Three Approaches to Risk Management—and How and Why Swedish Companies Use Them

Companies can manage risk by using derivatives or through operational hedging. But there is a third possibility: to leave their operating cash flows unhedged while ensuring that the firm has access to external finance in adverse states of the world. This article reports the findings of a recent survey of over 800 Swedish companies that aims to shed light on the relative importance of these three risk management methods, as well as how they interact in corporate risk management programs. The results show that risk management practices aimed at ensuring access to external finance are the main method used by the largest number of companies, followed by operational hedging methods and financial hedging with derivatives. Large companies hedge using both operational methods and derivatives, whereas small firms are less likely to use derivatives but nevertheless attach great importance to the other two ways of managing risk. Even among the largest companies, operational hedging tends to deemed more important than hedging with derivatives—a finding that, although perhaps a surprise to financial professionals, underscores the authors’ finding that operational and derivative‐based hedges function as complements rather than substitutes. Indeed, the authors report that the most financially sophisticated companies tend to use all three of these common forms of risk management.     

Why Capital Efficiency Measures Are Rarely Used in Incentive Plans, and How to Change That

Despite the wide acceptance of DCF valuation and its corollary that value is created only by earning more than the cost of capital, very few companies use performance measures that focus on corporate efficiency in using capital—measures such as return on capital (ROC) or economic value added (EVA)—as the main basis for their top management incentive programs. In this article, the authors begin by documenting the surprisingly limited use of such measures in management incentive plans. Next they analyze three often cited problems—difficulty in retaining managers, discouragement of growth investment, and complexity—that could account for the limited use of such measures. Third and last, they suggest a number of adjustments to standard capital efficiency measures that are designed to address these problems and, in so doing, to give corporate directors more confidence in using measures like EVA to reward and hold managers accountable for value-adding performance.
In illustrating the problems encountered when using such performance measures, the article uses case studies of three long-time "EVA companies"—Briggs & Stratton, Herman Miller, and Manitowoc—to highlight the difficulty of using a "bonus bank" (or "clawback") system to hold managers fully accountable for earning a minimum return on capital. After presenting empirical data that shows "delayed productivity" of invested capital, the authors suggest that conventional capital efficiency measures can discourage value-increasing growth.
The article concludes by recommending that although measures like EVA used in combination with negative bonus banks provide the right incentives, EVA capital charges should be phased in gradually to reflect the delayed productivity of capital. At the same time, corporate boards should consider providing bonus bank "relief" when market and industry factors have excessively large negative effects on the performance measures and bonus awards.     

低价揽客与压价竞争：对审计独立性的影响与管制对策

低价揽客行为与压价竞争行为问题研究的焦点主要集中在其对审计独立性的影响上,但国外研究没有得出一致且明确的结论,国内研究则更显落后。低价揽客行为与压价竞争对审计独立性影响不确定的基源,在于对两种行为本身的界定的不清晰。低价揽客行为与压价竞争行为的发生,在审计市场竞争环境下具有必然性,并且它们具有共同的本质,即都是事务所让渡部分利益而取得业务的行为。基于此,我们认为,对于压价竞争行为,监管者应该加以管制,但必须划定监管责任,以免陷入监管误区。     

美国政府救助金融危机的措施及对我国的启示

在经济全球化背景下,源于次级贷款产品的美国次贷风波迅速席卷全球。以美国为代表的发达国家采取力度空前的救助措施,暂时避免了金融体系的彻底崩溃。认真梳理研究美国的救市机制,有助于增强我国金融体系的危机应对能力,进一步提高我国金融体系的稳健性。本文通过分析金融危机下美国政府的各项救助措施．总结了此次危机救助的特点,并提出了对我国金融维稳的启示。     

拓宽研究视角,打破会计研究孤岛格局,探索现代会计研究新模式

当前,会计研究被人为地划分为众多自我封闭的研究领域,形成了会计研究中的孤岛。拓宽研究视角、打破会计研究孤岛格局、探索现代会计研究新模式,是增强会计研究活力、促进会计繁荣与发展的必由之路。本文就打破会计研究孤岛格局的原因与方式进行了探讨,通过研究-实践-教学三角模型的引入,提出三种有助于打开会计研究局面的途径,即广泛地接纳不同研究方法、开放包容地吸收更多研究理论、拓宽研究问题的视角。本文着重对第三种途径进行了详细论述,提出了一个能够将会计问题置于更为宽广研究视野的框架,并展示了应用该框架的一项研究成果。     

