Оглавление
Baruch Lev. Winning Investors Over
Acknowledgments
Introduction. Why Restoring Investors’ Trust in Managers Is Now Critical
The Critical Role of Capital Markets
Ephemeral Growth and Investors’ Discontent
What, Me Worry?
A U.S.–Centric or a Global Book?
The Shape of Things to Come
Chapter 1. It’s Not the End of the World. What to Do—and Not Do—When Faced with Missing the Consensus Earnings Estimate
The Not-So-Bell-Shaped Earnings Surprises
How Good Are Analysts Anyway?
Anatomy of Hits and Misses
Riding a Tiger
A Brief but Important Detour on Value Versus Glamour Stocks
Who Is Afraid of Missing the Consensus?
So, What’s a CEO to Do?
Operating Instructions
Chapter 2. Do We Have a Story for You. How Soft Information Can Change Stock Prices
Surprise, Investors Are Human After All
Speak Softly and Carry a Big (Hard) Stick
Analyze This … Earnings Conference Calls
The Secrets of Effective Conference Calls
Other Communication Channels
Meet the Relatives: Investor Relations
A Final Note on Visibility, Disclosure, and Stock Prices
Operating Instructions
Chapter 3. To Manage or Not to Manage Earnings? Why You Shouldn’t Even Think of Manipulating Financial Information
Truth in Accounting?
GAAP to the Rescue, Sort Of
Why and How They Do It
GE Brings Good Things to Life, Yet Not to Accounting
How Gateway “Immunized Itself from the Vagaries of the Market”
Things Go Better with Coke (When Pushed a Bit)
Charter Communications: No Customer Left Behind
CMS Energy: Brag-a-Watts
Daisytek International: Driving Miss Daisy to Bankruptcy
Made in America?
Why They Do It?
Innocent Victims
Crime and Punishment
Manipulation in Good Cause
Operating Instructions
Chapter 4. Kill All the Lawyers? How to Immunize Your Company from Class-Action Lawsuits
Surprise, surprise…
Postcards from the Edge: Sharp Price Drops
Being in the Wrong Place
Meet the Risk Factors
Operating Instructions: Immunize Your Company
Warn Early On of Impending Disappointments
Avoid Earnings Management and Aggressive Accounting
Avoid Excessive Insider Trading and Stock Option Grants
And Don't Detach Yourself from Investors
Chapter 5. Nothing in Excess. The Hazards of Under- and Overpriced Shares, Particularly the Latter
Overpriced Shares 101
Dell’s Price: Too Much of a Good Thing
Meeting Expectations at All Costs
Going with the Grain
Prices Out of Kilter?
Where Have All the Arbitrageurs Gone?
Operating Instructions
Are Your Shares Mispriced?
Estimating the Extent of Mispricing
A Soft Landing
Chapter 6. Guiding the Misguided. Why It’s Beneficial to Assist Investors with Forward-Looking Information
Anatomy of Guidance
Guidance and Its Discontents
Parting the Mist
Guidance Benefits Both Investors and the Company
Don’t Embarrass Your Analysts
Helps with Litigation, Too
What Not to Expect from Guidance
“Guiding” Short Sellers Is a Bad Idea
Guidance in Cyberspace
Experts and Persuasion Bias on the Web
Operating Instructions
Chapter 7. Life Beyond GAAP. Why Managers Should Disclose More Information Than Legally Required
Counterintuitively, No News Is Bad News
Information Asymmetry: Gainers and Losers
The Market for Lemons
Through a Glass Darkly
How Real Is All This?
Isn’t GAAP Enough?
A Small Turn of the Dial
Resurrecting and Improving Pro Forma Earnings
A Big Turn of the Dial
The Path-to-Growth Report
Show Me the Money
Operating Instructions
Chapter 8. Put Your Money Where Your Mouth Is. Why Certain Financial Actions Affect Share Prices and Others Don’t
Signaling: On a Wink and a Prayer
Shareholder Distributions: Dividends and Share Buybacks
Burning a Hole in Their Pocket
Hey, Big Spender: Share Buybacks
Stock Splits: Where Is the There, There?
