SIMON WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION BUSINESS | WINTER 2001 Open for Business James S. Gleason Hall Also: Charles Plosser’s Economic Forecast for 2002. The above plaque hangs in the entrance to James S. Gleason Hall, which was dedicated on November 19, 2001. For more, see article on page 14. James S. Gleason once said that accelerating new product develop- of business and civic organizations, integrity and honesty were the most ment, improving operational effective- and in many other worthwhile causes. important attributes managers could ness and pursuing growth through He also serves as president and direc- possess. Throughout his almost four acquisition. tor of The Gleason Foundation, which decades with Gleason Corporation and Today, as chairman and president, offers financial support to organiza- a lifetime of personal and professional Mr. Gleason oversees a revitalized tions in such areas as arts, humani- accomplishments, he has remained companythatenjoysan apexofdis- ties, research, health and social sci- true to this belief. It is no surprise, tinction, and controls the major share ences. Recipients have included the therefore, that he is a singularly of two worldwide markets approaching American Red Cross, The Consortium respected leader in the global corpo- $1 billion in value. For Graduate Study in Management, rate, public and academic communi- Mr. Gleason is a member of the Convalescent Hospital for Children, ties. Simon School’s first Executive Regional Council on the Aging, Drug When Mr. Gleason became CEO of Development Program graduating and Alcohol Council, Rochester Gleason Corporation in 1981, the firm class. He has consistently demon- Philharmonic Orchestra, the University was under enormous pressure from strated his commitment to education of Rochester and the Simon School. shareholders because of poor perfor- by giving generously of his time and In 1995, the Foundation announced mance. With remarkable courage and resources to the Simon School and the the Gleason Global Initiative, a $1 mil- vision, Mr. Gleason formulated a strat- University of Rochester. He currently lion grant to help the Simon School egy to enhance shareholder value by serves as a University Life Trustee and promote the understanding of a global refocusing on his company’s core busi- as a member of the Simon School’s marketplace and economy. The ness. Four major themes served as Executive Advisory Committee. He is Foundation’s latest leadership gift of the guiding principles for the strate- also a Trustee of the Rochester $4,000,000 allowed the Simon School gies and actions which he initiated: Institute of Technology. to break ground in spring 2000 for expanding global market presence, Mr. Gleason is active in a number James S. Gleason Hall. Winter 2001 08 10 04 03 Message From the Dean feature 04 Economic Recovery? Sooner Than You Think Dean Charles Plosser’s economic forecast for 2002 14 Feature 08 Simon Ranks Among the World’s Best Major publications vote “yes” on Simon during 2001 . Feature 09 Accounting After Enron business Simon professor and accounting expert Jerold L. Zimmerman on the Enron crisis. Faculty Research 10 The Block Pricing Puzzle Salesforce Design With Experienced-Based Learning The Joint Determination of Leverage and Maturity The Marketing Role of IPO’s: Evidence From Internet Stocks cover story 14 Open for Business The dedication of James S. Gleason Hall will enhance the Simon environment for students and corporate partners. in memoriam 22 Jeffrey R. Smith ’88 Zhe “Zack” Zeng ’98 Alfred H. Heineken alumni news 24 Alumni in Asia Welcome Simon Contingent Alumni Profile: Nobuaki Otsuki ’96 Farash Luncheon Program Connects Students and Alumni BUSINESS 2001 Winter Mergers and Acquisitions Class Notes SIMON 01 DEAN: Charles I. Plosser SENIOR ASSOCIATE DEAN FOR CORPORATE RELATIONS AND INSTITUTIONAL ADVANCEMENT: Charles W. Miersch SENIOR ASSOCIATE DEAN FOR FACULTY AND RESEARCH: Ronald W. Hansen ASSOCIATE DEAN FOR EXECUTIVE PROGRAMS: Richard M. Popovic ASSOCIATE DEAN FOR M.B.A. PROGRAMS: Stacey R. Kole CHAIRMAN, PH.D. PROGRAM: Ross L. Watts ASSISTANT DEAN FOR CAREER MANAGEMENT: Lisa M. McGurn ASSISTANT DEAN FOR INFORMATION TECHNOLOGIES: Kevin Brennan ASSISTANT DEAN FOR M.B.A. ADMISSIONS AND ADMINISTRATION: Pamela A. Black-Colton EXECUTIVE DIRECTOR OF ALUMNI RELATIONS AND DEVELOPMENT: Hollis S. Budd DIRECTOR OF ALUMNI RELATIONS: James Moore DIRECTOR OF MAJOR GIFTS: M. Eve Elzenga DIRECTOR OF MARKETING: Dawn S. McWilliams DIRECTOR OF OPERATIONS AND FINANCE: Martha Every DIRECTOR OF PUBLIC AFFAIRS: George M. Tomczyk DIRECTOR OF STUDENT SERVICES: Donna Lampen-Smith EDITOR: Charla Stevens Kucko CONTRIBUTING WRITER: SIMONBUSINESS, Vol. 16, No. 1 © 2002. Sally Parker Published semiannually by the University of Rochester, William E. Simon Graduate School of Business Administration, Carol G. ART DIRECTOR/DESIGNER: Simon Hall, Box 270100, Rochester, New York 14627-0100. Michael T. Johnson Postmaster: Send address changes to the William E. Simon Graduate PRODUCTION MANAGER: School of Business