Albert W. Sheen

Assistant Professor of Business Administration

Unit: Finance

Contact:

(617) 495-6334

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Albert Sheen is an assistant professor in the Finance Unit; he teaches Finance I in the MBA required curriculum. In his research, Professor Sheen investigates aspects of corporate finance, particularly corporate investment, public and private firms, internal capital markets, and product market strategy.

Professor Sheen holds a Ph.D. in finance from the UCLA Anderson School of Management and a BA in economics from the University of Chicago. Before entering graduate school, he was a management consultant with McKinsey & Company, an analyst at Beecher Investors, and an equity analyst with Sanford C. Bernstein and Co.

    Publications

    Journal Articles

    1. The Real Product Market Impact of Mergers

      I document sources of value creation in mergers by analyzing novel data on the quality and price of goods sold by merging firms. When two competitors in a product market merge, their products converge in quality, and prices fall relative to the competition. These effects take two to three years to be fully realized and are stronger in mature, slow growth industries. Prices do not fall, however, when the acquirer is diversifying into a new product market. This direct evidence of real changes induced by merger activity is consistent with consolidation by related merging firms to achieve operational efficiencies and lower costs.

      Keywords: Value Creation; Quality; Price; Goods and Commodities; Mergers and Acquisitions;

      Citation:

      Sheen, Albert. "The Real Product Market Impact of Mergers." Journal of Finance (forthcoming).

    Working Papers

    1. The Operational Consequences of Private Equity Buyouts: Evidence from the Restaurant Industry

      What, if anything, do private equity firms do with businesses they acquire? We find evidence of significant operational changes in 101 restaurant chain buyouts between 2002 and 2012. Analysis of health inspections conducted for over 50,000 stores in Florida shows that food safety and sanitation improve after private equity takeover, especially in areas related to food handling, kitchen maintenance and consumer advising. Supporting a causal interpretation, this effect is stronger in directly owned stores than in franchised locations—"twin restaurants" in the same chain over which private equity owners have limited control. Restaurants also reduce employee headcount and lower menu prices. This evidence suggests private equity firms are not simply financial engineers but rather active operators that improve management practices in the firm. Moreover, efficiency gains do not come at the expense of product quality.

      Keywords: Safety; Quality; Private Equity; Food; Management Practices and Processes; Leveraged Buyouts; Performance Efficiency; Retail Industry; Food and Beverage Industry; Florida;

      Citation:

      Sheen, Albert W., and Shai Bernstein. "The Operational Consequences of Private Equity Buyouts: Evidence from the Restaurant Industry." Working Paper, June 2013.
    2. Do Public and Private Firms Behave Differently? An Examination of Investment in the Chemical Industry

      I compare the capacity expansion decisions of U.S. public and private producers of seven commodity chemicals from 1989-2006. I find that private firms invest differently, and more efficiently, than public firms. Specifically, private firms are more likely than public firms to increase capacity prior to a positive demand shock (an increase in price and quantity) and less likely to increase capacity before a negative demand shock. This result is particularly strong among private equity run firms. These findings are consistent with theories in which public firms are subject to greater agency concerns.

      Keywords: Private Ownership; Chemicals; Investment; Public Ownership; Chemical Industry; United States;

    Cases and Teaching Materials

    1. High Noon at Vail Mountain, Spreadsheet

      Citation:

      Sheen, Albert, Luis Viceira, and Joshua Coval. "High Noon at Vail Mountain, Spreadsheet." Harvard Business School Spreadsheet Supplement 212-702, November 2011.
    2. High Noon at Vail Mountain

      Citation:

      Coval, Joshua, Albert Sheen, and Luis Viceira. "High Noon at Vail Mountain." Harvard Business School Case 212-035, November 2011.
    3. Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships

      After booming for more than five years, the global shipping (maritime) industry experienced a dramatic crash in late 2008 as the global financial system froze and the global economy slid into recession. Ship charter rates (revenue) fell by as much as 90% causing prices of used ships to fall by as much as 80%. As ship prices (values?) fell, ship owners began to default on loans and new purchase contracts while banks holding loans secured by ships faced the possibility of increasing defaults (violations of loan-to-value covenants), foreclosures, and write-offs. In the midst of this crisis, VHSS, the German Shipbroker's Association, introduced a proposal to value ships using discounted cash flow analysis (to determine a long-term asset value, LTAV) rather than market prices from comparable transactions. Thomas Rehder, the chairman of VHSS, argued this approach was necessary because market prices did not reflect fundamental values in the current environment. After announcing the alternative valuation methodology in September 2009, he must convince industry participants—ship owners, appraisers, and bankers—to adopt the new valuation methodology and bank regulators and auditing firms to approve its use.

