Bilge Yilmaz

Bilge Yilmaz
  • Wharton Private Equity Professor, Professor of Finance; Academic Director, Harris Family Alternative Investments Program

Contact Information

  • office Address:

    2333 Steinberg-Dietrich Hall
    3620 Locust Walk
    Philadelphia, PA 19104

Research Interests: alternative investments, corporate finance, game theory, political economy

Links: CV

Overview

Education

PhD, Princeton University, 2000; B.S., Bogaziçi University, 1991

Academic Positions Held

Wharton: 2009-present; 1998-2008. Previous appointment: Stanford University

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Research

  • Yaron Leitner and Bilge Yilmaz (2019), Regulating a Model, Journal of Financial Economics, 131 (2), pp. 251-268.

    Abstract: We study a situation in which a regulator relies on risk models that banks produce in order to regulate them. A bank can generate more than one model and choose which models to reveal to the regulator. The regulator can find out the other models by monitoring the bank, but in equilibrium, monitoring induces the bank to produce less information. We show that a high level of monitoring is desirable when the bank’s private gain from producing more information is either sufficiently high or sufficiently low. When public models are more precise, banks produce more information, but the regulator may end up monitoring more.

  • Archishman Chakraborty and Bilge Yilmaz (2017), Authority, Consensus and Governance, Review of Financial Studies, 30 (12), pp. 4267-4316.

    Abstract: Management-aligned boards exchange precise information with management and make efficient decisions. But when agency conflicts are important, management-aligned boards may not maximize shareholder value. Even if management controls all decisions and the board only provides advice, optimal boards may withhold information. This creates inefficiencies. But agency costs fall because management is induced to obey the board. When the board can directly veto management proposals, shareholders are better off. Optimal boards should then be more shareholder-aligned. Shareholder value is further enhanced if shareholders can veto management and also commit to revealing the board’s information. Optimal boards should then be perfectly shareholder-aligned.

  • Robert Marquez and Bilge Yilmaz (2012), Takeover Bidding and Shareholder Information, Review of Corporate Finance Studies, 1 (1), pp. 1-27.

  • Archishman Chakraborty, Simon Gervais, Bilge Yilmaz (2011), Security Design in Initial Public Offerings, Review of Finance , 15 (2), pp. 327-357.

  • Archishman Chakraborty and Bilge Yilmaz (2011), Adverse Selection and Convertible Bonds, The Review of Economic Studies, 78 (1), pp. 148-175.

  • Philip Bond, David Musto, Bilge Yilmaz (2008), Predatory Mortgage Lending, Journal of Financial Economics, (2009), 94, 412-427.

    Abstract: Regulators express growing concern over predatory loans, which the authors take to mean loans that borrowers should decline. Using a model of consumer credit in which such lending is possible, they identify the circumstances in which it arises both with and without competition. The authors find that predatory lending is associated with highly collateralized loans, inefficient refinancing of subprime loans, lending without due regard to ability to pay, prepayment penalties, balloon payments, and poorly informed borrowers. Under most circumstances competition among lenders attenuates predatory lending. They use their model to analyze the effects of legislative interventions.

  • Robert Marquez and Bilge Yilmaz (2008), Information and Efficiency in Tender Offers, Econometrica, (2008), 76(5), 1075-1101.

    Abstract: We analyze tender offers where privately informed shareholders are uncertain about the raider's ability to improve firm value. The raider suffers a "lemons problem" in that, for any price offered, only shareholders who are relatively pessimistic about the value of the firm tender their shares. Consequently, the raider finds it too costly to induce shareholders to tender when their information is positive. In the limit as the number of shareholders gets arbitrarily large, when private benefits are relatively low, the tender offer is unsuccessful if the takeover has the potential to create value. The takeover market is therefore inefficient. In contrast, when private benefits of control are high, the tender offer allocates the firm to any value-increasing raider, but may also allow inefficient takeovers to occur. Unlike the case where all information is symmetric, shareholders cannot always extract the entire surplus from the acquisition.

