Mitchell A. Petersen
Mitchell A. Petersen

FINANCE
Glen Vasel Professor of Finance
Director of the Heizer Center for Private Equity and Venture Capital

Print Overview

Mitchell Petersen is the Glen Vasel Professor of Finance. He has published widely in finance and economics. Professor Petersen's research is in the area of empirical corporate finance-the questions of how firms evaluate potential investment projects and how they fund such projects. His recent writing focuses on the funding of small firms and how such funding has been altered by technology and changes in the financial (banking) market. He was awarded the Smith-Breeden Prize for Outstanding Paper in the Journal of Finance in 1995 (for his paper "The Benefits of Lending Relationships: Evidence from Small Business Data") and the Michael Brennan Award for Best Paper in the Review of Financial Studies in 1998 (for his paper "Trade Credit: Theories and Evidence"). He was runner-up for the Brennan Award in 2008 (for his paper “Does the Source of Capital Affect Capital Structure”) and 2010 (for his paper “Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches”).

He has been a member of the editorial board of various journals, including the Journal of Finance, Financial Management, Review of Financial Studies and the Journal of Financial Intermediation. He is also a research associate with the National Bureau of Economic Research (NBER) and is a member of the Moody's Academic Advisory and Research Committee and served on the Board of Directors of L.R. Nelson.

Professor Petersen was awarded the Sidney J. Levy Teaching Award in 1996, 1999, 2001, 2003, 2006, 2008, 2010, and 2012 and was voted the Kellogg Professor of the Year in 2000, the Executive MBA Outstanding Professor in 2008, 2010, and 2011, and Kellogg Alumni Professor of the Year in 2010. He received his Ph.D. in Economics from the Massachusetts Institute of Technology. Prior to joining Kellogg Professor Petersen taught at the University of Chicago.



Areas of Expertise
Banking and Financial Institutions
Corporate Bankruptcy
Corporate Capital Structure
Corporate Finance
Debt-Equity Choice
Entrepreneurship
Payout Policy (Dividends, Repurchases)
Pension Funds
Real Options (Investments)
Risk Management
Small Business Management
Taxation

Print Vita
Education
PhD, 1990, Economics, Massachusetts Institute of Technology
AB, 1986, Economics, Princeton University, Summa Cum Laude, Phi Beta Kappa

Academic Positions
Director of Heizer Center for Private Equity and Venture Capital, Kellogg School of Management, Northwestern University, 2007-present
Glen E. Vasel Professor of Finance, Kellogg School of Management, Northwestern University, 2005-present
Glen E. Vasel Associate Professor of Finance, Kellogg School of Management, Northwestern University, 1997-2005
Assistant Professor of Finance, Kellogg School of Management, Northwestern University, 1994-1997
Assistant Professor of Finance, Graduate School of Business, University of Chicago, 1990-1994

Grants and Awards
BGI - Michael Brennan Award - Best Paper, Review of Financial Studies
Executive MBA Program Outstanding Teaching Awards, Kellogg School of Management, 2011, 2010, 2008
Kellogg Alumni Professor of the Year Award, Kellogg School of Managment, 2010
Sidney J. Levy Teaching Award, Kellogg School of Management, 2012, 2009-2010, 2007-2008, 2005-2006, 2003-2004, 2000-2001, 1998-1999, 1995-1996
Editor's Choice Award, Review of Financial Studies, 2010
Michael Brennan Award (runner-up), Barclays Global Investors, 2010
L.G. Lavengood Outstanding Professor of the Year Award, Kellogg School of Management, 2000

Editorial Positions
Associate Editor, Journal of Finance, 2004-Present

Print Research
Research Interests
Empirical corporate finance (how firms, especially small firms, are financed and, risk management, and the role of debt markets in funding investments)

