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End the Religion of ROE

Harvard Business Review

corporation than "what's the ROE on that?" Conversely, why market cigarettes? ROE justifies the means. To an extent not widely recognized, it was an equation in the first place that gave ROE the power to dominate not just investment decisions, but an entire business culture. There is no more powerful question in a U.S.

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A Refresher on Return on Assets and Return on Equity

Harvard Business Review

A service business may have expensive computer and IT systems. What is Return on Equity (ROE)? Unlike ROA, you want the ROE to be as high as possible, but there are limitations. ” How do companies use ROA and ROE? What mistakes do people make when using ROA and ROE? Retailers need a lot of inventory.”

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Japan Is Counting on Shareholder Activism to Improve Its Economy

Harvard Business Review

In Japan several factors combine to help insulate managers from outside influence, including cross-holdings where the company owns shares in a partner firm, docile boards mostly composed of company executives, and a court system historically biased against investment funds. By and large, they failed.

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Don't Confuse Engagement with User Experience

Harvard Business Review

The Android operating system has been outselling Apple's iOS by nearly a 5:1 ratio. But much of the firm's success arguably emerges from the experiential reality that its products, services and marketing efforts align around engagement behaviors — downloading music and apps, Siri, games, etc. The numbers don't lie.

ROE 10
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How Companies Can Use Investors to Their Advantage

Harvard Business Review

He asked one former major investor for a reaction to the company’s prediction (accompanying poor quarterly results): “that the [current] market contraction will bottom out soon and our profits will improve.” It would implement targets linked to shareholder value, including ROE and ROIC.

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Would You Want Carl Icahn to Run Your Company?

Harvard Business Review

"We have a dysfunctional corporate governance system in the United States and nobody can attack it and nobody can do anything about it because it's like the feudal system." That's Carl Icahn, in a fascinating interview with Reuters BreakingViews (thanks to Jeff Glekin and Lucy Marcus for pointing me to it).

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Idle Funds are the Devil's Playground

Harvard Business Review

vision of financial world order; as Time magazine reported, he was "bursting with hubris over its booming equity markets and its just-announced 5.6% Mahathir stood his ground, not just at Davos but in the financial markets, by refusing the IMF's aid, reducing Malaysia's interest rates, and restricting currency trading.

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