  • Archishman Chakraborty and Bilge Yilmaz (2008), Microstructure Bluffing with Nested Information, American Economic Review Papers & Proceedings, (2008), 98(2), 280-284.

  • Archishman Chakraborty and Bilge Yilmaz (2004), Manipulation in Market Order Models, Journal of Financial Markets, (2004), 7, 187-206.

    Abstract: We analyze a dynamic market order model similar to Kyle (Econometrica 53 (1985) 1315). We show that when the market faces uncertainty about the existence of the insider in the market, the equilibrium outcome changes in a significant way. In particular, the insider manipulates (i.e., trades in the wrong direction and undertakes short term losses) in every equilibrium, given a long enough horizon, and independently of the precise nature of noise trading in the market.

  • Archishman Chakraborty and Bilge Yilmaz (2004), Informed manipulation, Journal of Economic Theory, (2004), 114, 132-152.

    Abstract: In asymmetric information models of financial markets, prices imperfectly reveal the private information held by traders. Informed insiders thus have an incentive not only to trade less aggressively but also to manipulate the market by trading in the wrong direction and undertaking short-term losses, thereby increasing the noise in the trading process. In this paper we show that when the market faces uncertainty about the existence of the insider in the market and when there is a large number of trading periods before all private information is revealed, long-lived informed traders will manipulate in every equilibrium.

Teaching

Current Courses

  • FNCE291 - Corporate Restructuring

    This course explores the highly active and sophisticated deal making environment that is the hallmark of modern corporate restructuring. The course is primarily comprised of two key components. The first is groundwork-laying lectures that focus on fundamental rights and obligations of debtors, creditors, and other parties in interest in the various types of major chapter 11 cases, providing critical insight into understanding the motivations, strategies, and available tools for chapter 11 participants (which also serve as the foundation for out-of-court deals). The second element of the course is a series of case study panels based on market trends from the previous year that bring together key participants from recent deals, including the CEO or chairman of the company, the judge, the lead banker and lead lawyer, and the lead investors to give their insight and perspectives to the class.

    FNCE291401 ( Syllabus )

  • FNCE402 - Shareholder Activism

    The aim of the course is to provide an introduction to shareholder activism. The course makes use of lectures and case studies. The lectures expose the students to the institutional and empirical facts as well as approaches followed by leading shareholder activists. The case studies are designed to provide students an experience on identifying potential opportunity for value creation through active engagement. Assignments require students to develop/practice skills on fundamental analysis.

    FNCE402001 ( Syllabus )

  • FNCE791 - Corporate Restructuring

    This course explores the highly active and sophisticated deal making environment that is the hallmark of modern corporate restructuring. The course is primarily comprised of two key components. The first is groundwork-laying lectures that focus on fundamental rights and obligations of debtors, creditors, and other parties in interest in the various types of major chapter 11 cases, providing critical insight into understanding the motivations, strategies, and available tools for chapter 11 participants (which also serve as the foundation for out-of-court deals). The second element of the course is a series of case study panels based on market trends from the previous year that bring together key participants from recent deals, including the CEO or chairman of the company, the judge, the lead banker and lead lawyer, and the lead investors to give their insight and perspectives to the class.

    FNCE791401 ( Syllabus )

  • FNCE801 - Advanced Topics In Pe

    (Formerly FNCE 884) The goal of this course is to educate students about the substance, process and mechanics of PE investing, through the lens of the investment professionals, counterparties and advisors that drive transactions to completion. It focuses on growth and later-stage buyout transactions (excluding venture capital) taking a primarily U.S.-centric view that should be largely applicable in other markets. The course concentrates on the transaction stage of PE investing, mostly leaving aside deal sourcing, portfolio management and investor relations. Course topics will include: commercial diligence (incl. financial modeling), debt financing, accounting diligence, sales & purchase agreements, comps analysis and other advisory work. Students will apply each element of the deal process to a real-time mock deal by preparing materials that mirror a real private equity transaction.

