Bilge Yilmaz

Bilge Yilmaz
  • Wharton Private Equity Professor, Professor of Finance; Director, Wharton Alternative Investments Initiative

Contact Information

  • office Address:

    2333 Steinberg-Dietrich Hall
    3620 Locust Walk
    Wharton School
    University of Pennsylvania
    Philadelphia, PA 19104

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

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

  • 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.

  • David Musto and Bilge Yilmaz (2003), Trading and Voting, Journal of Political Economy, 111(5), October 2003, 990-1003.

    Abstract: Complete financial markets transform the political choice between candidates with different redistribution policies. If redistribution policies do not affect aggregate wealth, then financial trade implies that wealth considerations have no effect on voting and so do not affect who wins. However, an election in which one candidate would redistribute results in redistribution, and redistribution is the same whether or not he wins. Furthermore, he proposes, and if elected carries out, more redistribution than he prefers. If redistribution policies do affect aggregate wealth, then everybody expects more wealth if the candidate with the higher aggregate?wealth policy wins.

  • Ernst Maug and Bilge Yilmaz (2002), Two-Class Voting: A Mechanism for Conflict Resolution, American Economic Review, 92, pp. 1448-1471.

Teaching

Past Courses

  • FNCE203 - ADVANCED CORP FINANCE

    The objective of this course is to study the major decision-making areas of managerial finance and some selected topics in financial theory. The course reviews the theory and empirical evidence related to the investment and financing policies of the firm and attempts to develop decision-making ability in these areas. This course serves as an extension of FNCE 100 (FNCE 611). Some are as of financial management not covered in FNCE 100 are covered in FNCE 203. These may include leasing, mergers and acquisitions, corporate reorganizations, financial planning and working capital management, and some other selected topics. Other areas that are covered in FNCE 100 are covered more in depth and more rigorously in FNCE 203. These include investment decision making under uncertainty, cost of capital, capital structure, pricing of selected financial instruments and corporate liabilities, and dividend policy. During the Spring semester, Professor Opp does not allow students to take this course pass/fail.

  • 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. During the spring semester this course cannot be taken pass/fail.

  • FNCE384 - ADVANCED TOPICS IN PE

    This course will address a variety of applied topics in private equity (PE), with a 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. In addition, the course will focus on the transaction stage of PE investing i.e., the art of the deal and mostly leave aside deal sourcing, portfolio management and investor relations. 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. Course topics will address the entire deal process, and will include the following: Commercial Diligence (incl. financial modeling); Debt Financing; Accounting Diligence; Sales & Purchase Agreements; Comps Analysis; and Other Advisory Work. Throughout the course, students will learn about each element of the deal process through in-class lectures, while concurrently apply those learnings to a real-time mock deal, and preparing dealmaterials that mirror a real private equity transaction. The in-class lectures will cover both conceptual frameworks and real-world examples.

  • 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.

  • FNCE387 - ASP-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 thrugh active engagement. Assignments require students to develop/practice skills on fundamental analysis.

  • FNCE395 - ASP PRIVATE EQUITY

    The course will be a survey of the private equity asset class. Its objective is to provide an understanding of the concepts, agents, and institutions involved in the late stage corporate private equity market in the U.S. and around the globe. It will examine the buyout market and the activities of buyout funds from the differing perspectives of private equity investors, private equity fund sponsors, and managers of the portfolio companies. The course will be taught almost entirely with cases. Distinguished Wharton alumni in the private equity industry will be our guest speakers for many of the cases based on transactions they concluded. PLEASE NOTE: While this course is primarily intended for graduate students, admission may be granted to a limited number of interested undergraduate students. Be aware that this course may be recorded for live or subsequent distribution, display, broadcast, or commercialization in any media, including video, audio, or electronic media. For additional information, see the course syllabus or contact the department. This is a Pass/Fail course and will not count towards your concentration.

  • FNCE399 - INDEPENDENT STUDY

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

  • FNCE726 - ADVANCED CORP FINANCE

    The objective of this course is to study the major decision-making areas of managerial finance and some selected topics in financial theory. The course reviews the theory and empirical evidence related to the investment and financing policies of the firm and attempts to develop decision-making ability in these areas. This course serves as an extension of FNCE 611. Some areas of financial management not covered in FNCE 611 are covered in FNCE 726. These may include leasing, mergers and acquisitions, corporate reorganizations, financial planning, and working capital management, and some other selected topics. Other areas that are covered in FNCE 611 are covered more in depth and more rigorously in FNCE 726. These include investment decision making under uncertainty, cost of capital, capital structure, pricing of selected financial instruments and corporate liabilities, and dividend policy.

