1173 Posts Found

As the SEC shines a light on executive compensation, will companies clean up their acts or find new ways to hide excess?

Content: Article | Author: Don Durfee | Source: CFO Publishing | Subjects: Corporate Governance, Finance

How market beta can make hurdle rates look artificially low.

Content: Article | Author: Don Durfee | Source: CFO Publishing | Subjects: Economics, Finance

Many senior executives view dividends as a low priority on the strategic agenda. They’re wrong. The unique set of circumstances that made dividends unfashionable during the long bull market of the 1980s and 1990s is fast disappearing. In the current economic environment, dividends are an especially important lever for generating above-average shareholder returns. Revisiting a company’s dividend policy can also greatly improve the strategy debate … [ Read more ]

Content: Article | Authors: Eric E. Olsen, Gerry Hansell | Source: Boston Consulting Group (BCG) | Subject: Finance

Companies are what they are, not what their executives want them to be perceived as being. But management can improve the match between share prices and intrinsic value.

Content: Article | Author: Tim Koller | Source: McKinsey Quarterly | Subjects: Finance, Management

n 2004, The American Finance Association Board approved a project to record aspects of the History of Finance. Stephen Buser was appointed Historian with the mission to produce video interviews with important contributors to financial economic knowledge. Links to streaming videos of edited versions of interviews with Harry Markowitz, William Sharpe, Paul Samuelson and Robert Merton are posted below. Transcripts of the full texts of … [ Read more ]

Content: Article | Source: American Finance Association (AFA) | Subjects: Finance, History

Private equities are an important and growing part of the worldwide capital markets, and include early stage investments, often backed by venture capital. In the article “Venture-Backed Private Equity Valuation and Financial Statement Information,” Professors Antonio Dávila of IESE, and George Foster and Chris Armstrong of Stanford analyze how financial statement information impacts the valuation of firms by private equity investors in the U.S. market. … [ Read more ]

Content: Article | Authors: Antonio Dávila, Chris Armstrong, George Foster | Source: IESE Insight | Subjects: Entrepreneurship, Finance, Venture Capital

Going by the numbers alone can be misleading, meaningless or downright hazardous -there are banana skins galore in financial statements “tidied up” for earnings season. One-time charges, for instance, while properly used to take nonrecurring expenses that do not materially affect company value off the balance sheet, can hide unfavorable expenses, bad debt or poor investments. Easy to calculate, the venerable valuation standard P/E ratio-market … [ Read more ]

Content: Quotation | Source: Chief Executive | Subjects: Finance, Investing

Stuart Greenbaum gave a very interesting and important speech at the Financial Intermediation Research Society Meetings in Shanghai China. Fortunately for those of who did not go to China to attend the conference, the keynote address is available through SSRN. The abstract does not do the speech justice, so Jim Mahar (FinanceProfessor.com) provides some “visual bites” via some “look-ins”:

Content: Article | Author: James Mahar Jr. | Source: FinanceProfessor.com | Subjects: Corporate Governance, Finance

The widely used Fed model leads too many analysts, portfolio managers and financial commentators down the wrong road. It often leads investors to believe that by comparing two numbers – earnings yields and bond yields – they can easily determine whether the stock market is mispriced. Even worse, some investors believe that such a simple comparison is the shortcut to abnormal returns.

In the paper “The … [ Read more ]

Content: Article | Author: Javier Estrada | Source: IESE Insight | Subjects: Economics, Finance

Terms can be mesmerizing, but companies get a rude awakening when leasing’s real cost is revealed.

Content: Article | Author: Linda Corman | Source: CFO Publishing | Subject: Finance

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Regulators often justify new disclosure regulation by arguing that it reduces firms’ cost of capital; until now, there has been little evidence to support this argument. Recent research examines how the effectiveness of a country’s legal institutions and securities regulation is related to international differences in the cost of equity capital.

Content: Article | Author: Christian Leuz | Source: Capital Ideas | Subjects: Corporate Governance, Finance

Detailed notes about EVA and its calculation. Part of the excellent Damodaran Online site.

Content: Article | Author: Aswath Damodaran | Subject: Finance

Contents include:
– The pitfalls of EVA
– EVA is based on accounting return
– The problem of unevenly divided EVA
– Distortions caused by inflation, asset structure etc.
– Paradox of EVA
– How are different industries affected with these problems?
– How can you cope with these distortions of EVA
– The importance of these distortions to companies

Content: Article | Author: Esa Makelainen | Source: evanomics.com | Subject: Finance

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Interest is rising in the Treynor-Black model for portfolio selection, which can provide a new application to enterprise-wide portfolio optimisation, says Ross Miller.

Content: Article | Author: Ross Miller | Source: Risk Magazine | Subject: Finance | Industry: Investing

The emphasis on quarterly earnings at the expense of longer-term corporate health sometimes reaches absurd extremes: in one survey, executives said they would scale back investments in R&D and marketing to meet their quarterly forecasts–even if these cuts would hurt the long-term prospects of their companies. Since the capital markets value both immediate and sustained performance, companies should embrace a portfolio of initiatives over three … [ Read more ]

Content: Article | Authors: Keith Leslie, Lenny T. Mendonca, Richard Dobbs | Sources: CFO Publishing, McKinsey Quarterly | Subjects: Finance, Management

Business ratios are the guiding stars by which you steer your company’s course; they provide your targets and your standards; they direct you towards the best long-term strategies as well as the smartest short-term solutions. You can’t afford to leave them to the accountants. In Key Management Ratios, top financial educator Cieran Walsh teaches you everything you need to know about ratios to manage your … [ Read more ]

Content: Book | Author: Ciaran Walsh | Subjects: Finance, Management

Behavioral Corporate Finance identifies the key psychological obstacles to value maximizing behavior, along with steps that managers can take to mitigate the effects of these obstacles. The main goal of the book is to help students learn how to put the traditional tools of corporate finance to their best use, and mitigate the effects of psychological obstacles that reduce value.

Content: Book | Author: Hersh Shefrin | Subject: Finance

Venture capital is a crucial part of enterprise and job creation, but it also represents a market in itself. Does the venture capital sector behave like other markets, or does it have features that mark it as different? By identifying the characteristic features of the venture capital market, this paper from Bruce Kogut, Pietro Urso and Gordon Walker, provides valuable information for policy makers looking … [ Read more ]

Content: Article | Authors: Bruce Kogut, Gordon Walker, Pietro Urso | Source: INSEAD Knowledge | Subjects: Finance, Venture Capital