    FNCE801001

  • FNCE802 - Shareholder Activism

    (Formerly FNCE 887) The aim of the course is to provide an introduction to shareholder activism. The course makes use of lectures and case studies. The lectures expose the students to the institutional and empirical facts as well as approaches followed by leading shareholder activists. The case studies are designed to provide students an experience on identifying potential opportunity for value creation through active engagement. Assignments require students to develop/practice skills on fundamental analysis.

    FNCE802001 ( Syllabus )

  • LAW 908 - Corporate Restructuring

    This course explores the highly active and sophisticated deal making environment that is the hallmark of modern corporate restructuring. The course is primarily comprised of two key components. The first is groundwork-laying lectures that focus on fundamental rights and obligations of debtors, creditors, and other parties in interest in the various types of major chapter 11 cases, providing critical insight into understanding the motivations, strategies, and available tools for chapter 11 participants (which also serve as the foundation for out-of-court deals). The second element of the course is a series of case study panels based on market trends from the previous year that bring together key participants from recent deals, including the CEO or chairman of the company, the judge, the lead banker and lead lawyer, and the lead investors to give their insight and perspectives to the class.

    LAW 908401 ( Syllabus )

Past Courses

  • FNCE203 - ADVANCED CORP FINANCE

    This course discusses the theory and empirical evidence related to the various investment and financing policies of the firm and attempts to improve decision-making ability in these areas. This course covers aspects of financial management not covered in FNCE 100, including mergers and acquisitions, corporate reorganizations, financial planning and working capital management. It also offers a more rigorous coverage of topics discussed in FNCE 100, such as investment under uncertainty, cost of capital, capital structure, pricing of selected financial instruments and dividend policy.

  • FNCE251 - FNCE OF BUYOUTS & ACQS

    The course focuses on financial tools, techniques, and best practices used in buyouts (financial buyers) and acquisitions (strategic buyers). While it will touch upon various strategic, organizational, and general management issues, the main lens for studying these transactions will be a financial one. It will explore how different buyers approach the process of finding, evaluating, and analyzing opportunities in the corporate-control market; how they structure deals and how deal structure affects both value creation and value division; how they add value after transaction completion; and how they realize their ultimate objectives (such as enhanced market position or a profitable exit). The course is divided into two broad modules. The first module covers mergers and acquisitions, and the second one studies buyouts by private equity partnerships. FNCE 203 or FNCE 207 are recommended.

  • FNCE291 - CORPORATE RESTRUCTURING

    This course explores the highly active and sophisticated deal making environment that is the hallmark of modern corporate restructuring. The course is primarily comprised of two key components. The first is groundwork-laying lectures that focus on fundamental rights and obligations of debtors, creditors, and other parties in interest in the various types of major chapter 11 cases, providing critical insight into understanding the motivations, strategies, and available tools for chapter 11 participants (which also serve as the foundation for out-of-court deals). The second element of the course is a series of case study panels based on market trends from the previous year that bring together key participants from recent deals, including the CEO or chairman of the company, the judge, the lead banker and lead lawyer, and the lead investors to give their insight and perspectives to the class.

  • FNCE386 - ASP - HEDGE FUNDS

    This course will cover critical aspects and characteristics of hedge funds and the hedge fund industry. It will look at the legal foundations and structures of hedge funds including the primary regulations in the U.S. and abroad that are most relevant for hedge funds. It will also present the major hedge fund strategies, describe operation, control, administration, due diligence and valuation issues. Performance evaluation and investing in hedge funds from the investor's perspective will be discussed as will be issues of potential changes in regulation, risk management, and the use of leverage. The format of the course will mix lectures with presentations from industry participants, hedge fund managers, those who invest in hedge funds, those who advise them and provide services to them, and those who regulate them. Those who want to launch a hedge fund, join an existing one, invest in one, or provide services to one will want to register for this course.

