Publications
Impacto Histórico de la Globalización en Argentina y Chile: Empresas y Empresarios (The Historical Impact of Globalization in Argentina and Chile: Enterprises and Entrepreneurs)
| Authors: | Geoffrey Jones and Andrea Lluch, eds. |
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| Publication: | Buenos Aires: TEMAS-Grupo Editorial, 2011 |
Abstract
This book presents new research on the historical impact of globalization on Argentina and Chile. The authors focus on the role of entrepreneurs and firms.
The Role of Venture Capitalists in the Acquisition of Private Companies
| Authors: | Paul A. Gompers and Yuhai Xuan |
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| Publication: | In Research Handbook for Banking and Governance, edited by James Barth, Chen Lin, and Clas Wihlborg. Cheltenham, U.K.: Edward Elgar Publishing, forthcoming |
Abstract
In this chapter, we examine the characteristics of acquisition of private firms by public companies and explore the impact that venture capital backing has on the acquirer's characteristics, form of payment, announcement returns, long-run stock price, and operating performance. We find that compared to the acquirers of other private companies, firms that acquire private venture capital-backed companies tend to be larger, have higher Tobin's Q, are more likely to use equity in the transaction, and buy companies in a related industry. The market tends to react more negatively to the announcement of the acquisition of a venture capital-backed company, but the long-run stock market and operating performance is superior to other private acquisitions. We find that the use of stock and related transaction predicts better long-run performance. Our results suggest that the acquirers of private venture capital-backed companies do not suffer any adverse selection problem and continue to have superior performance in the long run.
Consumer-Driven Universal Health Care Is the Best Solution
| Authors: | Regina E. Herzlinger |
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| Publication: | In Current Controversies: Health Care, edited by Noel Merino. Farmington Hills, MI: Greenhaven Press, 2010 |
Abstract
The best way to achieve universal health insurance coverage is to implement a consumer-controlled system rather than a government-controlled system.
Corporate Ownership Structure and Bank Loan Syndicate Structure
| Authors: | Chen Lin, Yue Ma, Paul Malatesta, and Yuhai Xuan |
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| Publication: | Journal of Financial Economics (forthcoming) |
Abstract
This paper examines the relation between corporate ownership structure and bank loan syndicate structure using a novel, hand-collected data set on corporate ownership and control of 3,056 firms in 22 countries from 1996 to 2008. We find that the divergence between control rights and cash-flow rights of a borrowing firm's largest ultimate owner has a significant impact on the concentration and composition of the firm's loan syndicate. A one-standard-deviation increase in the divergence increases the syndicate concentration by approximately 18%. With respect to the syndicate composition, a one-standard-deviation increase in the divergence is associated with a 20% decrease in foreign bank participation and an 18% increase in the overall syndicate lending expertise related to the borrowing firm's industry. The effect of the excess control rights on the syndicate structure is more pronounced for firms that are informationally opaque, firms that have higher cash-flow rights dispersion across large owners, and firms in countries undergoing financial crises. On the other hand, the relation between control-ownership divergence and syndicate structure is mitigated by the lead arranger's reputation and lending relationship with the borrowing firm as well as by strong shareholder rights and good credit information sharing systems. Overall, our results are consistent with the hypothesis that the deviation of control rights and cash-flow rights in the borrowing firms exacerbates potential tunneling and other moral hazard activities by large shareholders, thereby increasing credit risk and monitoring needs. Consequently, lenders form syndicates with structures that facilitate enhanced due diligence and monitoring efforts as well as the syndication process.
Working Papers
The Consequences of Mandatory Corporate Sustainability Reporting
| Authors: | Ioannis Ioannou and George Serafeim |
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Abstract
: We examine the effect of mandatory sustainability reporting on several measures of socially responsible management practices. Using data for 58 countries, we show that after the adoption of mandatory sustainability reporting laws and regulations, the social responsibility of business leaders increases. We also document that both sustainable development and employee training become a higher priority for companies and that corporate governance improves. Furthermore, we find that companies implement more ethical practices, including reducing bribery and corruption, which increases managerial credibility. These effects are larger for countries with stronger law enforcement and more widespread assurance of sustainability reports. We conclude with thoughts about mandatory sustainability and integrated reporting.
