Knowledge@Emory -- Finance and Investment

Has Corporate Bankruptcy Become a Competitive Advantage?

Wed, 10 Jun 2009 21:01:04 EST

Chrysler's 42-day trek through U.S. bankruptcy court allowed the American automaker to restructure and paved the way for today's sale of the bulk of its assets to Italy's Fiat. The alliance gives Fiat further entree into the American market and may also give it a competitive advantage. But is filing Chapter 11 always the best option? According to legal and finance experts at Emory University and its Goizueta Business School, the stigma of filing for bankruptcy is considerably less than it once was and there can be benefits to such a move. To remain viable though, companies still need a solid business plan.

Will Over-Regulation Hamstring the U.S.�s Competitive Advantage?

Wed, 13 May 2009 16:56:54 EST

For decades, American presidents from both sides of the political aisle have steadily relaxed regulations governing areas from pollution to finance. Some observers say that abuse of this freedom has resulted in the worst economic crisis since the Great Depression. As President Barack Obama’s administration appears poised to move aggressively on a number of regulatory fronts, many wonder how much is too much? Legal and finance faculty at Emory University and its Goizueta Business School agree that tightening of regulation is inevitable. But if such enhanced oversight is done by proper degrees, they contend, businesses may actually benefit.

Making a Split Decision: Should Investors Consider More than Stock Price?

Wed, 13 May 2009 16:56:54 EST

The recent downturn in the market has certainly given investors cause for concern. According to T. Clifton Green, an associate professor of finance at Emory University's Goizueta Business School, the key to investing, even in such a difficult environment, is in understanding market trends, as well as in taking a long-term approach. His recent research, however, suggests that investor behavior also relies on sentiment and the categorizing of similarly priced stocks. This categorizing behavior, he notes, is not necessarily based on economic fundamentals or firm results.

Attached at the Wallet: The Delicate Financial Relationship between the U.S. and China

Wed, 13 May 2009 16:56:54 EST

The financial relationship between China and the U.S. is beginning to look like an unhealthy co-dependency. China holds so much of its foreign reserves in dollar-based assets that it is now vulnerable to shifts in the U.S. economy. And the U.S. has allowed China to purchase so much of its debt that it is now beholden to Chinese interests. Experts disagree, however, about the real motives for China's continuing investments, and whether it would ever sell them off.

Contemplating the Fourth U.S. Bailout of AIG

Thu, 12 Mar 2009 15:49:14 EST

On March 2, 2009, AIG received a fourth U.S. government bailout of some $30 billion. But will the global insurance behemoth be able to repay the debt it owes to the U.S. federal government and keep afloat after hefty losses? Professors at Emory University's Goizueta Business School reflect on the unprecedented moves to aid AIG, as well as the widespread concern over mark-to-market accounting and how it impacts this financial institution and others like it.

Recordkeeping and Reciprocity: A Journey through Time and Numbers

Thu, 12 Mar 2009 15:49:14 EST

“Recordkeeping alters the economic development of a society in fundamental ways,” says Gregory Waymire, a chaired professor of accounting at Emory University's Goizueta Business School and co-author of a recent article on recordkeeping and reciprocity in Proceedings of the National Academy of Sciences. Waymire and his co-researchers explored the effects of recordkeeping on trust and long-term relationships, noting that recordkeeping favorably impacts the history of economies by allowing for better reputation formation and decision coordination. An analysis of prehistoric transaction records—some of the earliest examples of memory storage external to the brain—provides critical insight into the value of recorded exchanges, with relevance to current debates over fair value accounting.

Will the 2009 Stimulus Act Fizzle?

Thu, 12 Feb 2009 21:08:52 EST

While state governments across the U.S. are eagerly anticipating the passage of the American Recovery and Reinvestment Act of 2009, the bill's ultimate impact on small business is questionable. The package calls for only about $500 million for the Small Business Administration’s loan-guarantee programs, which according to Charles F. Goetz, adjunct professor of organization and management and a distinguished lecturer in entrepreneurship at Emory University's Goizueta Business School, "is a drop in the bucket" compared to the real problem: the total drop-off in bank loans. Goetz and other Goizueta faculty examine the issues surrounding the latest version of the much-debated stimulus plan.

