Harvard Business Review

AUGUST 20, 2018

and for a random sample of firms of similar size in like industries, it was 13.9%. That is to say, if you decided to invest money in a random sample of activist hedge funds, you would have earned 12.4% This is ironic, of course, because studies show the majority of acquisitions don’t earn the cost of capital for the buyer.

Hedge 8

Hedge TSR Company Sample 8

Harvard Business Review

APRIL 5, 2017

But the other indicators probably pick up legitimate differences in how companies in the sample operate, as opposed to whether they are myopic. This measure has been validated by extensive academic research. As I said earlier, measuring a company’s short-term orientation is incredibly tricky. What would better measures be?

EPS 8

EPS Metrics Depreciation Short-term 8

Harvard Business Review

AUGUST 27, 2015

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

ROIC McKinsey GDP Company 8

Harvard Business Review

JUNE 18, 2015

By reporting the results of a survey of private equity investing practices, our sample represents PE firms across a spectrum of investment strategies, size, industry specialization, and geographic focus. Rather, they rely on internal rates of return and multiples of invested capital.

Discounted Cash Flow 8

Discounted Cash Flow CAPM Company Rate of Return 8

Harvard Business Review

AUGUST 21, 2015

More likely, a company has a small sample of consumer responses to certain price changes, such as what happens when price is raised or lowered by 5-20%. Read refreshers on net present value , breakeven quantity , debt-to-equity ratio , and cost of capital. But rarely have companies tested extreme price changes.

Price 8

Price Debt to Equity Ratio Marketing Net Present Value 8

Harvard Business Review

OCTOBER 21, 2016

Another study found that revenues from sustainable products and services grew at six times the rate of overall company revenues between 2010 and 2013, among the 12 members of the S&P Global 100 sampled (Singer, 2015). GE’s Ecomagination division, for example, has generated $200 billion in sales since 2005.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

FEBRUARY 7, 2017

Collectively, our sample accounts for about 60%–65% of total U.S. public market capitalization over this period. 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.

Long-term 8

Long-term EPS Short-term Management 8