- 20 Dec 2006
- Op-Ed
Investors Hurt by Dual-Track Tax Reporting
What corporations report in profit to the IRS and what they report to shareholders are often two different numbers—sometimes wildly so. That's why the IRS and Securities and Exchange Commission are proposing that companies publicly report taxes paid—and Professor Mihir Desai thinks this is only a first step. Key concepts include: Corporations are allowed to report different profit figures to capital markets and to tax authorities, creating large, unexplained gaps that potentially confuse investors. The IRS and SEC have jointly called for a simple but controversial proposal: Companies would be required to disclose how much they pay in taxes, an amount not now decipherable from public filings. More ambitious alternatives should be considered, including making corporate tax returns public, an end to the dual-book system, and a lower corporate tax rate on profits reported to capital markets. Closed for comment; 0 Comments.
- 25 Oct 2006
- Op-Ed
Fixing Executive Options: The Veil of Ignorance
Who says you can't rewrite history? Dozens of companies have been caught in the practice of backdating options for top executives. But this is only part of the problem with C-level compensation packages, which often motivate top executives to act in their own best interests rather than those of shareholders. Professors Mihir Desai and Joshua Margolis turn to philosopher John Rawls for a solution: Reward the execs, but don't give them the details. Key concepts include: Too often executive incentive packages are not aligned with the best interests of shareholders. Why create long-term value if your bread is buttered by quarterly performance? Option compensation could be restructured to ensure that managers were aware of the value of their compensation without any knowledge of the details of their compensation—a concept inspired by philosopher John Rawls' work on distributive justice. These options may only be useful for CEOs, senior officers, and directors—not middle management. Closed for comment; 0 Comments.
- 02 Aug 2006
- Research & Ideas
Investor Protection: The Czech Experience
When TV Nova launched as the first private television channel in post-communist Czechoslovakia, few anticipated the business drama behind the scenes. HBS professor Mihir Desai explains what managers can learn from one unlucky investor's experience. Key concepts include: Think hard about partner selection, deal structuring, and operational decisions when expropriation is a key risk. Well-constructed joint ventures should embody the notion of "Trust, but verify." Seek partners with experience with foreign companies and a track record of good behavior. Closed for comment; 0 Comments.
- 03 Apr 2006
- Research & Ideas
The Competitive Advantage of Global Finance
Relatively few multinational companies truly understand or take advantage of international finance. Professor Mihir A. Desai tackles the subject in a new book, International Finance: A Casebook. Here’s a Q&A. Closed for comment; 0 Comments.
- 18 Jul 2005
- Research & Ideas
Time to Rethink the Corporate Tax System?
Corporations have turned tax obligations into profit centers, bringing into question the whole rationale for business taxes in the first place. Professor Mihir A. Desai discusses problems with the modern corporate tax structure and suggests possible remedies. Closed for comment; 0 Comments.
- 10 May 2004
- Research & Ideas
Rethink the Value of Joint Ventures
Why are joint ventures losing favor with transnational companies? Professor Mihir A. Desai discusses research that suggests globalization makes go-it-alone strategies pay off. Closed for comment; 0 Comments.
- 25 Aug 2003
- Research & Ideas
Studying Japan from the Inside
What comes next for Japan’s economy? Masako Egawa, executive director of Harvard Business School’s Japan Research Office, sees a period of fundamental change ahead. Closed for comment; 0 Comments.
- 25 Feb 2002
- Research & Ideas
MNCs in Asia: Investing in the Future
To be a major global player, you have to participate in Asia. But challenges facing multinationals as they take part in this market range from currency devaluation to ever-changing government regulations. Closed for comment; 0 Comments.
Leveling the Executive Options Playing Field
Harvard Business School professor Mihir A. Desai recently presented testimony to a U.S. Senate subcommittee looking at the subject of executive stock options. His theme: A "dual-reporting system" makes it difficult for investors and tax authorities to learn the real numbers. Closed for comment; 0 Comments.