Harvard Business Review

SEPTEMBER 13, 2017

Our research has found that embedded sustainability drives financial performance through mediating factors such as innovation, operational efficiency, risk reduction, employee recruitment, engagement and retention, customer and supplier loyalty, competitive advantage, reduced cost of capital, and improved marketing and sales.

Supply Chain 8

Supply Chain Net Present Value Retail Cost of Capital 8

Terry Starbucker

AUGUST 29, 2010

Home About Me About This Blog Starbucker’s Amazon Store TerryStarbucker.com Ramblings From a Glass Half Full How Passion Can Revolutionize Digital Technology, AND Change The World: A Video Every Leader Must See by Starbucker on August 29, 2010 In early 1997, its stock price was $4. Not to mention that $240 share price.

Technology 282

Technology Price Video Cost of Capital 282

Harvard Business Review

APRIL 16, 2012

Strategic cash provides more flexibility concerning the timing and pricing of potential acquisitions; having cash on hand is the best insurance that CFOs will be able to respond with alacrity to opportunities and not be subject to the vagaries of the financial markets. Barring a tax holiday, this cash is effectively "trapped" offshore.

Company 14

Company Cost of Capital Finance Long-term 14

Harvard Business Review

FEBRUARY 1, 2018

One option, of course, is to drive up the stock price by buying back shares, and some CEOs may choose that course. The cost of capital is at historic lows, averaging below 6% for most large U.S. Indeed, for most companies, the value of accelerating growth greatly exceeds the value of returning capital to shareholders.

Supply Chain 9

Supply Chain CEO Discount Retail 9

Harvard Business Review

MAY 4, 2012

The arguments center on the value of establishing increased transparency with investors, and include: Higher Stock Price: The advocates for guidance argue that it can result in a higher stock price. First, let's review the case for guidance. Otherwise, they may be shackled by Fair Disclosure (Reg. FD) constraints.

CFO 11

CFO Metrics Price Depreciation 11

Harvard Business Review

OCTOBER 3, 2011

Critics imply that managing for shareholder value is all about maximizing the short-term stock price. Companies that manage for shareholder value, the thinking goes, do whatever it takes to engineer an ever-higher market price. The objective is to build value and then let the price reflect that value. Take M&A as an example.

Short-term 12

Short-term Long-term Price CEO 12

Harvard Business Review

NOVEMBER 4, 2014

The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market. If engagement works, then capital expenditures by fossil fuel firms are reduced, yielding lower carbon. It is impossible to know, and may vary on a case-by-case basis.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

NOVEMBER 4, 2014

The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market. If engagement works, then capital expenditures by fossil fuel firms are reduced, yielding lower carbon. It is impossible to know, and may vary on a case-by-case basis.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

JUNE 22, 2015

Marketers often have to make the call on whether a certain marketing investment is worth the cost. Can you justify the price tag of the ad you want to buy or the marketing campaign you’re hoping to launch next quarter? Revenue is the unit quantity sold multiplied by the selling price per unit. How do you calculate it?

Payback Period 8

Payback Period Fixed Costs Analysis Price 8

Harvard Business Review

APRIL 5, 2017

Repaying such profits to shareholders through share repurchases is better than misinvesting that cash to diversify into unrelated businesses in which management has no expertise or overinvesting in projects that may not return cost of capital. As I said earlier, measuring a company’s short-term orientation is incredibly tricky.

EPS 8

EPS Metrics Depreciation Short-term 8

Harvard Business Review

MAY 14, 2013

Swayed by arguments, particularly from coal-reliant Eastern Europe, that restoring proper market pricing would increase energy costs and possibly hinder growth during a time of deep recession, the European Parliament said no. There''s no way to determine precisely how much effect the postponement would have had on carbon prices.

Price 8

Price Energy Politics Marketing 8

Harvard Business Review

MARCH 10, 2011

Many are deeply uncertain about which initiatives they should fund — and one root of this indecision is a general lack of confidence in the cost of capital projections they are using to make the call. We find that 55 percent of respondents are convinced their cost of capital estimates are off by more than 50 basis points.

Cost of Capital 13

Cost of Capital CAPM Cost Discounted Cash Flow 13

Harvard Business Review

JUNE 27, 2012

Of the 70,000 companies with market data available, more than 42,000 earned shareholder returns (dividends + stock price appreciation) below inflation. real revenue and profit growth and earning their cost of capital has steadily declined. Only 9% of companies achieved even a modest level of sustained and profitable growth.

Creativity 14

Creativity Long-term Kotter Cost of Capital 14

Harvard Business Review

OCTOBER 21, 2016

These unpriced natural capital costs are generally internalized until events like floods or droughts cause disruption to production processes or commodity price fluctuation. Additionally, companies with superior environmental performance experienced lower cost of debt by 40-45 basis points.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

FEBRUARY 7, 2011

Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). If you follow that group over time, you would see their ROICs revert back toward the cost of capital. Consider the 1990s, when stock prices soared to lofty levels.

Skills 15

Skills ROIC Sports Cost of Capital 15

Harvard Business Review

OCTOBER 11, 2013

Beyond the intangibles of poor publicity and anxious employees, a sinking share price wreaked havoc with the company’s compensation structure, which relied on stock options as incentives. With the company’s share price sinking and its cost of capital rising, those deals might have to be put on hold. As CFO, A.J.

Case Study 8

Case Study CFO Hedge PR 8

Harvard Business Review

JUNE 18, 2015

Rather, they rely on internal rates of return and multiples of invested capital. Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

SEPTEMBER 8, 2014

The goal of strategy is profitable growth, meaning economic value above the firm’s cost of capital. Smartly reducing assets devoted to activities that earn less than their cost of capital requires good links with evolving market realities. ( Isn’t that a function of risk parameters and the debt-to-equity ratio?

Debt to Equity Ratio 10

Debt to Equity Ratio Cost of Capital Strategy Incentives 10

Harvard Business Review

NOVEMBER 7, 2012

There is a fascinating relationship between executives and the stock prices of the companies they manage. On the other hand, they frequently find their stock price inscrutable. The vast majority of executives think that their price is too low, but few can articulate an analytical case that backs that intuition.

Price 8

Price Analysis Cost of Capital Disruptive Innovation 8

Harvard Business Review

MAY 24, 2017

Invest human capital just like you invest financial capital. For financial capital, the business world has developed concepts such as the opportunity cost of capital, which is reflected in a company’s weighted average cost of capital.

Human Capital 15

Human Capital Management Company ROCE 15

Harvard Business Review

APRIL 2, 2014

The prizes were awarded “for their empirical analysis of asset prices,” but what the three had been doing looked from the outside less like a common endeavor than a not-all-that-coherent argument. So I wanted to see if Campbell could make sense of the prizes and the current state of academic knowledge about asset prices.

CAPM 8

CAPM Discount Price Finance 8

Harvard Business Review

FEBRUARY 7, 2017

The capital charge equals the amount of invested capital times the opportunity cost of capital — that is, the return that shareholders expect to earn from investing in companies with similar risk. In this case its capital charge is $800 times 8%, or $64.

Long-term 8

Long-term EPS Short-term Management 8

Strategy Driven

SEPTEMBER 9, 2011

The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital. In bond trading, there is no relationship, bond prices today have little to do with bond prices tomorrow, and I could completely change my positions overnight.

Innovation 50

Innovation NPV Business Model Constraint 50