Download the paper: http://www.hbs.edu/research/pdf/11-100.pdf
With a Little Help from My (Random) Friends: Success and Failure in Post-Business School Entrepreneurship
| Authors: | Josh Lerner and Ulrike Malmendier |
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Abstract
To what extent do peers affect our occupational choices? This question has been of particular interest in the context of entrepreneurship and policies to create a favorable environment for entry. Such influences, however, are hard to identify empirically. We exploit the assignment of students into business school sections that have varying numbers of classmates with prior entrepreneurial experience. We find that the presence of entrepreneurial peers strongly predicts subsequent entrepreneurship rates of students without an entrepreneurial background but in a more complex way than the literature has previously suggested: a higher share of entrepreneurial peers leads to lower rather than higher subsequent rates of entrepreneurship. However, the decrease in entrepreneurship is entirely driven by a significant reduction in unsuccessful entrepreneurial ventures. The effect on the rate of successful post-MBA entrepreneurs, instead, is insignificantly positive. In addition, sections with few prior entrepreneurs have a considerably higher variance in their rates of unsuccessful entrepreneurs. The results are consistent with intra-section learning, where the close ties between section-mates lead to insights about the merits of business plans.
Download the paper: http://papers.nber.org/papers/w16918
Delegation in Multi-Establishment Firms: Adaptation vs. Coordination in I.T. Purchasing Authority
| Authors: | Kristina Steffenson McElheran |
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Abstract
: This paper conducts one of the first large-scale, establishment-level empirical studies of delegation within firms. Recent contributions to a rapidly growing theory literature have focused on the tradeoff between adaptation and coordination in determining organizational structure, but empirical evidence is extremely limited. Theoretically, delegation of authority is expected when locally adapted choices are most important to the overall value of the firm, when local information advantages are significant, or when the cost of processing firm-wide information at the center grows too great. Centralization is predicted when the value of firm-wide coordination dominates these adaptation and information-processing concerns. Based on a novel data set containing information on establishment-level decision rights over information technology investments, I find robust conditional correlations consistent with some, but not all of these predictions. A relatively high economic value of adaptation at the establishment has a strong association with delegation to local managers, as do local information advantages and greater firm-wide diversification. In contrast, a high value of within-firm coordination as measured by the value of integrated production is negatively correlated with delegation. Surprisingly, absolute size of the firm is negatively related to delegation. The overall pattern of results highlights the need for a nuanced theoretical framework that can accommodate the full range of empirical facts.
Download the paper: http://www.hbs.edu/research/pdf/11-101.pdf
Cases & Course Materials
Leaders Who Make a Difference: Sam Palmisano's Smarter IBM: Day 1
Joseph L. Bower and Sonja Ellingson Hout
Harvard Business School Case 311-030
Sam Palmisano became CEO of IBM in 2002. He dramatically energized the organization through portfolio changes and a values-driven approach to managing the company. The case describes the steps he took to build a new strategy. Video is referenced that provides Palmisano's views of each step in the process. A second case will soon be in the system that describes Palmisano's approach as a strategist, organization builder, and driver of performance. Again, video clips supplement the reading of the case.
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Porsche: The Cayenne Launch
John Deighton, Jill Avery, and Jeffrey Fear
Harvard Business School Case ###-###
Can an online discussion forum supply insight into the evolution of brand meaning? In 2003 Porsche launched a sport utility vehicle, dividing Porsche purists from newcomers to the brand. Vocal members of online and offline Porsche communities ridiculed the Cayenne SUV and disapproved of the new breed of driver. Some opposed offering Porsche club membership to them, and some even refused to extend the fraternal Porsche "wave" or headlight flicking to them on the road. Porsche's values of speed, luxury, and a certain masculine zeal resonated strongly with its devotees, while drivers of the Cayenne (which came to be known as 'the SUV for soccer moms') tended to be safety-conscious, family-oriented, and conservative. Evolving debates on forums allow a class to debate whether the brand had strayed too far from its core values and was at risk.
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ActionAid International: Globalizing Governance, Localizing Accountability
Alnoor Ebrahim and Rachel Gordon
Harvard Business School Case 311-004
As a global NGO working in 45 countries, ActionAid International aims to eradicate poverty by addressing its underlying causes such as injustice and inequality. This case follows a series of radical transformations implemented by the organization's CEO, Ramesh Singh-a power shift from its headquarters in London to an international secretariat in Johannesburg; a new federated governance structure that increases the influence of units in Africa and Asia; and innovations in accountability and transparency to the poor communities with which it works. But as Singh gets ready to step down after seven years, he is confronted with challenges from newly empowered country units that he feels risk taking the organization in the wrong direction. How will the divisions between the northern and southern units play out? Will they tear the organization apart, just when it is becoming a global player?
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http://cb.hbsp.harvard.edu/cb/product/311004-PDF-ENG
a-connect: In Search of Talent Partners (B)
Robert G. Eccles and Penelope Rossano
Harvard Business School Supplement 411-085
B) case updates company changes since the (A) case. Key updates include leadership and management appointments and organizational changes.