Articles
Petersen, Mitchell A and Michael Faulkender. 2012. Investment and Capital Constraints: Repatriations Under the American Jobs Creation Act. Review of Financial Studies. 25(11): 3351-3388.
Petersen, Mitchell A. 2009. Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches. Review of Financial Studies. 22: 435-480.
Faulkender, Michael and Mitchell A Petersen. 2006. Does the Source of Capital Affect Capital Structure?. Review of Financial Studies. 19(1): 45-79.
Berger, Allen, Nathan Miller, Mitchell A Petersen, Raghuram G. Rajan and Jeremy Stein. 2005. Does Function Follow Organizational Form? Evidence From the Lending Practices of Large and Small Banks. Journal of Financial Economics. 76(2): 237-269.
Petersen, Mitchell A. 2004. Discussion of "Do Community Banks Benefit from Diversification" by Kevin Stiroh. Journal of Financial Services Research. 25(2-3): 161-167.
Petersen, Mitchell A and Raghuram G. Rajan. 2002. Does Distance Still Matter? The Information Revolution in Small Business Lending. Journal of Finance. 57(6): 2533-2570.
Petersen, Mitchell A and S.Ramu Thiagarajan. 2000. Risk Measurement and Hedging: With and Without Derivatives. Financial Management. 29(4): 5-29.
Petersen, Mitchell A. 1999. Banking Consolidation and Small Firm Finance: Discussion of ‘How Important are Small Banks to Small Business Lending? New Evidence from a Survey of Small Firms, by Jith Jayarantne and John Wolken. Journal of Banking and Finance. 2
Petersen, Mitchell A. 1999. Banks and the Role of Lending Relationships: Evidence from the U.S. Experience. Rassegna Economica. 63(1): 37-62.
Petersen, Mitchell A and Raghuram G. Rajan. 1997. Trade Credit: Theories and Evidence. Review of Financial Studies. 10(3): 661-691.
Petersen, Mitchell A and Raghuram G. Rajan. 1995. The Effect of Credit Market Competition on Lending Relationships. Quarterly Journal of Economics. 110(2): 407-443.
Petersen, Mitchell A. 1994. Cash flow Variability and Firm's Pension Choice: A Role for Operating Leverage. Journal of Financial Economics. 36(3): 361-383.
Fialkowski, David and Mitchell A Petersen. 1994. Posted versus Effective Spreads: Good Prices or Bad Quotes?. Journal of Financial Economics. 35(3): 269-292.
Petersen, Mitchell A and Raghuram G. Rajan. 1994. The Benefits of Lending Relationships: Evidence from Small Business Data. Journal of Finance. 49(1): 3-37.
Petersen, Mitchell A. 1992. Pension Reversions and Worker-Stockholder Wealth Transfers. Quarterly Journal of Economics. 107(3): 1033-1056.
Working Papers
Petersen, Mitchell A and Justin Murfin. 2013. Loans on sale: Credit market seasonality, borrower need, and lender rent seeking.
Petersen, Mitchell A. 2004. Information: Hard and Soft.
Book Chapters
Petersen, Mitchell A. 1996. "Allocating Assets and Discounting Cash Flows: Pension Plan Finance." In Pensions, Savings, and Capital Markets, edited by Phyllis Hernandez, John Turner, Richard Hinz, Washington, DC: US Department of Labor.
Petersen, Mitchell A. 1996. "Do 401(k) Plans Replace Other Employer-Provided Pensions?." In Advances in the Economics of Aging, edited by David A. Wise, 219-240. Chicago, IL: University of Chicago Press.
Cases
Petersen, Mitchell A.. 2004. Western-Southern Enterprise. Case 5-104-019 (KEL075).
Petersen, Mitchell A. and Robert O'Keef. 2004. West Teleservices. Case 5-104-020 (KEL074).
Petersen, Mitchell A.. 2014. Teuer Furniture (A): Discounted Cash Flow Valuation. Case 5-313-509(A) (KEL778).
Petersen, Mitchell A. and Rashmi Singhal. 2007. Vioxx: Too Risky for Merck?. Case 5-207-253 (KEL289).
Furfine, Craig and Mitchell A. Petersen. 2014. The Right of Acquisition: Options in Commercial Real Estate. Case 5-114-001 (KEL819).
Petersen, Mitchell A., Rajiv Chopra and Alex Williamson. 2013. Grupo Pão de Açúcar: Strategic Use of Trade Credit. Case 5-312-508 (KEL744).
Petersen, Mitchell A.. 2014. Teuer Furniture (B): Multiples Valuation. Case 5-313-509(B) (KEL788).

 
Print Teaching
Teaching Interests
Corporate finance (valuation, capital structure, and dividend policy), tax strategy, real options
Full-Time / Part-Time MBA
Accelerated Corporate Finance (FINC-440-0)

This course counts toward the following majors: Analytical Finance, Finance

Corporate finance covers the financial knowledge you need to run a firm, whether the firm is a multi-billion dollar international conglomerate or a three-person start up. Accelerated Corporate Finance will combine the material from Finance 1 and Finance 2 in an intensive one-quarter course. We will cover valuation (discounted cash flow, multiples, and real options), capital structure (how firms finance themselves and how they manage risk), and payout policy (should firms return capital to investors and if so how). For more details, you should read the descriptions of Finance 1 and Finance 2. The logical concepts will be covered in class, technical skills and intuition will be developed in class and through online exercises, and then the logic and tools will be applied to a set of valuation, financing, risk management, and payout cases. Given the pace of the course, students are expected to be prepared to put in the extra effort in class and outside of class. Basic finance knowledge (discounting) and accounting is assumed

Pre-requisite: Business Analytics I (DECS-430). Business Analytics II (DECS-431) and Accounting for Decision Making (ACCT-430) are recommended and may be taken concurrently.

