Vincent Glode

Vincent Glode
  • Pasi M. Hamalainen Associate Professor, Associate Professor of Finance

Contact Information

  • office Address:

    2330 Steinberg-Dietrich Hall
    3620 Locust Walk
    Philadelphia, PA 19104

Research Interests: financial intermediation, information economics

Links: Personal Website

Overview

Vincent Glode joined the Finance Department at the Wharton School in July 2009 after earning his PhD in finance from Carnegie Mellon University.  His research is mainly theoretical and studies how financial intermediaries create and allocate surplus in the economy.  His papers have been published in leading academic journals such as the American Economic Review, the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies.  He has served as an associate editor at Management Science and the Journal of Empirical Finance and as an elected board member of the Finance Theory Group. At Wharton, Professor Glode teaches Corporate Valuation at the undergraduate and MBA levels, for which he has won several teaching awards.  He has served on Wharton’s Teaching Excellence committee and the MBA program’s executive committee.  He is a CFA charterholder.

 

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Research

See personal website for updated info.

  • Vincent Glode and Guillermo Ordonez (Working), Technological Progress and Rent Seeking.

    Abstract: We model firms' allocation of resources between surplus-creating (a.k.a., productive) activities and surplus-appropriating (a.k.a., rent-seeking) activities. We show that economy- or industry-wide technological progresses, such as the recent improvements in processing big data, induce a disproportionate and socially inefficient allocation of resources towards rent seeking even if most of that technology applies to productive uses. As technology improves, firms lean more on rent seeking to obtain their profits, endogenously reducing the impact of technological progress on economic progress and inflating the price of resources that are used for rent seeking and production.

  • Vincent Glode and Christian Opp (Working), Private Renegotiations and Government Interventions in Debt Chains.

    Abstract: We propose a model of strategic debt renegotiation in which businesses are sequentially interconnected through their liabilities. This financing structure, which we refer to as a debt chain, gives rise to externalities, as a lender's willingness to provide concessions to its privately-informed borrower depends on how the lender's own liabilities are expected to be renegotiated. Our analysis reveals how government interventions that aim to prevent default waves should account for these private renegotiation incentives and their interlinkages. Our results shed light on the effectiveness of subsidies and debt reduction programs following economic shocks such as pandemics or financial crises.

  • Vincent Glode, Christian Opp, Ruslan Sverchkov (2021), To Pool or Not to Pool? Security Design in OTC Markets, Journal of Financial Economics.

    Abstract: We study security issuers' decisions on whether to pool assets when facing counterparties endowed with market power, as is common in over-the-counter markets. Our analysis reveals how buyers' market power may render the pooling of assets suboptimal --- both privately and socially --- in particular, when the potential gains from trade are large. Pooling assets then reduces the elasticity of trade volume in the relevant part of the payoff distribution, exacerbating the inefficient rationing associated with the exercise of buyers' market power. Our analysis provides insight on the determinants of asset-backed securities issuance, including regulatory reforms affecting financial institutions' liquidity.

  • Vincent Glode and Christian Opp (2020), Over-the-Counter vs. Limit-Order Markets: The Role of Traders’ Expertise, Review of Financial Studies.

    Abstract: Over-the-counter (OTC) markets attract substantial trading volume despite exhibiting frictions absent in centralized limit-order markets. We compare the efficiency of OTC and limit-order markets when traders' expertise is endogenous. We show that asymmetric access to counterparties in OTC markets yields increased rents to expertise acquisition for a few well-connected core traders. When the existence of gains to trade is uncertain, traders' higher expertise in OTC markets can improve allocative efficiency. In contrast, when expertise primarily causes adverse selection, competitive limit-order markets tend to dominate. Our model provides guidance for policymakers and empiricists evaluating the efficiency of market structures.

  • Vincent Glode, Christian Opp, Xingtan Zhang (2019), On the Efficiency of Long Intermediation Chains, Journal of Financial Intermediation.

    Abstract: Intermediation chains represent a common pattern of trade in over-the-counter markets. We study a classic problem impeding trade in these markets: an agent uses his market power to inefficiently screen a privately informed counterparty. We show that, generically, if efficient trade is implementable via any incentive-compatible mechanism, it is also implementable via a trading network that takes the form of a sufficiently long intermediation chain. We characterize information sets of intermediaries that ensure this striking result. Sparse trading networks featuring long intermediation chains might thus constitute an efficient market response to frictions, in which case no regulatory action is warranted.

  • Vincent Glode, Christian Opp, Xingtan Zhang (2018), Voluntary Disclosure in Bilateral Transactions, Journal of Economic Theory.