      Keywords: Fair Value Accounting; Financial Crisis; Capital Markets; Financial Liquidity; International Finance; Globalized Markets and Industries; Valuation; Banking Industry; Shipping Industry; Germany;

      Citation:

      Esty, Benjamin C., and Albert Sheen. "Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships." Harvard Business School Case 210-058, June 2010. (Revised April 2011.)
    4. Compass Maritime Services, LLC: Valuing Ships

      Tom Roberts, a founding partner of Compass Maritime Services, a New Jersey-based shipping research and consulting firm, has been asked by a new potential customer in May 2008 for advice on purchasing a capesize bulk carrier. After identifying a suitable ship with his colleague Basil Karatzas, they must determine an appropriate offer price for the ship and justify their recommendations.

      Keywords: Decision Choices and Conditions; Judgments; Price; Management Analysis, Tools, and Techniques; Negotiation Offer; Mathematical Methods; Ship Transportation; Valuation; Consulting Industry; Shipping Industry;

      Citation:

      Esty, Benjamin C., and Albert W. Sheen. "Compass Maritime Services, LLC: Valuing Ships." Harvard Business School Case 211-014, September 2010. (Revised December 2010.)
    5. Compass Maritime Services, LLC: Valuing Ships (CW)

      Tom Roberts, a founding partner of Compass Maritime Services, a New Jersey-based shipping research and consulting firm, has been asked by a new potential customer in May 2008 for advice on purchasing a capesize bulk carrier. After identifying a suitable ship with his colleague Basil Karatzas, they must determine an appropriate offer price for the ship and justify their recommendations.

      Keywords: Acquisition; Decisions; Microeconomics; Finance; Price; Management Analysis, Tools, and Techniques; Market Transactions; Partners and Partnerships; Mathematical Methods; Valuation; Consulting Industry; New Jersey;

      Citation:

      Esty, Benjamin C., and Albert W. Sheen. "Compass Maritime Services, LLC: Valuing Ships (CW)." Harvard Business School Spreadsheet Supplement 211-702, September 2010.
    6. Compass Maritime Services, LLC: Valuing Ships (TN)

      Teaching Note for 211014.

      Keywords: Partners and Partnerships; Research; Service Operations; Customers; Price; Shipping Industry; Consulting Industry; New Jersey;

      Citation:

      Esty, Benjamin C., and Albert W. Sheen. "Compass Maritime Services, LLC: Valuing Ships (TN)." Harvard Business School Teaching Note 211-015, September 2010.
    7. Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V.: Valuing Ships (TN)

      Teaching Note for 210058.

      Keywords: Valuation; Economic Slowdown and Stagnation; Financial Crisis; Price; Financing and Loans; Contracts; Asset Pricing; Cash Flow; Management Analysis, Tools, and Techniques; Shipping Industry; Germany;

      Citation:

      Esty, Benjamin C., and Albert W. Sheen. "Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V.: Valuing Ships (TN)." Harvard Business School Teaching Note 211-009, August 2010.
    8. Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships (CW)

      After booming for more than five years, the global shipping (maritime) industry experienced a dramatic crash in late 2008 as the global financial system froze and the global economy slid into recession. Ship charter rates (revenue) fell by as much as 90% causing prices of used ships to fall by as much as 80%. As ship prices (values?) fell, ship owners began to default on loans and new purchase contracts while banks holding loans secured by ships faced the possibility of increasing defaults (violations of loan-to-value covenants), foreclosures, and write-offs. In the midst of this crisis, VHSS, the German Shipbroker's Association, introduced a proposal to value ships using discounted cash flow analysis (to determine a long-term asset value, LTAV) rather than market prices from comparable transactions. Thomas Rehder, the Chairman of VHSS, argued this approach was necessary because market prices did not reflect fundamental values in the current environment. After announcing the alternative valuation methodology in September 2009, he must convince industry participants--ship owners, appraisers, and bankers--to adopt the new valuation methodology and bank regulators and auditing firms to approve its use.

      Keywords: Fair Value Accounting; Economic Slowdown and Stagnation; Capital Markets; Cash Flow; Financial Liquidity; Banks and Banking; Price; Price Bubble; Contracts; Crisis Management; Market Transactions; Valuation; Shipping Industry;

      Citation:

      Esty, Benjamin C., and Albert W. Sheen. "Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships (CW)." Harvard Business School Spreadsheet Supplement 211-701, July 2010.