  • FNCE751 - FNCE OF BUYOUTS & ACQS

    The focus of this course is on buying (or acquiring controlling stakes in) firms. The main topics to be covered are mergers and friendly acquisitions, hostile takeovers and buyouts. Using case studies, the course surveys the drivers of success in the transactions. While issues regarding motive and strategy will be discussed, financial theory would be the main lens used to view these control acquiring transactions. This will allow students to (1) evaluate transactions through valuation approaches and (2) structure deals employing financial innovation as a response to legal framework and economic frictions. This course should be of interest to students interested in pursuing careers as private equity investors, advisors in investment banking and corporate managers that deal with these issues. This course assumes familiarity with valuation analysis. During the spring semester students are not permitted to take this course pass fail.

  • FNCE884 - ADVANCED TOPICS IN PE

    This course will address a variety of applied topics in private equity (PE), with a 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. In addition, the course will focus on the transaction stage of PE investing i.e., the art of the deal and mostly leave aside deal sourcing, portfolio management and investor relations. 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. Course topics will address the entire deal process, and will include the following: Commercial Diligence (incl. financial modeling); Debt Financing; Accounting Diligence; Sales & Purchase Agreements; Comps Analysis; and Other Advisory Work. Throughout the course, students will learn about each element of the deal process through in-class lectures, while concurrently apply those learnings to a real-time mock deal, and preparing dealmaterials that mirror a real private equity transaction. The in-class lectures will cover both conceptual frameworks and real-world examples. FNCE 884-001 will be taught by Professor Bilge Yilmaz. Section 001 will contain six hours of material on how to execute the value creation plan post acquisition through an operational partner's perspective. In balance, section 002 will be taught by Professor Bilge Yilmaz and David Bard, Senior Fellow and Lecture will spend more time on all other topics.

  • 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.

  • FNCE887 - ASP-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 thrugh active engagement. Assignments require students to develop/practice skills on fundamental analysis.

  • FNCE895 - ASP PRIVATE EQUITY

    This course will be a survey of the private equity asset class. Its objective is to provide an understanding of the concepts, agents, and institutions involved in the late stage corporate private equity market in the U.S. and around the globe. It will examine the buyout market and the activities of buyout funds from the differing perspectives of private equity investors, private equity fund sponsors, and managers of the portfolio companies. The course will be taught almost entirely with cases. Distinguished Wharton alumni in the private equity industry will be our guest speakers for many of the cases based on transactions they concluded. While this course is primarily intended for graduate students, admission may be granted to a limited number of interested undergraduate students. PLEASE NOTE: this course may be recorded for live or subsequent distribution, display, broadcast, or commercialization in any media, including video, audio, or electronic media. For additional information, see the course syllabus or contact the department. This is a Pass/Fail course and will not count towards your concentration.

  • FNCE896 - FINANCE IN EUROPE

    This is a short seminar on finance in Europe. Its objective is to bring students, academics and several industry experts together to study financial markets, practice, and institutions in Europe. The course will primarily examine the following areas: 1.Current challenges in European markets and Euro Zone 2.Political economy of European Union 3.Alternative Investments 4.Investment Banking & Cross Border Mergers and Acquisitions. We will cover the above topics by studying the practice and transactions in Europe with a comparison to USA and rest of the world. This is a half unit course and it is designed for Wharton MBAs. Exceptionally motivated undergraduate students are also welcome to take the course.

  • FNCE897 - FNCE IN MID EAST & N AFR

    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.

  • 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 desisions of the firm, dividends, capital structure, mergers, and takeovers.

In the News

Knowledge @ Wharton

Activity

Latest Research

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

In the News

Has the Hedge Fund Industry Lost Its Way?

For hedge funds, poor performance, closures and large investor withdrawals are raising questions about their future. But don’t expect hedge funds to disappear anytime soon.

Knowledge @ Wharton - 2015/11/6
All News