  • FNCE399 - INDEPENDENT STUDY

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

  • FNCE401 - ADVANCED TOPICS IN PE

    This course will cover a variety of applied topics in private equity (PE) with a focus on growth and later-stage buyout transactions. It will have a primarily U.S.-centric view that is largely applicable to other markets. Venture capital is not explicitly addressed in this course. Course topics will address the entirety of the deal process and value creation in the post-acquisition period, and will include the following: - LBO modeling - Commercial due diligence (principles and execution) - Debt financing - Sale & purchase agreements (SPA) - Accounting diligence - Deal structuring - Operations & Value creation Throughout the course, students will learn about each element of the deal process through in-class lectures, while concurrently applying those learnings to former transactions (these must be old enough that sharing material is no longer sensitive). The in-class lectures will cover conceptual frameworks, practical considerations and real-world case studies and examples. There will be four assignments in this course. The first three assignments will apply these learnings to the art of the deal through a real world lens. In the last assignment, students will develop a value creation plan for designated public companies "TargetCo1" and "TargetCo2". Students are expected to actively engage in classroom discussions, challenging one another and the instructors about how to think through these issues in an ever-evolving investment world. In addition, throughout the course, students are expected to work as a team on the assignments.

  • FNCE402 - SHAREHOLDER ACTIVISM

    The aim of the course is to provide an introduction to shareholder activism. The course makes use of lectures and case studies. The lectures expose the students to the institutional and empirical facts as well as approaches followed by leading shareholder activists. The case studies are designed to provide students an experience on identifying potential opportunity for value creation through active engagement. Assignments require students to develop/practice skills on fundamental analysis.

  • FNCE750 - VENT CAP & FNCE INNOVAT

    This course covers the finance of technological innovation, with a focus on the valuation tools useful in the venture capital industry. These tools include the "venture capital method," comparables analysis, discounted cash flow analysis, contingent-claims analysis. The primary audience for this course is finance majors interested in careers in venture capital or in R&D-intensive companies in health care or information technology.

  • FNCE751 - FNCE OF BUYOUTS & ACQS

    The course focuses on financial tools, techniques, and best practices used in buyouts (financial buyers) and acquisitions (strategic buyers). While it will touch upon various strategic, organizational, and general management issues, the main lens for studying these transactions will be a financial one. It will explore how different buyers approach the process of finding, evaluating, and analyzing opportunities in the corporate-control market; how they structure deals and how deal structure affects both value creation and value division; how they add value after transaction completion; and how they realize their ultimate objectives (such as enhanced market position or a profitable exit). The course is divided into two broad modules. The first module covers mergers and acquisitions, and the second one studies buyouts by private equity partnerships. FNCE 703 or FNCE 707 are recommended.

  • FNCE791 - CORPORATE RESTRUCTURING

    This course explores the highly active and sophisticated deal making environment that is the hallmark of modern corporate restructuring. The course is primarily comprised of two key components. The first is groundwork-laying lectures that focus on fundamental rights and obligations of debtors, creditors, and other parties in interest in the various types of major chapter 11 cases, providing critical insight into understanding the motivations, strategies, and available tools for chapter 11 participants (which also serve as the foundation for out-of-court deals). The second element of the course is a series of case study panels based on market trends from the previous year that bring together key participants from recent deals, including the CEO or chairman of the company, the judge, the lead banker and lead lawyer, and the lead investors to give their insight and perspectives to the class.

  • FNCE801 - ADVANCED TOPICS IN PE

    (Formerly FNCE 884) The goal of this course is to educate students about the substance, process and mechanics of PE investing, through the lens of the investment professionals, counterparties and advisors that drive transactions to completion. It focuses on growth and later-stage buyout transactions (excluding venture capital) taking a primarily U.S.-centric view that should be largely applicable in other markets. The course concentrates on the transaction stage of PE investing, mostly leaving aside deal sourcing, portfolio management and investor relations. Course topics will include: commercial diligence (incl. financial modeling), debt financing, accounting diligence, sales & purchase agreements, comps analysis and other advisory work. Students will apply each element of the deal process to a real-time mock deal by preparing materials that mirror a real private equity transaction.

