The Shareholder Base and Payout Policy — The Harvard Law School Forum on Corporate Governance

Small business of-interest and need-to-know.

Excerpt:  …… we examine the relation between the shareholder base and payout policy. Finance practitioners acknowledge that having a broad shareholder base is an important factor for many corporate decisions. For example, in a recent study of firm payout policy, Brav, Graham, Harvey, and Michaely (2005) survey financial executives and conclude that “With respect to payout policy, the rules of the game include … [to] have a broad and diverse investor base…” Despite the apparent importance of the shareholder base there is little academic evidence relating shareholder base to corporate decisions. In this paper we investigate the effect of the shareholder base on the level and method of payout.

Read full article via The Shareholder Base and Payout Policy — The Harvard Law School Forum on Corporate Governance and Financial Regulation.

PwC & Wharton Focus on How CFO’s Can Build Top-Performing Finance Teams

Human resources management accounting and finance teams.

Excerpt:  Top CFOs know they are only as strong as their teams. From treasury to financial planning and analysis, their finance managers have a shared vision of being valued contributors in strategic discussions – adding insight and analysis at critical junctures of decision-making. How can CFOs attract, retain, and motivate finance talent to be much more than number-crunchers?

PwC and faculty at Wharton share insight on how top finance organizations can rise to the challenge.

Read introduction and download full pdf via PwC & Wharton focus on how CFO’s can build top-performing finance teams: PwC.

Corporate Governance, Accounting and Finance: A Review

This is a reprint and review well worth your time but this is not a light read  —  recommended for those charged with the responsibility of deep understanding and forwarding business governance.  It delves into the  detail of why and how-to, history and metrics.

Excerpt:  We review accounting and finance research on corporate governance (CG). In the course of our review, we focus on a particularly vexing issue, namely endogeneity in the relationships between CG and other matters of concern to accounting and finance scholars, and suggest ways to deal with it. Given the advent of large commercial CG databases, we also stress the importance of how CG is measured and in particular, the construction of CG indices, which should be sensitive to local institutional arrangements, and the need to capture both internal and external aspects of governance. The ‘stickiness’ of CG characteristics provides an additional challenge to CG scholars. Better theory is required, for example, to explain whether various CG practices substitute for each other or are complements. While a multidisciplinary approach to developing better theory is never without its difficulties, it could enrich the current body of knowledge in CG. Despite the vastness of the existing CG literature, these issues do suggest a number of avenues for future research.

Read full article  via Corporate governance, accounting and finance: A review – Brown – 2010 – Accounting & Finance – Wiley Online Library.

Divisional Managers and Internal Capital Markets — The Harvard Law School Forum on Corporate Governance

Of-interest and food for thought and strategy.   Small business takeaways.

Excerpt: While the capital budgeting process is one of the most fundamental corporate decisions, introduced at the very beginning of virtually any finance textbook, we still know relatively little about this area of the inner workings of a firm. Our paper seeks to advance our knowledge of this corporate decision by studying the role of human capital in a firm’s capital budgeting and the involvement of managers at various levels of hierarchy. In particular, we construct a hand-collected dataset of divisional managers at the S&P 500 firms and examine the effect of managerial influence on investment decisions and firm value. We study managerial influence via both formal channels (e.g., managers’ board membership and seniority), and informal channels (e.g., managers’ social connections to the CEO via prior employment, education, and nonprofit organizations).

Read full article via Divisional Managers and Internal Capital Markets — The Harvard Law School Forum on Corporate Governance and Financial Regulation.

New Standard for Calculating Cost per Hire

More today on how-to tools …..this one is within human resources to measure the cost of hires.

Excerpt…….One of the key sticking points in the HR and finance relationship is data. More specifically, CFOs spend a significant portion of their professional lives focusing on data. HR leaders factor in a number of variables when doing their jobs and making decisions, but many of those variables are not easily quantified.

Therefore, CFOs should welcome any sign that HR professionals are heeding the call for more data-driven HR decision-making. One such sign is the development of a new standard for calculating the cost per hire in order to more accurately track recruitment costs and return on recruiting investments. The standard was developed by a group of HR leaders with the support of the Society for Human Resource Management. The resulting standard was approved by the American National Standards Institute.

Read full article……via New Standard for Calculating Cost per Hire | Business Finance.

How Strategic Finance Helps Grow Your Business | Event

The event is on March 28th online but you do need to register first.

Register here…..Smart Business Network WebEx Enterprise Site.  From Smart Business

PUP | Excerpt series of Robert Shiller’s FINANCE AND THE GOOD SOCIETY

Read introduction to book and access links for more information here….Princeton University Press Blog » Blog Archive » Excerpt series of Robert Shiller’s FINANCE AND THE GOOD SOCIETY this week on Bloomberg View.

Finance Partnering Evolution

The business finance function is in an evolution …….. read the prior finance partnerships…….. and the new transformative finance partnerships…… with organization as a whole.   Accounting and finance

Excerpt…….there are significant trends in the transforming function that provide mechanisms used to gain cost and process efficiencies but also importantly, to maximise the contribution of finance to the business.

