and product markets. A professional focus of the journal Business Economics has been expressed as providing "practical information for people who apply economics in their jobs."

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Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on both sides of a trade". Its concern is thus the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. It has two main areas of focus: asset pricing and corporate finance; the first being the perspective of providers of capital, i.e. investors, and the second of users of capital.

Robert C. Merton American economist

Robert Cox Merton is an American economist, Nobel Memorial Prize in Economic Sciences laureate, and professor at the MIT Sloan School of Management, known for his pioneering contributions to continuous-time finance, especially the first continuous-time option pricing model, the Black–Scholes formula. In 1993 Merton co-founded hedge fund Long-Term Capital Management. In 1997 he received the Nobel Prize for his contributions in Economics.

Fischer Black American economist

Fischer Sheffey Black was an American economist, best known as one of the authors of the famous Black–Scholes equation.

Real options valuation, also often termed real options analysis, applies option valuation techniques to capital budgeting decisions. A real option itself, is the right—but not the obligation—to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a capital investment project. For example, the opportunity to invest in the expansion of a firm's factory, or alternatively to sell the factory, is a real call or put option, respectively.

Stewart Clay Myers is the Robert C. Merton (1970) Professor of Financial Economics at the MIT Sloan School of Management. He is notable for his work on capital structure and innovations in capital budgeting and valuation, and has had a "remarkable influence" on both the theory and practice of corporate finance. Myers, in fact, coined the term "real option". He is the co-author with Richard A. Brealey and Franklin Allen of Principles of Corporate Finance, a widely used and cited business school textbook, now in its 11th edition. He is also the author of dozens of research articles.

EDHEC Business School (Ecole des Hautes Etudes Commerciales du Nord) french business school

EDHEC Business School is a leading French business school. As a private Grandes écoles in France, it specializes in business and management. EDHEC Business School has 5 campuses: Lille, Nice, Paris, London, and Singapore. EDHEC Business School offers undergraduate (BBA), graduate and executive education. It has 8,000 students enrolled in traditional graduate and undergraduate programmes, 150 partner universities and a network of more than 40,000 alumni in over 125 countries. EDHEC's MSc Finance program was ranked #1 worldwide by Financial Times in 2017; making it one of the most prestigious study programs in Europe. Out of 14,000 business schools worldwide, EDHEC is one of just 80 business schools that have the Triple Crown Accreditation from EQUIS, AACSB and AMBA.

John Burr Williams was an American economist, recognized as an important figure in the field of fundamental analysis, and for his analysis of stock prices as reflecting their "intrinsic value." He is best known for his 1938 text The Theory of Investment Value, based on his Ph.D. thesis, in which he articulated the theory of discounted cash flow (DCF) based valuation, and in particular, dividend based valuation.

Financial modeling is the task of building an abstract representation of a real world financial situation. This is a mathematical model designed to represent the performance of a financial asset or portfolio of a business, project, or any other investment.

Frank J. Fabozzi is an American economist, educator, writer, and investor, currently Professor of Finance at EDHEC Business School and a Member of Presentation Edhec Risk Institute. He was previously a Professor in the Practice of Finance and Becton Fellow in the Yale School of Management. He is well known as the author of numerous books on finance, both practitioner-focused and academic. He has been the editor of the Journal of Portfolio Management since 1986 and is on the board of directors of the BlackRock complex of closed-end funds.

Aswath Damodaran is a Professor of Finance at the Stern School of Business at New York University, where he teaches corporate finance and equity valuation. He is best known and famous as author of several widely used academic and practitioner texts on Valuation, Corporate Finance and Investment Management. Damodaran is widely quoted on the subject of valuation, with "a great reputation as a teacher and authority". He has written several books on equity valuation, as well on corporate finance and investments. He is also widely published in leading journals of finance, including The Journal of Financial and Quantitative Analysis, The Journal of Finance, The Journal of Financial Economics and the Review of Financial Studies. He is also known as being a resource on valuation and analysis to investment banks on Wall Street.

The following outline is provided as an overview of and topical guide to finance:

Krishna Palepu is an American academic, author, consultant and director of various corporations. He is the Ross Graham Walker Professor of Business Administration at Harvard Business School. He serves as Senior Adviser to the President of Harvard University for Global Strategy.

The Charles H. Kellstadt Graduate School of Business is part of the DePaul University Driehaus College of Business, a business school located in the Chicago Loop, Illinois, United States. The Driehaus College of Business was founded in 1912 and is one of the ten oldest and most respected business schools in the U.S. The school is accredited by the Association to Advance Collegiate Schools of Business-International. In the fall of 2012, Kellstadt enrolled 2,107 students.

Sheridan Dean Titman is a professor of finance at the University of Texas at Austin, where he holds the McAllister Centennial Chair in Financial Services at the McCombs School of Business. He received a B.S. degree from the University of Colorado and an M.S. and Ph.D. from Carnegie Mellon University.

George S. Oldfield is a prominent academic in the field of finance. He has been published extensively, and is cited for his work on the effects of a firm's unvested pension benefits on its share price published in the Journal of Money, Credit and Banking in 1977.

Jennifer N. Carpenter is an American finance academic best known for her pioneering research into executive stock options. Other interests include fund manager compensation, survivorship bias, corporate bonds, and option pricing. She has been published in numerous journals including the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, and the Journal of Business.

In finance, a contingent claim is a derivative whose future payoff depends on the value of another “underlying” asset, or more generally, that is dependent on the realization of some uncertain future event. These are so named, since there is only a payoff under certain contingencies. Any derivative instrument that is not a contingent claim is called a forward commitment. The prototypical contingent claim is an option, the right to buy or sell the underlying asset at a specified exercise price by a certain expiration date; whereas (vanilla) swaps, forwards, and futures are forward commitments, since these grant no such optionality. Contingent claims are applied under financial economics in developing models and theory, and in corporate finance as a valuation framework.

Campbell Russell "Cam" Harvey is a Canadian economist, known for his work on asset allocation with changing risk and risk premiums and the problem of separating luck from skill in investment management. He is currently the J. Paul Sticht Professor of International Business at Duke University's Fuqua School of Business in Durham, NC, as well as a research associate with the National Bureau of Economic Research in Cambridge, MA. He is also a research associate with the Institute of International Integration Studies at Trinity College in Dublin and a visiting researcher at University of Oxford. He served as the 2016 president of the American Finance Association.

Hayne Leland is professor emeritus at the University of California, Berkeley. Prior to becoming emeritus, he was the Arno Rayner Professor of Finance at the Haas School of Business. Before joining Berkeley, Leland was an assistant professor in economics at Stanford, and he has held visiting professorships at UCLA and the University of Cambridge. He received his B.A. from Harvard, followed by an M.Sc.(Econ) at the London School of Economics and a Ph.D. in economics from Harvard. He received an honorary doctorate degree from the University of Paris (Dauphine) in 2007.

References

  1. 1 2 3 4 "Timothy A. Luehrman: Biography". Harvard Business School. Archived from the original on November 1, 2007.
  2. Luehrman, T., “Strategy as a Portfolio of Real Options,” Harvard Business Review, 76 (5), 1998, pp. 89-99.
  3. "Strategy as a Portfolio of Real Options" . Retrieved 4 March 2016.
  4. "Investment Opportunities as Real Options: Getting Started on the Numbers" . Retrieved 4 March 2016.