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The Creative Industries: The Promise of Digital Technology
Anita Elberse
Harvard Business School Module Note 511-090
An abstract is unavailable at this time.
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http://cb.hbsp.harvard.edu/cb/product/511090-PDF-ENG
Countrywide plc.
Stuart C. Gilson and Sarah Abbott
Harvard Business School Case 211-026
One of the world's leading investors in distressed companies, Oaktree Capital Management, is contemplating a "loan to own" investment in the debt of Countrywide plc, a financially troubled residential real estate agent based in the U.K. Only sixteen months earlier, Countrywide was acquired by private equity investor Apollo Management L.P. in a leveraged buyout. Although Countrywide is the largest real estate agent in the U.K., and has a strong portfolio of assets, its economic fortunes have declined suddenly with the widespread collapse of global financial and real estate markets, putting it in danger of defaulting on its debt and having to restructure under a U.K. Scheme of Arrangement.
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H Partners and Six Flags
Robin Greenwood and Michael Gorzynski
Harvard Business School Case 211-090
Rehan Jaffer, the founder of hedge fund H Partners, is considering what to do with his investment in Six Flags. H Partners had invested a significant amount of the firm's capital in the senior bonds of U.S.-based Six Flags, following that company's bankruptcy filing.
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http://cb.hbsp.harvard.edu/cb/product/211096-PDF-ENG
Cosmeticos de Espana, S.A. (E)
David F. Hawkins
Harvard Business School Supplement 111-119
Spanish parent company must decide on the Euro/BsF exchange rate to translate its Venezuelan subsidiary's financial statements into euros.
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http://cb.hbsp.harvard.edu/cb/product/111119-PDF-ENG
International Agribusiness in China: Charoen Pokphand Group
William C. Kirby, Michael Shih-ta Chen, Tracy Yuen Manty, and Yi Kwan Chu
Harvard Business School Case 910-418
The world's leading Thai agribusiness corporation and largest agribusiness investor in China, CP Group, is facing another crossroads in China as the country starts to undergo rural reform. The issues at hand for Chairman Dhanin Chearavanont is how CP can balance its place as a key investor in China's burgeoning agriculture market with its unstated obligation to provide guidance and expertise in food safety, technology, and jobs for rural farmers while still competing against the growing cadre of international and domestic companies vying to grab share from its operations in China. Was rural reform going to help or hinder CP's position in China, and was CP doing all it could to take advantage of these changes?
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http://cb.hbsp.harvard.edu/cb/product/910418-PDF-ENG
Todovino: Can Your Rival Be Your Friend?
F. Asís Martínez-Jerez and Lisa Brem
Harvard Business School Case 111-071
Todovino sells Spanish wines through wine clubs and websites. Founder-CEO Gonzalo Verdera has partnered with many companies to create cobranded wine clubs, but now he is pondering a joint venture with one of his rivals, a brick-and-mortar wine chain, where Todovino would provide the online presence for the chain. Should Verdera help his rival? What are the risks and benefits for Todovino?
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The IASB at a Crossroads: The Future of International Financial Reporting Standards
Karthik Ramanna, Karol Misztal, and Daniela Beyersdorfer
Harvard Business School Case 111-084
What are the major challenges to the continued growth of IFRS worldwide? Should countries be encouraged to pursue "full adoption" of IFRS, or should each country determine its own IFRS "convergence" strategy? Given the limitations of governance and information-intermediation institutions worldwide, should IFRS limit the use of fair-value accounting? How should the IASB respond to the growing power of emerging markets such as China in international standard setting? What lessons can be learned from the growth and development of IFRS for international harmonization of corporate governance standards more broadly? This case first describes the IASB's major accomplishments over the 2001-2010 period and then outlines the major challenges to the continued growth of IFRS as it enters its second decade.
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http://cb.hbsp.harvard.edu/cb/product/111084-PDF-ENG
Hindustan Unilever's 'Pureit' Water Purifier
V. Kasturi Rangan and Mona Srivastava
Harvard Business School Case 511-067
The case asks students to formulate a strategy to respond to various competitive threats to its Pureit water purifier, launched in 2008, targeted at millions of low-income Indian consumers who did not have access to safe drinking water. The case describes in detail the product development and launch process that required HUL, the $3.5 billion Indian subsidiary, to innovate on many different fronts. It details competitive actions since the launch to set the stage for what the company should do next.
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http://cb.hbsp.harvard.edu/cb/product/511067-PDF-ENG