Bear Collapse Focus of New HBS Case Study

Posted by: Louis Lavelle on September 30, 2008

If you’re thinking of applying to business school to escape the dismal economy, you might want to think twice. Sure, you won’t be standing in the unemployment line if you’re at b-school, but you won’t really be “escaping” either, since in all likelihood you’ll be spending your days analyzing just what went so horribly, horribly wrong.

At Harvard Business School, the Crimson reports, two professors are working on what will probably be the first of a long line of case studies, this one analyzing the collapse of Bear Stearns—a company near and dear to all MBA students’ hearts.

The professors, Clayton S. Rose and Daniel B. Bergstresser, say it's going to be taught to first-year finance and corporate leadership classes starting in April 2009. Bergstresser, an assistant professor at HBS, explains why the case is an important one for business school students:

The events that led to the collapse of Bear Stearns represent one of the focal events in American financial history. Until the market events of last week, the collapse of Bear was the major financial event of the last 10 years.

Part of the case will look at the hastily arranged shotgun wedding between Bear and JP Morgan Chase. The risks for JP Morgan are huge--defecting talent and clients, hidden liabilities, incorrectly valued assets--but so are the potential gains. The question is whether the latter will outweigh the former. Says Bergstresser: "That remains to be seen."

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