Read introduction and downloa paper here…..via The inside track: Partnering for value.  From CGMA

CGMA launch focuses on non-financial value, long-term business strategies

Good read and very today leadership topic…..small business takeaways

Excerpt…….A panel of executives meeting in the finance capitals of New York City and London discussed new research Tuesday on the importance of the human dimension and non-financial value in long-term business strategies.

Read full article……via CGMA launch focuses on non-financial value, long-term business strategies.    From CGMA Magazine

The Role of Accounting in the Financial Crisis — The Harvard Law School Forum on Corporate Governance

I have heard or read the theory/deduction from others that accounting and financial standards were the cause of the economic crisis……..at best, I think the weight is relational only to the fact there were standards at the time of the crisis, and the actual cause and effect have most to do with poor or non existent implementation and application

Excerpt……….we believe that the inconsistent implementation and subsequent misapplication of the standards contributed in three ways to the financial crisis. Specifically, reporting of immediate gains on securitization facilitated and motivated more subprime lending. Second, some amounts originally selected as Level 1 and Level 2 fair values were incorrect, but once borrowers began to default on home loans, firms switched to Level 3 internal estimates rather than adjusting to the true declining fair value. The ability to use these internal estimates enabled firms to continue to assume risk. Finally, the eventual recognition of losses and the ripple effects through the economy resulted in a large, rapid decrease in the amount of banks’ capital. For these reasons, we believe that the misapplication of the U.S. accounting standards had some role in the financial crisis.

Read full article.via The Role of Accounting in the Financial Crisis — The Harvard Law School Forum on Corporate Governance and Financial Regulation.

Deloitte | FATCA | A Practical Guide for Analyzing and Implementing the Newly Proposed Foreign Account Tax Compliance Act

Accounting and governance.

Excerpt………This paper provides:

An overview of pre-existing account, new account, withholding, and reporting requirements as outlined in the provision
Possible implications for U.S. and foreign financial institutions
Steps to consider in addressing FATCA compliance

Download the PDF to learn more.

Read introduction and download paper here…….via Deloitte | FATCA | A Practical Guide for Analyzing and Implementing the Newly Proposed Foreign Account Tax Compliance Act.

Financial Modeling is an Art, not a Science

Short article but great basics …….small business how-to and need to do….  Accounting, finance and strategy.  Use the numbers!!

Excerpt…….Financial Modeling of proforma returns is a task that should be performed by every business, annually. It is the act of quantifying the anticipated revenues and expenses, associated with implementing your business strategy. While the expected outcome of a Balance Sheet or Statement of Cash Flow can be completed, the statement modeled will most likely be the Income Statement.

The primary driver of the success of this process is related to the quality of the assumptions used, i.e. data based estimate vs. a gut guestimate. The ease of choosing assumptions is directly related to the age of your company

Read full article…..via Financial Modeling is an Art, not a Science | Proformative.

How can banks apply lean principles to improve the finance function? PwC

Good read…..

Excerpt………Finance leaders are facing a hailstorm of accounting, regulatory, and management challenges, creating pressure to improve the efficiency of Finance and information quality. Externally, stakeholders and regulators demand more transparent and reliable information in less time.

Internally, business leaders require fast, accurate, and increasingly transparent information to support smart, informed business decisions. Meanwhile, overlapping and inconsistent data, manual reporting, disparate systems, and aging technology lead to poor information quality

Read introduction and download paper here…….via How can banks apply lean principles to improve the finance function? PwC.

CFOs Need to Refocus on Building the Business, Not Just Saving It

Great read and timely……  for everyone that had to batten down the hatches to weather the storm…..don’t forget or forget how to focus on business growth.  Now is a better time than tomorrow.   Leadership

Excerpt…….CFOs and other finance executives have done a great job at controlling costs throughout the extended period of global economic volatility that has become the “new normal.” But there’s a growing sense of that CFOs need to do more to deliver value to their organizations, and that the finance profession needs to adopt and actively pursue best practices to restore their companies to ongoing growth.

As managing director of Accenture’s Finance & Enterprise Performance consulting practice, Paul Boulanger has closely observed this shift from cost management to orchestrating growth. “Finance organizations that contribute the most to their company’s future performance will be those that align with the corporate growth agenda and have the right capabilities in place while sustaining the cost management gains of the past couple of years.

Read full article……via CFOs Need to Refocus on Building the Business, Not Just Saving It | Business Finance.

How One Company Teaches Employees the ABCs of Finance

Good idea folks and not just for insurance companies as noted in article………   I believe company fiscal responsibility comes with your job …..whatever your job… over the years and in many companies, I have embarked upon coaching not just the accounting and finance groups, but also department managers are cost and profit managers….same with project managers…..same with administrative staff……etcetera.  I have always disliked fiscal titled management is equal to policing the organization and tried very hard to change it wherever and whenever possible.

Excerpt…..To boost profits and improve the firm’s interaction with clients, an insurance brokerage giant gives its 25,000 employees an education in finance and accounting.

Read full article…..via financial education Marsh McSweeney Hinton Schiff Hagemann.  From CFO.com