john

 

John E. Parsons
Senior Lecturer, Sloan School of Management
Head, MBA Finance Track
Executive Director, Center for Energy and Environmental Policy Research

Massachusetts Institute of Technology
E62-684
77 Massachusetts Avenue
Cambridge, MA 02139
(617) 324-3745
jparsons@mit.edu

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I am a financial economist working in the area of financial risk management, corporate finance and valuation. While I have applied these tools to a wide array of different industries, I have the most experience in the energy industry and on environmental problems.

I am a Senior Lecturer at MIT’s Sloan School of Management and a member of its Finance Group. I Head the MBA Finance Track.

I am the Executive Director of the Center for Energy and Environmental Policy Research, which is co-sponsored by the MIT Economics Department and the Sloan School of Management.

I am currently a Visiting Scholar at the Federal Energy Regulatory Commission, in the Office of Enforcement's Division of Analytics and Surveilance.

For the last several years I have been developing a unique MBA elective course on Corporate Risk Management (MIT Course Catalog number 15.423)

The links below give more information on each of these activities.


sloan

  I am a member of the Finance Group at MIT’s Sloan School of Management. It is an exciting group of faculty and students doing path breaking research, and a great place to learn more and dig deeper into the discipline of financial economics. Through the Finance Department, I developed a course in Corporate Risk Management that is described below.  I have also participated in teaching specialized courses on financing energy and related topics.

ceepr logo

 

MIT’s Center for Energy and Environmental Policy Research (CEEPR) is the focus at MIT for research activity in energy economics since the Center's founding in the mid-1970s, and in environmental economics since the early 1990s. CEEPR promotes rigorous and objective empirical research at MIT on issues related to energy and environmental policy to support decision-making by government and industry. The results of the research are disseminated through publications, workshops, educational programs and other public outreach activities. Economics research at CEEPR is integrated with engineering and science in collaboration with faculty throughout MIT. The relevance and validity of the research is enhanced through cooperation with government and industry associates in countries around the globe.

CEEPR gave me my first engagement in applied financial economics in the mid-1980s when I was pulled in to a major study on the evolution of the international natural gas markets and asked to analyze the role of contracts in financing the development of new natural gas fields and LNG projects. In subsequent years, CEEPR underwrote a series of my studies in the application of corporate finance to practical problems in financing energy investments. Over the years, I stayed in touch, and in 2005 they brought me back as the Executive Director. Through CEEPR, I am able to continue my research into corporate finance and risk management issues as they apply to energy companies and environmental problems, and I contribute knowledge of finance and economics to some of MIT’s interdisciplinary collaborations on energy and environmental policy issues.

 

Corporate Risk Management (MIT Course Catalog number: 15.491) is a course in how corporations make use of the insights and tools of risk management. Most courses on derivatives, futures and options, and financial engineering are taught from the viewpoint of investment bankers and traders in the securities. This course is taught from the point of view of the manufacturing corporation, the utility, the software firm—any potential end-user of derivatives, but not the dealer. Most related courses focus on the extensive taxonomy of instruments and the complex models developed to price them, and on ways to exploit mispricing. While this course will make use of some of these pricing models, the focus is on how corporations use the insights and models to improve their operations, to increase the value of their real assets, or to create the financial flexibility necessary to implement their core strategy.

I developed this course over many years, combining my academic training together with my 10 years of experience as a full-time consultant for businesses faced with various risk management problems. Two things struck me while attempting to apply academic models in the real world: first, the models were terribly useful, and second, the problems actually facing companies, and the ways that these models were actually employed and made useful, were different than how we taught about them in business schools. My return to MIT from consulting has given me the opportunity one never gets in the business world to try to write down the lessons I learned and to produce a different systematization of how the academic models are employed. I think it is a novel presentation of the material that I think is very useful.

An earlier half-semester version of the course is available on MIT’s OpenCourseware platform listed as “15.997 Advanced Corporate Risk Management”. My long-time collaborator, Professor Antonio Mello of Imperial College, London, has co-authored with me the lecture notes that are the core of this course. These lecture notes will be available sometime in the future.