What's The Outlook for U.S. Tax Policy?

Thu, 12 Feb 2009 21:08:52 EST

U.S. tax policy is going to change. Exactly how it could and will change was the topic of a recent half-day symposium entitled “Great Expectations: The Outlook for U.S. Tax Policy,” sponsored, in part, by Emory University’s School of Law. The symposium brought together a group of lawyers, accountants, policy makers, business leaders and academics to discuss an Obama presidency’s effect on tax law. Not surprisingly, a spirited debate ensued.

The Bold and the Credible: Assessing the Reliability of Financial Analysts

Thu, 15 Jan 2009 17:18:35 EST

If investors have learned anything by the rocky journey the stock market is taking them on, it's that analyst competence matters. In a new paper, “Is There Safety in Numbers? The Effects of Forecast Accuracy and Forecast Boldness on Financial Analysts’ Credibility with Investors,” Kathryn Kadous, an associate professor of accounting at Emory University's Goizueta Business School, and colleagues explore how investors decide which financial analysts are most credible. The study, which has been conditionally accepted at the journal Contemporary Accounting Research, looked at three key variables: the boldness of an analyst’s forecast, the forecast’s accuracy and the analyst’s previous forecasting reputation. Among the findings: analysts who provide accurate, bold forecasts experience more positive consequences than those who provide accurate, non-bold forecasts.

What�s Ahead for U.S. Financial Institutions?

Thu, 11 Dec 2008 18:36:48 EST

When Barack Obama is sworn in as the 44^th U.S. president on January 20, he will inherit a weak economy that has helped to effectively put some Wall Street companies out of business while driving bank failures to the highest level in more than a decade. At the very least, financial institutions can expect increased government scrutiny, according to faculty from Emory University’s Goizueta Business School. The challenge, they add, will be to refrain from strangling the financial system with over-regulation.

Understanding the Implications of U.S. President-Elect Barack Obama�s Tax Policy

Thu, 13 Nov 2008 13:36:10 EST

With U.S. unemployment on the rise and America’s bank bailout still on the front burner, there is much debate over the best way that taxes should (or should not) be used to jumpstart the economy. Knowledge@Emory recently sat down with Professor Dorothy A. Brown from Emory University's School of Law to discuss the implications of President-Elect Obama’s tax plan and what it might mean for the country.

Will Retailers Have a Merry Holiday Season?

Thu, 13 Nov 2008 13:36:10 EST

As the holiday shopping season approaches, retailers are traditionally giddy with anticipation of scoring their biggest sales numbers of the year. But this time around, their dreams of gold may be replaced by a lump of coal as retailers stare down a weak U.S. economy, the loss of thousands of high-paying Wall Street jobs, and signs that America has slipped into a recession. Some deep, lasting changes may be ahead, say faculty from Emory University’s Goizueta Business School.

Will Wall Street�s Collapse Boost Private Equity Markets?

Thu, 09 Oct 2008 15:33:12 EST

The collapse of the housing and credit markets that has crippled some Wall Street giants is likely to have a variety of effects on private equity, say faculty at Emory University and its Goizueta Business School. One likely shift is a larger role for private equity providers in financing big-ticket deals. But liquidity concerns are likely to rein in their appetite for risk, the faculty adds, despite the just-passed $700 billion bailout package.

Africa's 'Cocoon' Phase: Can Private Investors and Entrepreneurs Transform the Continent?

Tue, 24 Mar 2009 10:59:51 EST

In the past, business in Africa behaved like a "caterpillar" -- uninteresting, slow moving and easy to step on, says Eric Kacou, managing director of OTF Group, a U.S.-based consulting firm focused on emerging economies. Today, the continent is poised for a metamorphosis that requires a "new mindset" relying less on natural resources and more on innovation and private sector growth. At the Wharton Global Alumni Forum in Cape Town, South Africa, Kacou was among the speakers on two panels exploring the potential for new business models and "smart" capital to change Africa's economy.

