Albert W. Sheen
Assistant Professor of Business Administration
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.
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Working Paper
| 2013
The Operational Consequences of Private Equity Buyouts: Evidence from the Restaurant Industry
Albert W. Sheen and Shai Bernstein
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. Establishment-level analysis of more than 50,000 restaurants in Florida shows that health and sanitation violations, particularly those most attributed to foodborne illness, decline after private equity takeover. These violations are strongly correlated with overall consumer satisfaction. Within a chain, we use independently owned franchised stores, over which private equity owners have limited control, as carbon copy counterfactuals to directly owned stores to support a causal interpretation. Improvements in sanitation and food safety occur while target chains employ fewer workers per store, and menu prices decline. This evidence suggests that private equity firms are not simply financial engineers but rather active investors that improve operations management practices in the firm. Moreover, cost-cutting activities do not come at the expense of consumer product quality.
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Other Unpublished Work
| 2012
The Real Product Market Impact of Mergers and Acquisitions
Albert W. Sheen
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.
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Other Unpublished Work
| 2011
Do Public and Private Firms Behave Differently? An Examination of Investment in the Chemical Industry
Albert W. Sheen
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.
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Supplement
| HBS Case Collection
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2011
High Noon at Vail Mountain, Spreadsheet
Albert Sheen, Luis Viceira and Joshua Coval
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Case
| HBS Case Collection
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2011
High Noon at Vail Mountain
Joshua Coval, Albert Sheen and Luis Viceira
Citation: Coval, Joshua, Albert Sheen, and Luis Viceira. "High Noon at Vail Mountain." Harvard Business School Case 212-035, November 2011.
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Case
| HBS Case Collection
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2011
(Revised from original 2010 version)
Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships
Benjamin C. Esty and Albert Sheen
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;
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Case
| HBS Case Collection
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2010
(Revised from original 2010 version)
Compass Maritime Services, LLC: Valuing Ships
Benjamin C. Esty and Albert W. Sheen
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;
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Supplement
| HBS Case Collection
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2010
Compass Maritime Services, LLC: Valuing Ships (CW)
Benjamin C. Esty and Albert W. Sheen
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;
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Teaching Note
| HBS Case Collection
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2010
Compass Maritime Services, LLC: Valuing Ships (TN)
Benjamin C. Esty and Albert W. Sheen
Teaching Note for 211014.
Keywords: Partners and Partnerships;
Research;
Service Operations;
Customers;
Price;
Shipping Industry;
Consulting Industry;
New Jersey;
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Teaching Note
| HBS Case Collection
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2010
Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V.: Valuing Ships (TN)
Benjamin C. Esty and Albert W. Sheen
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;
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Supplement
| HBS Case Collection
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2010
Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships (CW)
Benjamin C. Esty and Albert W. Sheen
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;
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