Administration, Carol G. Simon Hall, Box John M. Robortella 270100, University of Rochester, Rochester, New York 14627-0100. BUSINESS 2001 Winter PHOTOGRAPHY: © 2002 William E. Simon Graduate School of Business Annette Dragon, G. Steve Jordan, John Myers, Administration, University of Rochester SIMON Jan Regan, John Smillie, Shannon Taggart 02 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION Message From the Dean eaders who are familiar with Simon Business will notice some differences in the Winter 2001 issue. R First of all, we have added an Alumni News section, with information for and about Simon alumni throughout the world. This information, which has previously been shared with our alumni in a separate quarterly publication, will now reach them twice a year in this magazine. They will also continue to hear from us in an annual alumni newsletter, and in the dean’s annual report. While we decided to make this change for reasons including cost efficiencies and timeli- ness of news, we also think that our corporate partners, prospective students and members of the media will be interested in knowing how Simon graduates are faring in their personal and professional lives. We’ve devoted a large part of this issue to the much-anticipated dedication ceremonies for James S. Gleason Hall, a magnificent new building which increases usable space for the Simon School by 38,000 square feet. Gleason Hall will provide greatly enhanced accommoda- tions for our students and recruiters, and free up space to enlarge facilities for our Admissions and Alumni Relations areas, as well as the Simon School’s Executive Development Program. Additional space for corporate partnerships, club meetings and team-related activities will enable our students to pursue expanded leadership opportunities. And finally, we offer this issue—albeit sadly—as a memorial to two Simon alumni who were lost in the September 11 terrorist attack in New York City. Jeffrey R. Smith ’88 and Zhe “Zack” Zeng ’98, both of whom graduated from the University of Rochester and the Simon School, represented the finest qualities of a Simon M.B.A. Friends and colleagues remember both men for their deep loyalty and concern for others. We dedicate this issue of Simon Business to Jeff and Zack, and extend our deepest sympathies to their families. Charles I. Plosser Dean and John M. Olin Distinguished Professor of Economics and Public Policy BUSINESS 2001 Winter SIMON 03 04 SIMONBUSINESS Winter 2001 WILLIAM E. SIMON GRADUATE SCHOOL OF BUSINESS ADMINISTRATION Feature economic outlook SOONER THAN YOU THINK. he economy might not be doing very well right now, and indeed it may worsen slightly, but key econom- T ic indicators show it is poised to turn around more quickly than most people predict, says Charles I. Plosser, dean of the Simon School. Plosser, an internationally renowned economist, delivered his prediction on December 11, 2001, during the 23rd annual Economic Outlook Seminar, sponsored by the Simon School, Greater Rochester Metro Chamber of Commerce and JPMorganChase. “The economy is poised for a recovery. Most of the pieces are in place to warrant such a prediction. If things go according to plan, we should see a return to positive growth in the first quarter of 2002,” he said. “Real GDP growth will start out at a very modest pace in the first quarter and gradually strengthen during the year. By the second half of 2002, real growth should be close to 4 percent.” Plosser told an audience of more than 400 that an understanding of future recovery requires reflection on the past. The economic slowdown began when business investment spending fell after the first quarter of 2000. Then came the September terrorist attacks, which turned a slowdown and possible recession into reality. Like any disaster, the attacks destroyed human and physical capital; estimates of cleanup costs and the loss of life and property are $30–60 billion. But as horribly sad as the tragedy is, Plosser said, it represents a relatively minor shock to the $10 trillion U.S. economy. Unlike a natural disaster, however, the attacks introduced greater uncertainty regarding national security. The result: a sharp and significant retrenchment in consumer spending, transforming the slowdown into a recession, according to Plosser. If things go according to plan, we should“ see a return to positive growth in the first quarter of 2002. “How quickly economic growth returns depends in large part on how quickly and strongly consumer spend- ing bounces back,” he said. For clues as to how the economy will respond in the current climate, Plosser looked back to other shocks on U.S. consumer spending. Consumers closed their pockets for a while during the 1970’s Arab oil embargo and, to a lesser extent,” follow- ing the 1990 Iraqi invasion of Kuwait. In each case, Plosser noted, “the economy rebounded, and long-term BUSINESS 2001 Winter growth rates that were consistent with underlying increases in productivity were restored.” The current climate carries the added weight of uncertainty related to war and possible future attacks.