  • FNCE802 - SHAREHOLDER ACTIVISM

    (Formerly FNCE 887) The aim of the course is to provide an introduction to shareholder activism. The course makes use of lectures and case studies. The lectures expose the students to the institutional and empirical facts as well as approaches followed by leading shareholder activists. The case studies are designed to provide students an experience on identifying potential opportunity for value creation through active engagement. Assignments require students to develop/practice skills on fundamental analysis.

  • FNCE886 - ASP - HEDGE FUNDS

    This course will cover critical aspects and characteristics of hedge funds and the hedge fund industry. It will look at the legal foundations and structures of hedge funds including the primary regulations in the U.S. and abroad that are most relevant for hedge funds. It will also present the major hedge fund strategies, describe operation, control, administration, due diligence and valuation issues. Performance evaluation and investing in hedge funds from the investor's perspective will be discussed as will be issues of potential changes in regulation, risk management, and the use of leverage. The format of the course will mix lectures with presentations from industry participants, hedge fund managers, those who invest in hedge funds, those who advise them and provide services to them, and those who regulate them. Those who want to launch a hedge fund, join an existing one, invest in one, or provide services to one will want to register for this course.

  • FNCE888 - PE EQUITY: FUNDRAISING

    This course is for second year MBA students. Please note: Students cannot receive credit for both FNCE 884 and FNCE 888. This course will address a variety of topics in private equity (PE) leveraging a highly practical and real-world approach. It will focus on growth and later-stage buyout transactions (venture capital is not explicitly addressed in this course), and a primarily U.S.-centric view that should be largely applicable in other markets. The course will focus on several key areas outside the private equity transaction: fundraising, sourcing investment opportunities, and creating value under PE ownership. The goal of this course is to educate students about these aspects of PE investing through the lens of the investment professionals, consultants, counterparties and advisors that live them each day. Students will be expected to actively engage in classroom discussions, challenging one another and the lecturers about how to think through these issues in an ever-evolving investment world. In addition, throughout the course, students will be expected participate actively with their teams as they proceed with at home assignments.

  • FNCE896 - FINANCE IN EUROPE (GMC)

    Open to MBA, Executive MBA and Undergraduate students, these modular courses are intended to provide unique educational experiences to students in a regional context that has particular resonance with the topic. Taught around the globe, the modular courses help us enrich the curriculum and research on our own campuses in Philadelphia and San Francisco.

  • FNCE897 - FINANCE EMERGING MARKETS

    This is a Wharton Global Modular Course on finance in the Middle East and North Africa. Its objective is to bring students, academics and industry experts together to study financial markets, practice, and institutions in this region.

  • 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.

  • FNCE912 - CORP FNCE AND FIN INSTIT

    This course provides students with an overview of the basic contributions in the modern theory of corporate finance and financial institutions. The course is methodology oriented in that students are required to master necessary technical tools for each topic. The topics covered may include capital structure, distribution policy, financial intermediation, incomplete financial contracting, initial and seasoned public offerings, market for corporate control, product market corporate finance interactions, corporate reorganization and bankruptcy, financing in imperfect markets, security design under adverse selection and moral hazard, and some selected topics.

  • FNCE932 - TOPICS IN CORP FINANCE

    This course covers advanced theory and empirical investigations; financial decisions of the firm, dividends, capital structure, mergers, and takeovers.

  • LAW 908 - CORPORATE RESTRUCTURING

    This course explores the highly active and sophisticated deal making environment that is the hallmark of modern corporate restructuring. The course is primarily comprised of two key components. The first is groundwork-laying lectures that focus on fundamental rights and obligations of debtors, creditors, and other parties in interest in the various types of major chapter 11 cases, providing critical insight into understanding the motivations, strategies, and available tools for chapter 11 participants (which also serve as the foundation for out-of-court deals). The second element of the course is a series of case study panels based on market trends from the previous year that bring together key participants from recent deals, including the CEO or chairman of the company, the judge, the lead banker and lead lawyer, and the lead investors to give their insight and perspectives to the class.

Activity

Latest Research

Yaron Leitner and Bilge Yilmaz (2019), Regulating a Model, Journal of Financial Economics, 131 (2), pp. 251-268.
All Research

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