Publications
- June 2015
- Review of Accounting Studies
Speaking of the Short-Term: Disclosure Horizon and Managerial Myopia
Abstract—We study conference calls as a voluntary disclosure channel and create a proxy for the time horizon that senior executives emphasize in their communications. We find that our measure of disclosure time horizon is associated with capital market pressures and executives' short-term monetary incentives. Consistent with the language emphasized during conference calls partially capturing short-termism, we show that our proxy is associated with earnings and real activities management. Overall, the results show that the time horizon of conference call narratives can be informative regarding managers' myopic behavior.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49245
Abstract—Why is it so hard to build and maintain the capacity to innovate? The reason is not simply a failure to execute but a failure to articulate an innovation strategy that aligns innovation efforts with the overall business strategy. Without such a strategy, companies will have a hard time weighing the trade-offs of various practices-such as crowdsourcing and customer co-creation-and so may end up with a grab bag of approaches. They will have trouble designing a coherent innovation system that fits their competitive needs over time and may be tempted to ape someone else's system, and so they will find it difficult to align different parts of the organization with shared priorities. As Corning, a leader in glass and materials science, has found, an innovation strategy must address how innovation will create value for potential customers, how the company will capture a share of that value, and what types of innovation to pursue. Critics tend to discount "routine" innovation that leverages a company's existing technical capabilities and business model and extol "disruptive" innovation, but that is a simplistic view. A company's unique competitive circumstances should dictate the innovation portfolio it pursues. Because innovation cuts across functions, only senior leaders can set an innovation strategy. In doing so, they must recognize that the strategy, like the process of innovation itself, requires continual experimentation and adaptation.
Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49244
Working Papers
Accounting Data, Market Values, and the Cross Section of Expected Returns Worldwide
Abstract—Under fairly general assumptions, expected stock returns are a linear combination of two firm fundamentals-book-to-market ratio and return on equity. This parsimonious relation is pervasive, producing expected return proxies (ERP) that predict the cross section of out-of-sample returns in 26 of 29 international equity markets. The average slope coefficient on the ERP is a highly significant 1.05. In contrast, factor-model-based proxies fail to exhibit predictive power worldwide. Integrating the model with a dynamic information structure, we show analytically, and verify empirically, that the importance of return on equity in forecasting future stock returns depends on the quality of the accounting information. This extension also reconciles our model with alternative characteristic-based forecasters. These findings suggest that a tractable accounting-based valuation model provides a unifying framework for obtaining reliable proxies of expected returns worldwide.
Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49238
Monitoring Global Supply Chains
Abstract—Firms reliant on supply chains to manufacture their goods risk reputational harm if the working conditions in those factories are revealed to be dangerous, illegal, or otherwise problematic. While firms are increasingly relying on private-sector "social auditors" to assess factory conditions, little had been known about the accuracy of those assessments. We analyzed nearly 17,000 code-of-conduct audits conducted at nearly 6,000 suppliers around the world. We found that audits yield fewer violations when the audit team had been at that particular supplier before, when audit teams are less experienced or less trained, when audit teams are all-male, and when the audits were paid for by the supplier instead of by the buyer. We describe implications for firms relying on social auditors and for auditing firms.
Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=45768
Cases & Course Materials
- Harvard Business School Case 415-028
Aarti Grover and CMS Computers
No abstract available
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/415028-PDF-ENG
- Harvard Business School Case 415-051
Sarah Sullivan at Greater Marketing Solutions (GMS)
Sarah Sullivan, the new managing director of Greater Marketing Solutions, faces the difficult challenge of letting seven professionals go within a short span of time. In doing so she faces two greater challenges: figuring out which individuals to let go and getting her leadership team on board with her plan.
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/415051-PDF-ENG
- Harvard Business School Case 315-062
Responsibilities to Customers
This note introduces the module on Responsibilities to Customers taught in Leadership and Corporate Accountability, a required course in the Harvard Business School MBA program. The note outlines the asymmetries inherent in the company-customer relationship and positions the economic, legal, and ethical responsibilities of companies to their customers as ways of addressing these asymmetries.
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/315062-PDF-ENG
- Harvard Business School Case 815-085
Building an Integrated Biopharma Company: Crucell (A)
By 2009, Crucell had become the largest biopharma company in the Netherlands and was a symbol of national pride. The case traces the evolution of the company from a university spin-off into a fully integrated company. Crucell's success, particularly in the vaccine space, had begun to attract the attention of much larger pharmaceutical companies. While there was much appeal to working with these companies, these relationships could also challenge Crucell's independence. This issue is highlighted by the decision of whether to partner with companies that wanted ownership of 10% to 20% of Crucell as part of the business development deals.
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/815085-PDF-ENG
- Harvard Business School Case 815-086
Building an Integrated Biopharma Company: Crucell (B)
The (B) case updates events at Crucell since 2009. In September 2009, Johnson & Johnson acquired 18% of Crucell for $400 million. This investment was part of a business development deal. Subsequently, in 2012, Johnson & Johnson acquired Crucell for $2.8 billion.
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/815086-PDF-ENG
- Harvard Business School Case 315-018
MedCath Corporation (C)
MedCath is a horizontally integrated chain of heart hospitals that partners with local cardiologists. It claims that its focus leads to better and cheaper results than those of an everything-for-everybody general hospital. Community hospitals generally vehemently oppose their entry into a new area. What options does MedCath have?
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/315018-PDF-ENG
- Harvard Business School Case 614-018
Ford Motor Company: Blueprint for Mobility
Mark Fields, Ford Motor Company's COO, had to ensure the company's current business model of building cars and trucks remained strong, while concurrently navigating the company into the rapidly expanding industry of personal mobility. Personal mobility required new technologies and business models that were untraditional at Ford, and Fields had to evaluate the traditional business model colliding with the new business model. To direct these new technologies and business models, Ford released its "Blueprint for Mobility," which established near-, mid-, and long-term goals to make mobility accessible and affordable to all. The case focuses on the launch of three mobility experiments (car sharing, parking, and on-demand ride sharing) and asks students to determine how Fields should balance these types of experiments with the company's traditional operations. Further, was Ford doing enough in the mobility space, and if so, was it moving fast enough? What new sources of revenue could Ford derive from mobility solutions?
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/614018-PDF-ENG
- Harvard Business School Case 615-048
Boeing 787: Manufacturing a Dream
This case traces the design and development of the Boeing 787 Dreamliner. Emphasis is on executive leadership and firm strategy in coordinating across a global network of partners in the production of a new aircraft.
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/615048-PDF-ENG
- Harvard Business School Case 515-713
Marketing Exercise: Using Conjoint Analysis for Business Decisions
No abstract available
Purchase this case:
https://cb.hbsp.harvard.edu/cbmp/product/515713-PDF-ENG