Corporate Finance

Finance Roundup for Executives: April 26, 2016

Be informed, get involved, and shape the world through finance. Read's most recent headlines and standout stories.
Kerry MarunaApril 26, 2016

Standout Stories

Don’t be obsessed with metrics… Felix Fox, an ambitious car salesman in the post-financial meltdown society where valuable resources are scarce, looks enviously at people who are personally quoted on the human stock exchange. The evolution of their stock — the value of their life — is being tracked on a continuous basis with a rate watch. Initially, when Felix becomes quoted (he’s in urgent need of money), he enjoys the thrill — until he starts to fall apart under the transparent tyranny of the metrics.

Felix Fox, as you might have guessed, does not exist: he is a comic book character in the French sci-fi series Human Stock Exchange. But the storyline is not as far-fetched as it seems. In fact, there are some analogies with managers’ lives in today’s organizations. The quest for financial performance and the pressure to measure can corrode organizational cultures, narrow the focus of leadership, reduce intrinsic motivation, and support unethical behavior. Swamped with metrics, people typically either find creative ways of coping, or simply disengage from the process altogether. Let’s look at three real-life cases we have seen as management consultants. Read article.

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Blending… Meeting the United Nations’ Sustainable Development Goals will require additional investments of $2.5 trillion a year in things like health care and education for the world’s poorest people, according to UNCTAD, a UN agency. A further $13.5 trillion is needed by 2030 to implement the Paris climate accord, according to the International Energy Agency, a watchdog group. It is enough to drive development types to drink — which may be how they came up with the term “blended finance,” a heady cocktail of public, private, and charitable money.

The phrase is being floated at all manner of gatherings, from the recent meetings of the IMF and the World Bank to the World Economic Forum in Davos, as a way to make the limited pool of money available for worthy causes go further. The new name notwithstanding, however, the idea of using public funds to attract private money is a venerable one. For it to change development finance fundamentally, as enthusiasts claim it can, it will have to become easier to scale up. Read article.

The value of Ubernomics Imagine that on Hilton’s next analyst conference call management announces plans to spend $170 billion over the next five years to add 12,000 hotels. This would be considered an impossible feat, given that it took Hilton nearly a century to reach its current base of 4,300 hotels and it only has a $20 billion market capitalization.

Yet an upstart company, launched while we witnessed the collapse of Lehman Brothers and Bear Stearns, says it will somehow add 12 million accommodation listings (the equivalent of 12,000 hotels) over the next five years and grow its revenue from nearly $1 billion last year to $10 billion by 2020 – and that without incurring any capital development costs. Read article.


Regulators Propose New Rule on Executive Pay

The National Credit Union Administration wants to reduce risk-taking but credit unions say the rule would give the agency too much power.


How An Obsession with Metrics is Killing Your Company

Three ways to overthrow the tyranny of metrics.


Trending: Blending

The fad for mixing public, charitable, and private money.


Unlocking Hidden Value Through ‘Ubernomics’

How companies like Uber and Airbnb are showing the way to a new, collaborative economy.


China Capital Flight to Ease by 20% in 2016

Increased investor confidence in the stability of the yuan is expected to reduce outflows after a torrid 2015, a report says.


Cigna Gets 129% ROI on Tuition Reimbursement Costs

Robust Accenture study reveals that tuition assistance programs create several kinds of savings in the talent management area.


5 Things to Know about Owning a Small Business

What you need to know about crowdfunding, cybersecurity, location, borrowing, and avoiding culture clashes.


Halliburton Cuts 6,000 jobs as Revenue Falls 17%

“What we are experiencing today [in the energy industry] is far beyond headwinds; it is unsustainable,” Halliburton’s president says.


Gannett Makes $815M Bid for Tribune Publishing

The offer represents a premium of 63% for Tribune shareholders and the publisher of the Los Angeles Times is giving it a “thorough review.”


Xerox’s Restructuring Costs Cut Into Profits

Earnings plunged 85% to 3 cents a share in the first quarter as the company prepares to split into two separate entities.


First Date Decline Fuels $553M Loss for KKR

KKR’s largest private-equity holding lost 19% of its value in the first quarter, part of a 0.9% depreciation in KKR’s private-equity portfolio.


Bangladesh Bank Hack Exploited SWIFT Software

U.K. security researchers say the cyberattack is a warning to all financial institutions that run SWIFT Alliance Access and similar systems.


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