    Abstract: We characterize optimal voluntary disclosures by a privately informed agent facing a counterparty endowed with market power in a bilateral transaction. Although disclosures reveal some of the agent's private information, they may increase his information rents by mitigating the counterparty's incentives to resort to inefficient screening. We show that when disclosures are restricted to be ex post verifiable, the informed agent optimally designs a disclosure plan that is partial and that implements socially efficient trade in equilibrium. Our results shed light on the conditions necessary for asymmetric information to impede trade and the determinants of disclosures' coarseness.

  • Vincent Glode and Richard Lowery (2016), Compensating Financial Experts, Journal of Finance.

    Abstract: We propose a labor market model in which financial firms compete for a scarce supply of workers who can be employed as either bankers or traders. While hiring bankers helps create a surplus that can be split between a firm and its trading counterparties, hiring traders helps the firm appropriate a greater share of that surplus away from its counterparties. Firms bid defensively for workers bound to become traders, who then earn more than bankers. As counterparties employ more traders, the benefit of employing bankers decreases. The model sheds light on the historical evolution of compensation in finance.

  • Qi Chen, Joseph Gerakos, Vincent Glode, Daniel Taylor (2016), Thoughts on the Divide between Theoretical and Empirical Research in Accounting, Journal of Financial Reporting.

  • Vincent Glode and Christian Opp (2016), Asymmetric Information and Intermediation Chains, American Economic Review.

    Abstract: We propose a parsimonious model of bilateral trade under asymmetric information to shed light on the prevalence of intermediation chains that stand between buyers and sellers in many decentralized markets. Our model features a classic problem in economics where an agent uses his market power to inefficiently screen a privately informed counterparty.  Paradoxically, involving moderately informed intermediaries also endowed with market power can improve trade efficiency. Long intermediation chains in which each trader's information set is similar to those of his direct counterparties limit traders' incentives to post prices that reduce trade volume and jeopardize gains to trade.

  • Vincent Glode, Burton Hollifield, Marcin Kacpercyzk, Shimon Kogan (2016), Is Investor Rationality Time Varying? Evidence from the Mutual Fund Industry, Behavioral Finance: Where do Investors’ Biases Come From?.

Teaching

Past Courses

  • FNCE207 - VALUATION

    The focus of this course is on the valuation of companies. The course covers current conceptual and theoretical valuation frameworks and translates those frameworks into practical approaches for valuing companies. The relevant accounting topics and the appropriate finance theory are integrated to show how to implement the valuation frameworks discussed on a step-by-step basis. The course teaches how to develop the required information for valuing companies from financial statements and other information sources in a real-world setting. Topics covered in depth include discounted cash flow techniques and price multiples. In addition, the course covers other valuation techniques such as leveraged buyout analysis.

  • FNCE399 - INDEPENDENT STUDY

    Integrates the work of the various courses and familiarizes the student with the tools and techniques of research.

  • FNCE899 - INDEPENDENT STUDY

    Independent Study Projects require extensive independent work and a considerable amount of writing. ISP in Finance are intended to give students the opportunity to study a particular topic in Finance in greater depth than is covered in the curriculum. The application for ISP's should outline a plan of study that requires at least as much work as a typical course in the Finance Department that meets twice a week. Applications for FNCE 899 ISP's will not be accepted after the THIRD WEEK OF THE SEMESTER. ISP's must be supervised by a Standing Faculty member of the Finance Department.

Awards and Honors

  • Wharton Teaching Excellence Award, 2019
  • Wharton Teaching Excellence Award, 2018
  • Finalist for Anvil Award for Outstanding Teaching, Wharton MBA Program, 2017
  • Excellence in Teaching Award, Undergraduate Division at the Wharton School, 2017
  • Best Paper Award, 12th Annual Conference in Financial Economics at IDC-Herzliya, 2015
  • Cynthia and Bennett Golub Faculty Scholar Award, 2012-2013
  • Terker Family Prize in Financial Research [2nd prize], 2010
  • Best Paper Award in Capital Markets, Northern Finance Association meeting, 2008
  • Best Paper Award in Investments, Financial Management Association meeting, 2007

In the News

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Activity

Latest Research

Vincent Glode and Guillermo Ordonez (Working), Technological Progress and Rent Seeking.
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In the News

How to Design Debt Relief for Maximum Effect

Government interventions in private debt negotiations could be more effective in preventing default waves if they accounted for the connections between lenders and borrowers across the “debt chain,” new research shows.

Knowledge @ Wharton - 8/24/2021
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