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Calculating the Market Value of Leadership

Harvard Business Review

In recent years, investors have learned that defining the market value of a firm cannot just be based on finances. GAAP and FASB standards require financial reporting of earnings, cash flow, and profitability – all measures that investors have traditionally examined.

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Why We Need to Update Financial Reporting for the Digital Era

Harvard Business Review

The market caps of just four companies, Apple, Alphabet, Amazon, and Microsoft, now exceed $3 trillion. Their combined assets of $944 billion are an order of magnitude lower than the combined assets of $7,700 billion of the largest 3,177 companies in 1986, when the aggregate market capitalization reached $3 trillion for the first time.

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A Blueprint for Digital Companies’ Financial Reporting

Harvard Business Review

On June 25, 2018, Facebook lost market capitalization of more than $100 billion in just two hours of trading after it announced its quarterly performance, despite exceeding analysts’ earnings forecasts. In a market like social media, a firm’s success can depend on the winner-take-all profits that come from market leadership.).

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Why Leaders Are Still So Hesitant to Invest in New Business Models

Harvard Business Review

Consider the dramatic shift in the types of assets that create market value. According to Ocean Tomo, a consulting firm focused on intellectual capital, physical assets (plant, property, and equipment) made up more than 80% of the market value of the S&P 500 in 1975. How much is changing?

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The Dangers of Digital Protectionism

Harvard Business Review

Still others hope to create market barriers for global companies — a form of digital protectionism. These solutions lie at the intersection of technology development by companies and policy formulation by governments. follows Generally Accepted Accounting Principles (GAAP), developed through a rules-based approach.

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How B2B Software Vendors Can Help Their Customers Benchmark

Harvard Business Review

Neustar’s MarketShare software makes it possible for customers to measure the effects of their marketing programs and compare them to other firms. At the same time that data mirrors and scoring have emerged in the corporate world, capital markets are becoming increasingly interested in the analysis of alternative data sets.

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GDP Is a Wildly Flawed Measure for the Digital Age

Harvard Business Review

Gross Domestic Product (GDP), our core measure of prosperity, was developed during the industrial age. physical capital), rather than today’s growth drivers of developing and creating human, intellectual, and network capital. It struggles to account for today’s intangible assets—services, insights, and networks.

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