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Desperately Seeking Simplicity

Harvard Business Review

An example was a discussion session of tired-looking European finance ministers, defensive and elusive about the speed of acting on the Euro crisis. I heard it in a session led by Professor Michael Porter and Dean Nitin Nohria of the Harvard Business School who were sharing a research project on declining American Competitiveness.

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Providing Earnings Guidance? Think Again

Harvard Business Review

Less Volatility in Stock Price: The net effect of providing guidance is arguably a less volatile stock price, which can result in a lower beta and a lower cost of capital. FD) constraints. After weighing the pros and cons, I come down on the side of not providing guidance.

CFO 11
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Even for Companies, the U.S. Is Split Between Haves and Have-Nots

Harvard Business Review

Companies in the top one-fifth of profitability earn, in aggregate, about 70 times more economic profit (accounting profit less cost of capital) than those in the middle three-fifths combined, according to McKinsey’s database of 3,000 large, publicly listed, nonfinancial U.S. Consider what’s happening among corporations.

ROIC 8
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Why Europe's Carbon Woes Matter to the Whole World

Harvard Business Review

In Europe, the emissions-reduction targets were set prior to the 2008 financial crisis, which as we all know presaged a deep recession and a eurozone debt crisis. Share prices for European utilities and industrial companies have fallen too, threatening a wave of credit downgrades and increasing companies'' cost of capital.

Price 10
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Finally, Proof That Managing for the Long Term Pays Off

Harvard Business Review

During the 2008–2009 global financial crisis, they not only saw smaller declines in revenue and earnings but also continued to increase investments in research and development while others cut back. Consider, for example, Company A, which earns $100 of after-tax operating profit, has an 8% cost of capital and $800 of invested capital.