Taking the Tedium out of Research

John Core, associate professor of accounting at the Wharton School, is an expert on stock options. Core and his coauthors reach their conclusions about the role stock options play in compensating both executives and lower-level employees–and the impact such incentives have on corporate performance–by using statistical models that incorporate thousands of observations about granting and exercising options, corporate earnings and stock prices from multiple Wharton Research Data Services (WRDS) databases.

WRDS helps him get his projects done more quickly and accurately. “I might have 10,000 pieces of data, and when you’re merging data it’s easy to make mistakes,” Core says. “What’s nice about the Web interface is I can review observation by observation very quickly to make sure information about a company such as option grants from one database is matched correctly with information about that company’s stock price from another database.” Furthermore, Core gets to skip the step of converting all the data from Fortran–the format in which it’s provided by many database companies–to SAS, so he can do the necessary statistical analysis to prove or disprove his theories.

Core, who got his doctorate from Wharton in 1995, shortly after WRDS was deployed, remembers the old days. During an interview in his high-ceilinged office, which is stuffed with journals and papers, Core picks up a five-inch-thick binder. It’s the size, he says, of the manual for Compustat, a database popular with finance researchers. “The university would get one Compustat manual, and people would have to get a copy of it. You’d waste a lot of time looking for the Compustat manual. Now that the manual is online, people don’t have to be looking stuff up in books.”