Publications

In August 2014, Mark Gentry, COO of the Gifford Pinchot State University (GPSU)** Foundation, discussed with Robert Farrington of Commonfund the growing pressure from GPSU's student government to divest from fossil fuel companies. This call reflected a broader trend, as many universities were grappling with how to address carbon exposure in their investment portfolios. With around 40% of Commonfund’s university clients actively considering their carbon footprint, they provided guidance on incorporating environmental considerations into investment strategies.

The GPSU Foundation faced several dilemmas in formulating its investment policy related to carbon risk. They needed to determine the primary objectives of their strategy, which could range from actively removing carbon emissions to influencing public attitudes on climate issues. Other considerations included whether to alter their portfolios or engage with companies as shareholders, all while ensuring compliance with fiduciary responsibilities to donors. Commonfund, assisting in crafting responses for its clients, also confronted challenges such as defining meaningful measures of carbon intensity and choosing the best investment approaches, including screening or impact investing. 

** Gifford Pinchot State University (GPSU) is a fictitious entity, created as a composite of a number of university endowments interviewed by the case writer.  

Over its six-decade history, the General Services Administration (GSA), has been described as a broker, agent, landlord, quartermaster, purchasing agent, Big Box store, clearinghouse, connector, property manager, and “a bureaucracy designed to do business with other bureaucracies.” It has been described also as a political tool, a breeding ground for corruption, and one of the most wasteful agencies in government. News reports regularly use terms like “chronically troubled agency” to describe the GSA. In fact, the agency has faced a series of leadership and management scandals over the years.

Appointed to lead the GSA in 2010,  Martha Johnson brought decades of management experience to the agency. A graduate of the Yale School of Management (‘79), Johnson had held executive positions in government (the Commerce Department and the GSA), consulting (SRA International), in-house consulting (Ben & Jerry’s), manufacturing (the Cummins Engine Company), and business services (Computer Sciences Corporation). She brought a new vision of government, based on trust, to the management of the agency. But then in 2011, an "over the top" conference at a Las Vegas resort forced her to resign. What remains of Johnson's vision?

Project Sammaan aimed to address the critical issue of open defecation in urban slums. The project leadership decided to pilot community toilets in Bhubaneswar and Cuttack, India to gain information about further diffusing interesting approaches to the problem. Launched in April 2012, the project brought together a diverse team of designers, architects, and social researchers to create innovative, scalable solutions for sanitation issues. Despite these collaborative efforts, the project encountered numerous setbacks, including delays in approval and misunderstandings among partners. These issues raised several critical questions for Project Sammaan's future. Leadership had to contemplate whether additional funding was necessary and how it should be allocated. Additionally, there was a need to reassess the management structure and redefine research objectives to ensure alignment with achievable goals.

We test the hypothesis that, when thinking about allocating money to a stock, investors mentally represent the stock by the distribution of its past returns and then evaluate this distribution in the way described by prospect theory. In a simple model of asset prices where some investors think in this way, a stock whose past return distribution has a high (low) prospect theory value earns a low (high) subsequent return, on average. We find empirical support for this prediction in the cross-section of U.S. stock returns, particularly among small-capitalization stocks where less sophisticated investors are likely to have a bigger impact on prices. We repeat our tests in 46 international stock markets and find a similar pattern in a majority of these markets.