Keep calm and allocate capital: Six process improvements
The most effective resource allocation processes are radically simple.
Content: Article | Authors: Tim Koller, Zuzanna Kraszewska | Source: McKinsey Quarterly | Subject: Finance
Bots, algorithms, and the future of the finance function
Automation and artificial intelligence are poised to reshape the finance function. Knowing what to automate and managing the disruption can lead to a new era of productivity and performance.
Content: Article | Authors: Frank Plaschke, Ishaan Seth, Rob Whiteman | Source: McKinsey Quarterly | Subjects: Finance, IT / Technology / E-Business
How Private Equity Has Evolved to Compete in Global M&A
PE firms have shed old skin and in recent decades become bigger, smarter, and more relevant in M&A and markets than ever before, argues a new paper co-authored by Wharton’s Paul Nary.
Content: Article | Authors: Aseem Kaul, Paul Nary, Shankar Parameshwaran | Source: Knowledge@Wharton | Subjects: Finance, Mergers & Acquisitions
When Information Won’t Reduce Stock Price Volatility Immediately
Where company disclosures are concerned, “the more the merrier” doesn’t always apply; complexity and timing matter too.
Content: Article | Authors: Frederico Belo, Joon Woo Bae, Jun Li, Xiaofei Zhao, Xiaoji Lin | Source: INSEAD Knowledge | Subject: Finance
Why Stock Valuation Hinges More on Returns Than Future Earnings
Growth stocks don’t generate the long-term returns that would justify their high multiples, according to the 2023 Jacobs Levy Center’s “Best Paper,” co-authored by Wharton’s Sean Myers.
Content: Article | Authors: Ricardo De la O, Sean Myers, Shankar Parameshwaran, Xiao Han | Source: Knowledge@Wharton | Subjects: Finance, Market/Investment
When sky-high executive pay is a case of common ownership
Overpaying CEOs is a mechanism that floats all boats but undermines competition and leaves consumers paying more.
Content: Article | Authors: Florian Ederer, Martin Schmalz, Miguel Anton, Mireia Giné | Source: IESE Insight | Subjects: Corporate Governance, Finance
The Cost of Capital: If Not the CAPM, Then What?
Twenty years ago, it would have been considered heresy to doubt the usefulness of the capital asset pricing model (CAPM) in assessing the cost of capital. Ivo Welch argues that, today, the CAPM should not just be doubted—it should be discarded.
Content: Article | Author: Ivo Welch | Source: Management and Business Review (MBR) | Subject: Finance
The new finance operating system: 5 key factors that CFOs must get right
Learn more about the five core components of a resilient finance operating system and how this new lens enables your organization to focus on growth in the face of unexpected shocks—and drive organizational success.
Content: Article | Authors: Affan Mian, Christopher Napoli, Jeff Postma, Tawfik Jamjoum | Source: Kearney | Subject: Finance
The Key To Successful Zero-Based Budgeting
To do it right, let go of your company’s “evolutionary past” and take a granular look at where your profitability comes from today—it might surprise you.
Content: Article | Author: Jonathan Byrnes | Source: Chief Executive | Subjects: Finance, Management
Margin management in inflationary times: the importance of end-to-end visibility
The leading companies are harnessing the power of data to lessen the impact of inflation on their business and maintain profit margins.
Content: Article | Authors: Cristobal Lowery, Jean-Paul Savelkoul, Remko de Bruijn, Roger van Engelen | Source: Kearney | Subjects: Finance, Operations
6 Factors That Determine Your Company’s Valuation
Investors consult detailed, quantitative models before making decisions. Shouldn’t corporate managers have a similar understanding of how the market values their company, so they can make informed decisions to maximize shareholder value? An EY-Parthenon analysis of quarterly data from thousands of companies in hundreds of industries over a period of 20 years has identified six critical factors that account for most of the variability in … [ Read more ]
Content: Article | Authors: John Trustman, Louise Keely | Source: Harvard Business Review | Subject: Finance
Looking back: Meet the new P/E normal, same as the old P/E normal
Weighted average and median P/E ratios rarely diverge significantly—and when they do, the gap soon closes.
Content: Article | Author: David Schwartz | Source: McKinsey Quarterly | Subjects: Finance, Market/Investment
Five Myths (and Realities) about Zero-Based Budgeting
Companies often shy away from the method because they fear it or believe it means “budgeting from zero.” In reality, it’s a structured process that can build a culture of cost management.
Content: Article | Authors: Carey Mignerey, Kyle Hawke, Shaun Callaghan | Source: McKinsey Quarterly | Subjects: Accounting, Finance
Don’t Kill Share Buybacks
New proposed restrictions on companies buying back their own stock would likely backfire.
Content: Article | Authors: Alice Bonaimé, Theo Vermaelen | Source: INSEAD Knowledge | Subject: Finance
The Art of Performance Management
At most large companies, the performance management system is a hodgepodge of legacy systems. KPIs are not aligned across the organization. Different information systems categorize data differently. Decision rights as to who decides what data to collect are so distributed that there is no consistent approach to reporting across the entire company.
As a result, the finance organization spends an inordinate amount of time simply putting … [ Read more ]
Content: Article | Authors: Alexander Roos, James Tucker, Jeff Kotzen, Julien Ghesquieres, Marc Rodt, Tim Nolan | Source: Boston Consulting Group (BCG) | Subjects: Finance, Management
Going Beyond Budgeting
Among CFOs, alternative approaches to budgeting are getting a lot of attention. In particular, Beyond Budgeting, a concrete alternative to traditional budgeting, is gaining mainstream traction. The approach is producing impressive results at a growing number of global companies. Moreover, a BCG study confirmed that Beyond Budgeting has significant benefits: 59% of 174 finance executives surveyed reported increased sales, 56% saved significant costs in the … [ Read more ]
Content: Article | Authors: Bjarte Bogsnes, Hardik Sheth, Sebastian Stange | Source: Boston Consulting Group (BCG) | Subject: Finance
Where a Firm’s Value Truly Lies
A new approach to uncovering the sum of all the parts of a modern firm.
Content: Article | Authors: Frederico Belo, Maria Ana Vitorino | Source: INSEAD Knowledge | Subjects: Accounting, Finance
Which Metrics Really Drive Total Returns to Shareholders?
McKinsey analysis of more than 2,200 large global companies reveals the importance of monitoring both economic-profit growth and revenue growth.
Content: Article | Authors: Peter Stumpner, Tim Koller, Vartika Gupta | Source: McKinsey Quarterly | Subject: Finance
Do Algorithms Make Better — and Fairer — Investments Than Angel Investors?
Can an algorithm outperform the average angel investor? And if it can, does that also mean it will make less biased investments? Researchers put these questions to the test: They built an investing algorithm and put it head to head with 255 angel investors in a simulation, asking it to select the most promising investment opportunities among 623 deals from one of the largest European … [ Read more ]
Content: Article | Authors: Charlotta Siren, Dietmar Grichnik, Ivo Blohm, Joakim Wincent, Malin Malmstrom, Torben Antretter | Source: Harvard Business Review | Subjects: Entrepreneurship, Finance, Venture Capital
The Art of the Big Decision
A new approach to analyzing capital-intensive resource investments—Dynamic Decision Management—views projects as adjustable sequences of decisions.
Content: Article | Authors: Christian Loy, Hanjo Arms | Source: Kearney | Subjects: Finance, Management