SPRING/SUMMER 2006 the Alumni Magazine of NYU Stern STERNbusiness PETER DRUCKER, 1909-2005 THE MANAGEMENT THINKER'S YEARS AND WORK AT NYU STERN THE MANAGEMENT THINKER'S YEARS AND WORK AT NYU STERN Media Moguls Crash Campus I Greenspan Honored I Michael Steinhardt on Investing I Kidville Grows Up I Enron's Impact on Jobs I Beware Celebrity CEOs I Profits at Family Firms a letter fro m the dean In this issue of tioned to carry out by virtue of our location in New STERNbusiness we mark York. We see New York, in all its complexity and the passing of Peter dynamism, as our classroom. In and around the city, Drucker, the prolific and the huge concentration of companies, managers, and brilliant management theo- executives serves as a vast source of knowledge – and rist who spent the most pro- as an audience eager for the future talent we provide. ductive portion of his remarkably long and influential As seen in this issue’s alumni pages, Stern is active- career at New York University Graduate School of ly connecting with a community that spans the globe. Business Administration, as Stern was then known. But we also have our sights set closer to home. In Drucker had a transformative impact on the field September, our Langone Part-time MBA Program, of management, and on the broader business culture, which already offers evening and weekend-only because he was a creative and innovative thinker who options at our Washington Square Campus, will return did not confine his analysis to the standard theories of to Westchester County. This location will make it more the day. While he spent much of his career based at convenient for working professionals in the area to universities – he taught at the School from 1950 to advance their careers without stepping away from 1971 – he never fit conveniently into the academic them. Students in Westchester will benefit from the mold. same excellent curriculum and faculty and receive the Whether the topic was the impact of technology or same degree as all NYU Stern MBA students. the management of large corporations, he always Making it easier for busy professionals to integrate offered a bold and fresh viewpoint – one in which close a first-rate business education into their working lives observation and experience informed theory. The same is the sort of project that would surely have intrigued process worked in reverse. Through his writings, Peter Drucker. With this issue, we honor his legacy teaching, consulting, and lectures, Drucker brought and contributions to the School and to the communi- theory and academic research outside the walls of the ties we serve, and we highlight the many exciting university to an extraordinarily broad audience. efforts and initiatives underway at Stern. Drucker encapsulated much of what we regard as our mission at NYU Stern – bringing together the best of academic research and real-world experience to provide the best business education to the brightest Thomas F. Cooley business students. It’s a mission we’re uniquely posi- Dean STERNbusiness A publication of the Stern School of Business New York University President, New York University contents SPRING/SUMMER 2006 John E. Sexton Dean, Stern School of Business Thomas F. Cooley 2 Public Offerings Deputy Dean, Stern School of Business Alan Greenspan receives honorary degree, KKR founder Russell S. Winer Henry Kravis discusses private equity, and Vanguard founder John Bogle and author Kurt Eichenwald talk ethics Vice Dean and Dean of the Undergraduate College 8 Stern in the City Sally Blount-Lyon 8 Estée Lauder’s global brand manager, By Daniel Gross 9 A serial entrepreneur’s latest venture is child’s play, Chairman, Board of Overseers By Stephanie Sampiere William R. Berkley 11 8 questions for Houston Rockets owner Leslie Alexander Chairman Emeritus, Board of Overseers 12 Cover Story – Peter Drucker, 1909-2005 Henry Kaufman Remembering the NYU Stern years of the 20th century’s most Associate Dean, Marketing influential management theorist, By Dale E. Zand, and External Relations Richard Freedman, and David Rogers Joanne Hvala 18 Leading Indicators Editor, STERNbusiness Stern’s CEO Series: Talking media franchises with Anne Fudge of Daniel Gross Young & Rubicam Brands, Mel Karmazin of Sirius Satellite Radio, Managing Editors, STERNbusiness and Janet Robinson of The New York Times Company Stephanie Sampiere and Jenny Owen 22 Prospectus Contributing Writers New faculty appointments, noteworthy papers, awards, and honors Shana Carroll, Rika Nazem, Jessica Neville, Angela Parks, Carolyn Ritter, Susan C. Walsh, Lisette Zarnowski Office Hours – Faculty Research Design 24 The Burden of Celebrity Esposite Graphics How CEOs can lose by winning awards, By James B. Wade, Joseph F. Porac, Timothy G. Pollock, Letters to the Editor may be sent to: and Scott D. Graffin NYU Stern School of Business 28 Heir Loss Office of Public Affairs 44 West Fourth Street, Suite 10-160 Do shareholders benefit when corporate control stays in the family? New York, NY 