Finance II (FINC-441-0)

Corporate Finance (FINC-441) covers the financial knowledge you need to run a firm, whether the firm is a multi-billion international conglomerate or a three-person start up. You will learn how to answer the three fundamental question of corporate finance. (1) Capital structure or the funding decision: which source(s) of capital should you use to fund the firm’s project? (2) Capital budgeting or the investment decision: which projects should you invest in? (3) Dividend decision: how should you deploy the capital that the project returns. We will cover the three fundamental methods for valuing projects and firms: discounted cash flow (or net present value), real options, and multiples analysis. The class begins with a theoretical framework. The world of finance is very complex. Without a logical structure that you can use to frame and answer questions, you will rapidly become lost and will be unable to defend your position. The theoretical framework is valuable, however, only if you can use it to examine real world decisions. Thus the majority of class time will be devoted to applying the logical framework.
This course is important for anyone who plans to run a firm or a division, who hopes to be involved in the investment or funding decisions of the firm, who plans to work for a service provider who will assist the firm in analyzing these decisions (e.g., banking and consulting), or who plans to invest in firms or advise clients who will invest in firms. Even if you initially specialize in a different functional area, you want to understand how the finance function works. The most brilliant idea isn’t useful if you cannot get it funded.

ACCT-430 and MECN-430 are recommended.

This version of Finance II is designed for students who took Finance I in or before Summer 2014. This course will be offered in Fall 2014 in Evanston & Chicago and offered in Winter 2015 in Chicago


Financial Strategy and Tax (FINC-447-0)

This course counts toward the following majors: Analytical Finance, Finance.

Taxes are a crucial component of the most investor’s asset allocation decision. After tax-returns are the portion investors keep. Taxes are also a crucial component of firm’s investment and financing decisions. Unfortunately, knowledge of how taxes work is often left to the experts. This means that many opportunities for creating value for firms and investors are missed. This course will not make you a tax expert. You will still need to hire a tax expert. Instead the objective is to teach you enough of the structure of tax codes (past, current, and future; US and non-US) so that you can ask intelligent tax, business, and finance questions before it is too late. The class is designed to fill the gap between an MBA who is well trained in finance and the tax experts that you will rely on in your career. We will first develop a set of fundamental tax and finance concepts. We then will apply this to a wide range of investment, financing, and risk management applications. FINC-465-0 is a prerequisite for the course but may be taken concurrently.

Executive MBA
Managerial Finance II (FINCX-441-0)
Managerial Finance II analyzes corporate financial decisions. Topics include market efficiency, capital structure, dividend and stock repurchase policy, and firms’ use of options and convertible securities.

Strategic Financial Management (FINCX-442-0)
Strategic Financial Management examines financial management theory and cases. Students use valuation skills to determine the cost of capital, financing and operating issues faced by the firm.

Executive Education
Advanced Management Program: Intensive

A condensed and immersive professional development opportunity for senior executives responsible for creating markets and driving growth in today's fast-paced, interconnected economy. A holistic approach to assessing the organizational impact of one's leadership skills and style, all supported with executive coaching.


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Advanced Management Program: The Global Experience

Kellogg offers the same core leadership content for senior executives as our Advanced Management Program: Intensive in a modular format that includes an additional week of programming. This breakthrough course design provides an unparalleled experiential global week of learning in select markets around the world.


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Business for Scientists and Engineers
Develop the business acumen to advance your life’s work. In this collaborative program, you will gain skills in marketing, leadership, finance and other management areas to build on your expertise in science or engineering. Covering topics such as taking innovation from bench to market, launching a startup, managing intellectual property and implementing negotiation strategies, this program will arm you with the tools and frameworks to face new challenges and embrace new opportunities.
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Corporate Finance: Strategies for Creating Shareholder Value
Learn the latest methodologies – and their real-world applications – for analyzing and valuing financial decisions.

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Executive Development Program
Equipping high-potential middle to senior managers with the business knowledge and leadership skills they need to succeed in general management. Explore theory-driven knowledge and concrete strategies across all business areas and return to your workplace equipped and energized to continue to advance as a leader, decision maker and change agent.
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Women's Senior Leadership Program
With an emphasis on practical learning and talent development, this four-part program — strategically paced over the course of a year — equips women with the knowledge and tools needed to elevate themselves to the C-suite and beyond. Strengthen and broaden your leadership talents through this rigorous program of intensive classroom instruction, individual career appraisals, personal coaching, case studies and simulations.
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