Measuring the Contributions of Brand to Shareholder Value (and How to Maintain or Increase Them)

Since 1993 Young & Rubicam has invested over $130 million in collecting and interpreting data on consumers' perceptions of some 44,000 product and service brands in over 50 countries. At the core of Y&R's research effort is the Brand‐Asset® Valuator (or “BAV”), a model that converts the firm's hoard of data on global consumer perceptions and behavior patterns into assessments of brand strength and value. When combined with the findings of independent research by academics in marketing and finance (using Compustat data on corporate operating and stock‐price performance), the BAV's assessments of brand values can be used to quantify the contributions of brands to both corporate earnings and market values. One of the main findings of this research is that brands contribute to the market value of companies by increasing not only current earnings, but the price‐to‐earnings (P/E) multiples that investors assign to current earnings. Such increases in P/E multiples in turn reflect investors' expectations for lower risk, higher growth or both. At the same time, more recent consumer surveys (conducted in 2005‐2007) provided indications of brand “erosion” even as the markets were pushing up share prices, presumably with the expectation that intangibles like brand would continue to drive operating earnings in the future. For the leaders of consumer‐related corporations, the resulting “disconnect” between stock prices and brand values points to a continuing challenge for brand management. Building brand value is important for both finance professionals trying to increase shareholder value and marketers trying to build brand strength and increase sales and margin. The aim of the authors' research is to bring these two groups—finance and marketing— closer together by demonstrating the role of marketing strategy and brand equity in driving shareholder value.     

Emmanuel Saez and Gabriel Zucman: The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay

Financial Markets and Portfolio Management -     

Social Capital,Trust, and Corporate Performance: How CSR Helped Companies During the Financial Crisis (and Why It Can Keep Helping Them)

The authors summarize the findings of their study, published recently in the Journal of Finance, that shows that CSR investments can help companies when they perhaps need it most—that is, during sharp downturns when overall trust in companies and markets declines. Companies with high‐CSR rankings experienced stock returns that were five to seven percentage points higher than their low‐CSR counterparts during the 2008–2009 financial crisis, and even larger excess returns during the Enron crisis of 2001–2003. High‐CSR companies during the crisis also reported better operating performance, higher growth, higher employee productivity, and greater access to debt markets—while continuing to generate higher shareholder returns as late as the end of 2013. Many of these operating improvements continued well into the post‐crisis period, though at more modest levels. As the authors view their findings, the ‘social capital’ built up by corporate CSR programs complements effective financial capital management in increasing shareholder wealth mainly by limiting companies' downside risk. CSR is seen as not only reducing systematic as well as firm‐specific risk, but as also providing protection against overall ‘loss of trust.’ The social capital created by CSR programs is said to provide a kind of insurance policy that pays off when investors and the overall economy face a severe crisis of confidence.     

A Consulting Giant; a Disgruntled Client: A ‘Failed’ Attempt to Change Management Controls in a Public Sector Organisation

There has been very little research into management consulting interventions in public sector organisations, especially in emerging economies. This paper aims to fill this void by narrating the empirics of a consulting assignment carried out by a large international consulting firm in a Pakistani public sector organisation. The study found that consultants’ recommendations of ‘businesslike’ management controls, such as a modern performance measurement system and a ‘state‐of‐the‐art’ information system, were rejected outright by the client management. Employing a critical realist perspective that focuses on the structural conditions facing both the client and the consultants, and on the strategies adopted by both parties, the study aims to explain the empirics of the case. Through structural and strategic analysis, this paper aims to enhance our understanding of the dynamics of management consulting in public sector organisations, especially in emerging economies.     