In the Balance Sheets: Reassessing the Auditors� Reporting Model

Thu, 14 Aug 2008 13:00:01 EST

The auditor’s report—sometimes feared, often symbolic—is far from a tell-all exposé. In a paper recently published in Accounting Horizons, Shawn Davis, visiting assistant professor of accounting at Emory University’s Goizueta Business School, along with coauthors Bryan Church and Susan McCracken, explore the history, process and content of the auditor’s report, offering readers a “state-of-the-art” basis for understanding auditors’ reporting model. The authors show that an audit is a complex process involving such variable factors as the auditor-client relationship, litigation risk, negative press coverage, and the ways in which auditors receive evidence, all of which can impact their overall reporting decision.

Why Changes Made During Rough Times Can Make Companies Thrive

Thu, 14 Aug 2008 13:00:01 EST

The turbulent U.S. economy is forcing Americans to make some tough choices. Suddenly, eating out, long car trips, and even the morning java fix are now subject to scrutiny as consumers redefine their financial priorities. For companies like Starbucks, which reported a net loss of $6.7 million in the third quarter, this shift is eating into the bottom line and exposing vulnerabilities. According to faculty at Emory University's Goizueta Business School, companies similar to the coffee giant can ride out the rough times and even thrive. How? Through smart strategy, good planning and, maybe most importantly, keeping a level head.

To Love, Honor, Cherish and Consume: The Selling of the American Wedding

Thu, 14 Aug 2008 13:00:01 EST

Money, to paraphrase the Beatles, can't buy you love. But it can certainly buy a lavish wedding, as noted in Rebecca Mead's new book, One Perfect Day: The Selling of the American Wedding. Indeed, according to Mead, America's wedding industry exceeds $161 billion annually -- an enormous sum that suggests how much weddings have become not only big business, but big fantasy. Yet as our reviewer notes, the wedding boom is not just confined to wealthy Western nations, but has become a global phenomenon, concerned with "displaying and solidifying social position in a world where such things are fluid and changeable."

Understanding the Entrepreneurial Spirit in Early African America

Thu, 10 Jul 2008 14:49:28 EST

For her new book Love and Marriage in Early African America, Frances Smith Foster searched archives for more than a decade and offers this compilation of fictional stories, song lyrics, personal letters, poems, and autobiographical accounts written by blacks during the late 1700s and through the early part of the 1900s. Foster, chair of the English Department and Charles Howard Candler professor of English and Women’s Studies at Emory University, notes that these writings not only document the family lives, loves, and relationships of African-Americans during the period, the research also shows the economic life that African-Americans created for themselves despite slavery and its aftereffects. In this interview with Knowledge@Emory, Foster discusses the material and the window it provides into the entrepreneurial spirit of blacks then. She also sheds light on the difficult and complicated lives of enslaved people, as well as the economic motivations of enslaved vs. freed women.

Have U.S. Automakers Finally Run Out of Gas?

Thu, 12 Jun 2008 16:24:54 EST

The late May announcement by American car manufacturer Ford Motor Company that it will cut up to 12% of salaried jobs is yet another piece of disappointing news from Detroit. Despite moves by Ford and other U.S. car companies to bring operating costs closer to those of other competitors, their efforts seem almost too little, too late. With gas prices steadily rising and American consumer demand for gas-guzzling vehicles dwindling, could this be the end of the road for U.S. carmakers? American carmakers have the ability to survive, say faculty at Emory University and its Goizueta Business School, but they will have to be prepared to make significant changes to their operating model.

Can Investors and Employees Foresee Their Company�s Future?

Wed, 14 May 2008 19:19:17 EST

After the collapse of Bear Stearns and the rise in layoffs in the U.S. –80,000 jobs eliminated in March alone--is there any way to tell if a company is healthy? Even with 24-hour cable news shows and the plethora of information available via the Internet, determining if the company you work for or invest in is sound can be challenging. There are ways to detect trouble, say faculty at Emory University and its Goizueta Business School, but like a great sale, you’ve got to do some digging in order to get the real deal.