10012 By Morten Bennedsen, Kasper Nielsen, Francisco Perez-Gonzalez, www.stern.nyu.edu and Daniel Wolfenzon [email protected] 32 Enron’s Final Accounting Fraudulent accounting can lead to substantial job losses, Illustrations by: By Simi Kedia and Thomas Philippon Gordon Studer Chrostophe Vorlet Steven Salerno 36 Peer to Peer Michael Caswell Student Life in Washington Square and Beyond: Robert O’Hair C200/BNP scholarship, a thriving tutoring business, the Undergraduate College partners with Wharton, and students’ in-depth look at the Met Opera 38 Alumni Affairs Alumni News and Events: The Alumni Ball, a career network and global community, and alumni in Westchester/Fairfield 42 Class Notes 48 Past Performance Dean Abraham Gitlow witnessed NYU Stern’s maturation from a post-war factory to a global power, By Daniel Gross Public Offerings A SARBANES-OXLEY FOR NONPROFITS? Barry Fingerhut (MBA ’69), president of GeoCapital, LLC, who sits on a number of private boards, including the NYU Stern Board of Overseers, spoke about his experience as a board member at FEGS, the largest not-for-profit health-related and human services organization in the United States. According to Fingerhut, FEGS is already years ahead of public and private boards in terms of accounting prac- tices and has always had adequate controls in place. However, he noted that a majority of nonprofits are under-funded and under-managed, and would have a difficult time being compliant with Sarbanes-Oxley. Gerald Rosenberg, chief of the New York State Attorney General’s Charities Bureau, discussed how his From left to right: Professor Seymour Jones, Mark Lilling, Barry Fingerhut, and Joel Levy. agency investigates accounting abuses by nonprofits using anonymous tips from insiders and by reading the In November, nearly 200 academics, industry practi- charities section of The New York Times. tioners, regulators, and legal professionals attended a Teresa John, professor of accounting at NYU Stern, gathering at NYU Stern to debate whether it is practical concluded that certain provisions of Sarbanes-Oxley, or necessary for nonprofit organizations to implement such as those dealing with independent boards, audit Sarbanes-Oxley governance reforms. The event, spon- committees, audits, and improved controls, would sored by NYU Stern Ross Institute’s Corporate indeed benefit the not-for-profit world. Governance of Not-for-Profits, was moderated by Michael Hayes, a partner at PricewaterhouseCoopers Seymour Jones, clinical professor of accounting at NYU LLP, said he believes that a majority of nonprofits are Stern, and Mark Lilling (BS ’72), managing director at already implementing a good number of Sarbanes- Great Neck, New York-based Audit Committee Oxley regulations, but on their own timetable. Other Consulting Team LLC. panelists included: Joel M. Levy, CEO, YAI/National Lilling noted that in New York City alone there are Institute for People with Disabilities, and James S. 92,000 nonprofit organizations with a total of $218 bil- Sligar, a partner at Milbank, Tweed, Hadley & McCloy, lion in assets. Given the vast number of organizations – LLP. and the vast size of their assets – he asked panelists The Corporate Governance of Not-for-Profit whether nonprofit organizations should be subject to a Organizations forum was made possible through the set of regulations similar to those imposed on corpora- generous support of NYU Stern alumnus Mark S. Lilling tions by the 2002 Sarbanes-Oxley Act. and The Audit Committee Consulting Team LLC. AMY CHUA DISCUSSES In September, Amy Chua, profes- Book of 2003.” Chua captivated the attracted world-class leaders to NYU FREE MARKETS AND sor at Yale Law School, delivered the audience with her perspective on the Stern including such prominent fig- INSTABILITY annual Lubin Lecture to a packed impact of globalization, and dis- ures as Vice President Hubert audience of NYU Stern students and cussed at length her theories on Humphrey, former US Senator Jacob alumni from the Undergraduate “market-dominant minorities,” citing J. Javits, and former Federal Reserve College's Scholars Program. During examples ranging from Burma to The Chairman Paul A. Volcker. In April, her lecture, Chua recapped the key Republic of the Ivory Coast. Thomas Friedman, foreign affairs themes from her book, World on Fire: The Lubin Lecture was estab- columnist at The New York Times, How Exporting Free Market lished by Joseph I. Lubin, a distin- journalist, and author of The World is Democracy Breeds Ethnic Hatred and guished business, civic, and philan- Flat, will deliver the 2006 Lubin Promotes Global Instability, which thropic leader and Trustee of New Lecture. The Economist selected as a “Best York University. The lectures have 2 Sternbusiness great teacher, we might have had a great jazz play- er.” Top: New York University President In accepting his hon- John Sexton (left) and orary degree, Greenspan NYU Provost David commented on how, on McLaughlin (right) confer Alan Greenspan.