Formal Water Markets: Why, When, and How to Introduce Tradable Water Rights

In most countries the state owns the water resources and thehydraulic infrastructure, and public officials decide who getsthe water, how it is to be used, and how much will be chargedfor it. But costly inefficiencies in the supply and use of watersupport a shift from government provision to a market-basedapproach that is more effective and less wasteful. Markets can allow rapid changes in allocation in response tochanging demands for water and can stimulate investment andemployment as investors are assured of access to secure suppliesof water. Because of water's unique characteristics, such marketsdo not work everywhere; nor do they resolve all water-relatedissues. By designing appropriate water laws and regulationsand by strengthening private and public institutions to administerthem, formal water markets can effectively address rising demandsfor groundwater and for water found in rivers, lakes, and canals.Lessons from Chile's experience demonstrate that formal watermarkets can improve the economic efficiency of water use andstimulate investment.      

Coming Through in a Crisis: How Chapter 11 and the Debt Restructuring Industry Are Helping to Revive the U.S. Economy

During the recent financial crisis, U.S. bankruptcy courts and debt restructuring practitioners were faced with the largest wave of corporate defaults and bankruptcies in history. In 2008 and 2009, $1.8 trillion worth of public company assets entered Chapter 11 bankruptcy protection—almost 20 times the amount during the prior two years. And the portfolio companies of U.S. private equity firms faced a towering wall of debt that, many observers predicted, was about to wipe out most of the industry. But far from the death of private equity or a severe contraction of corporate America, the past three years have seen an astonishingly rapid working off of U.S. corporate debt overhang, allowing corporate profits and values to rebound with remarkable speed and vigor. And as the author of this article argues, corporate America's recovery from the recent financial crisis provides a clear demonstration of the importance of U.S. bankruptcy laws and restructuring practices in maintaining the competitiveness of U.S. companies and the long‐run growth of the U.S. economy.     

救助企业复活 实现银企双赢——农业银行河南省分行实施复活企业工程的调查

复活企业工程是农业银行河南省分行对国有商业银行如何处置不良贷款，优化自身经营环境，有效化解金融风险和构筑新型银企关系进行的有益尝试，通过实施“复活工程”，收到了危困企业复活，银行资金盘活，地方政府减负的良好效果。     

Characteristics Associated with the Corporate Decision to Adopt Long‐term Performance Plans

This study investigates why firms adopt long‐term performance plans. The results provide evidence that firms that adopt long‐term performance plans have higher risk as measured by Beta, have lower percentages of managerial stockholdings, have higher levels of investment in research and development expenditures two years prior to adoption of a long‐term performance plan, and experience increases in the ratio of debt to total assets in the two year period prior to long‐term performance plan adoption. Also, firms increase their investments in research and development and capital expenditures following adoption of long‐term performance plans.     

小心黄灯

亲爱的CFO朋友:你们好!感恩节刚过,麦道夫的儿子马克用栓狗绳自尽的消息便充斥于全球各大媒体,又激起人们对已有些淡忘的两年前那场金融危机和财富浩劫的回忆和讨论。时逢《新理财》杂志的约稿,这也使我有了写下以下文字的想法。     

Why FX Risk Management Is Broken–and What Boards Need to Know to Fix It

This article provides a comprehensive critique of current corporate foreign exchange risk management (FXRM) practices. The authors characterize much of FXRM as a “legacy” activity, a set of outdated, often decentralized and “earnings‐driven” methods and procedures that have not been subjected to rigorous cost‐benefit analysis at the enterprise level. And according to the authors, the costs of poorly designed and executed FXRM have increased sharply in recent decades because of the growing demand by analysts and investors for cost‐efficiency, transparency, and predictability. After discussing six ways in which the FX policy of most large multinationals fails to serve the interests of their investors and other important stakeholders, the authors offer the following: (1) a restatement of the goals of FXRM; (2) an illustration of various ways of implementing a largely (if not completely) centralized approach to FXRM; (3) a proposal for aligning performance evaluation and executive pay with the goals of FXRM; (4) suggestions for improving decision‐support tools in relation to FXRM; (5) proposals for integrating FXRM into an enterprise‐wide risk management system, which include shifting responsibility for FXRM from the Finance/Treasury group to a centralized risk committee (typically under a Chief Risk Officer who reports to the board of directors); and (6) suggestions for improving communication of a company's risk management policies and practices to investors and other stakeholders.