The Top 10 Consolidation and Reporting Pitfalls and How To Avoid Them
Buying technology that supports and improves processes, and showing people how to use that technology, should improve consolidation and reporting. Why then do companies keep making the same mistakes?
Content: Article | Author: Tad Leahy | Source: Business Finance Magazine | Subjects: Accounting, Finance
Powerful CEOs and their Impact on Corporate Performance
Executives can only impact firm outcomes if they have influence over crucial decisions. Based on this idea we develop and test the hypothesis that firms whose CEOs have more decision-making power should experience more variability in performance. We construct proxies for the CEO’s power to influence decisions and show that stock returns are significantly more variable for firms run by powerful CEOs. We find similar … [ Read more ]
Content: Article | Authors: Daniel Ferreira, Heitor Almeida, Renee B. Adams | Source: Social Science Research Network (SSRN) | Subjects: Corporate Governance, Finance
Get Real About Real Options
Traditional discounted cash flow techniques systematically undervalue investment projects because on their own they cannot value the opportunity to make decisions later in the process. Yet managers stick to old techniques like discounted cash flow (DCF) and even crude payback period analysis. In today’s chaotic economic environment Yann Bonduelle and Inga Schmoldt urge readers to embrace more subtle scenario and sensitivity analyses.
Content: Article | Authors: Inga Schmoldt, Yann Bonduelle | Source: European Business Forum (EBF) | Subjects: Finance, Management
Luxury Goods and the Equity Premium
What a great article The equity risk premium has puzzled researchers for years. In a nutshell it is the finding that the equity risk premium demanded by investors is too large to be explained by changes in stock returns or changes in consumption unless very high levels of risk aversion were assumed. (See Grossman-Schiller, 1981, Mehra-Prescott 1985). In a forthcoming JF article, … [ Read more ]
Content: Article | Authors: Jonathan A. Parket, Motohiro Yogo, Yacine Ait-Sahalia | Subjects: Finance, Industry Specific | Industry: Finance / Banking
Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decisions
Offers a pragmatic, reliable, and entertaining guide. Complex concepts and formulas are brilliantly interspersed with well-chosen examples and step by step walk-through from a variety of industries.
Content: Book | Author: Johnathan Mun | Subjects: Finance, Management
Watch How You Think
Insights from behavioral finance could change the way companies approach mergers and acquisitions.
Content: Article | Author: Edward Teach | Source: CFO Publishing | Subject: Finance
International Evidence on Financial Derivative Usage
Bartram, Brown, and Fehle provide a fascinating look at who uses derivatives? And what type of derivatives do they use? After examining nearly 7300 non financial firms from 48 countries, they report that about 60% of the firms used some derivatives. Currency derivatives were the most popular kind used followed by interest rate derivatives. Only 10% used commodity derivatives. [FinanceProfessor.com Annotation] … [ Read more ]
Content: Article | Authors: Frank R. Fehle, Gregory W. Brown, Sohnke M. Bartram | Source: Social Science Research Network (SSRN) | Subject: Finance
What Drives Companies to Repurchase Their Stock?
In the late 1990s, the use of employee stock options increased dramatically, as did the use of stock repurchases. Both affect a company’s earnings per share. New research goes beyond the anecdotes to determine whether financial reporting incentives affect corporate managers’ decisions to repurchase their company’s stock.
Content: Article | Authors: Daniel A. Bens, Douglas J. Skinner, M.H. Franco Wong | Source: Capital Ideas | Subjects: Accounting, Finance | Industry: Finance / Banking
401(k) Report Card
Managerial Entrenchment and the Debt-Equity Choice
OK we’ve heard all about shareholder-manager conflicts over the past few years (see Enron, Adelphia, Tyco etc.). And as a result we’ve heard all about corporate governance. But how does it tie back to the classroom in a concrete manner? One of the most frequent ways is to focus on the problems of managerial risk aversion. (For instance: due to risk aversion managers … [ Read more ]
Content: Article | Author: Ayla Kayhan | Source: University of Texas at Austin | Subjects: Corporate Governance, Finance
Deflecting Check Fraud
Despite increased security and new technologies that combat bad checks, companies are getting hammered with losses.
Content: Article | Author: Samuel Greengard | Source: Business Finance Magazine | Subject: Finance | Industry: Finance / Banking
Basel’s New Balance
A new accord may soon help banks lend more for less.
Content: Article | Author: Randy Myers | Source: CFO Publishing | Subjects: Finance, Industry Specific | Industry: Finance / Banking
Taking The Fear Out of Factoring
With more and more reputable companies entering the factoring business, services have greatly improved. But factors` bottom line use remains the same: providing ready funds for companies in cash-flow-challenged industries.
Content: Article | Author: Martin Mayer | Source: Inc. Magazine | Subject: Finance
How Foreign Firms Can Attract U.S. Investors: Overcoming ‘Home Bias’
Wharton accounting professor Brian Bushee remembers talking to the CFO of a large Australian consumer products company that was having trouble attracting interest from U.S. analysts and institutional investors. Part of the problem, the CFO had decided, was that his company chose to comply with Australian accounting methods rather than with U.S. GAAP (Generally Accepted Accounting Principles). His experience led Bushee and two colleagues to … [ Read more ]
Content: Article | Author: Brian Bushee | Source: Knowledge@Wharton | Subjects: Finance, International | Industry: Finance / Banking
Much Ado About Dividends
BPM’s Lifeline for Capital Spending
Business performance management software can guide companies to the most lucrative capital investments. But data integration problems hold up progress.
Content: Article | Author: Tad Leahy | Source: Business Finance Magazine | Subjects: Finance, IT / Technology / E-Business
Accounting Returns Revisited: Evidence of their Usefulness in Estimating Economic Returns
Danielson and Press provide an interesting look at how well accounting numbers can do to describe the economic returns of a firm. And they conclude, that in spite of the many complaints, accounting numbers do a pretty good job (not perfect) at proxying for actual economic returns. [FinanceProfessor.com Annotation]
Content: Article | Authors: Eric G. Press, Morris G. Danielson | Source: Social Science Research Network (SSRN) | Subjects: Accounting, Finance
Defining Intangible Assets
Conservatism in Accounting – Part I: Explanations and Implications
Conservatism is under attack from certain circles. For example, some (including even the FASB) are now suggesting it may be better to abandon conservatism in order to show more unbiased financial statements. In a surprisingly interesting article (NOTHING personal, but come on, it is about accounting conservatism!) Ross Watts looks at this issue and examines conservatism both from a both an historical/theoretical perspective … [ Read more ]
Content: Article | Author: Ross L. Watts | Source: Social Science Research Network (SSRN) | Subjects: Accounting, Finance
Rewriting the Letter of Credit
Online commerce cries out for a new take on an old economy tool. Letters of credit are being transformed into digital documents stored on Web sites, and new electronic alternatives are preserving the benefits of L/Cs in a form that is simpler and paperless.
Content: Article | Author: Richard H. Gamble | Source: Business Finance Magazine | Subjects: Finance, Industry Specific | Industry: Finance / Banking