Finally, a Genuine Signal
Operating Instructions
Chapter 9. Is Doing Good, Good for Business? Which Corporate Social Responsibility (CSR) Activities Are Worth Pursuing and Which Are Not
As If Managing the Business Isn’t Hard Enough
Spot the CSR
Anything You Can Do, I Can Do Better
The Bad Rap of Cause-Related Philanthropy
Looking over the Precipice: CSR as Insurance
Sounds Good, but Does It Really Work?
Social Capital: The Devil They Know
Parting the Mist: Reputation, Brand, Image
The Economist’s View of Corporate Reputation
CSR to the Rescue?
Operating Instructions
Chapter 10. In the Long Run, We’re All Dead. Why the Much-Maligned Investor Short-Termism and Managerial Myopia Are Myths
Whence Myopia?
The End of Short-Termism? You Wish
What’s in a Stock Price?
The Perils of Myopic Management
Why the “Obsession” with Quarterly EPS?
Operating Instructions
Chapter 11. Breathing Down Your Neck. How to Handle Activist Investors and Hedge Funds Intruding on Your Turf
From Adam Smith to Hedge Funds: Why Activism?
Activism: A Brief History
A Road Map to Shareholder Activism
Who Are They?
What Do They Want?
How Do They Operate?
What Do They Achieve?
Activism in the 1980s and 1990s
Activism in the 2000s
The hedge fund era
Short-Termism and Other Downers
The Recent Financial Crisis: The End of Activism?
Passive-Aggressive Sovereign Funds: The New Kid on the Block?
Operating Instructions
Chapter 12. Looking Out for You, Dear Shareholder. Why Corporate Governance Often Fails and How to Fix It
What’s All the Fuss About?
Where’s the Beef? The Impact of Effective Governance
Owners in the Saddle
The Scorekeepers’ Score
A Team of Rivals or a Kitchen Cabinet?
Operating Instructions
Chapter 13. Excess or Excellence? How to Clean Up the Managerial Compensation Mess
Witnesses for the Prosecution
In Defense of Pay
The Weak Performance–Pay Link
The Corporate Purpose
Managers’ Mission
Operating Instructions: Reforming Executive Compensation
Remunerate Performance Only
Measure Performance Effectively
Align Managers’ Responsibility with Controllability
Contain Managers’ Risk Exposure
Grant Stock Options Smartly
Shareholders’ Say on Pay
Finally, Apply the Embarrassment Test
Chapter 14. What Then Must We Do? Meta-instructions
The Pursuit of Long-Term Growth
Effective Information Sharing
Strategic Reporting
Integrity and Immediacy
Actions, When Words Aren’t Enough
Avoiding Company and Manager Misconduct
Equitable Compensation
Do Good, Effectively
A Final Postscript
Notes. INTRODUCTION
CHAPTER 1
CHAPTER 2
CHAPTER 3
CHAPTER 4
CHAPTER 5
CHAPTER 6
CHAPTER 7
CHAPTER 8
CHAPTER 9
CHAPTER 10
CHAPTER 11
CHAPTER 12
CHAPTER 13
CHAPTER 14
Bibliography
About the Author
Отрывок из книги
“Capital markets are for us, CEOs of public companies, the most important thing,” the CEO of an innovative pharmaceutical company stated to me over lunch in San Francisco. Crossing the Bay Bridge back to Berkeley, I decided to write a book on this very topic: how to make the interactions between managers and investors mutually beneficial.
I thankfully received considerable assistance and support writing this book. The extensive research underlying practically every chapter was facilitated by highly capable colleagues: Richard Carrizosa, Peter Demerjian, Feng Gu, Kalin Kolev, Alina Lerman, Theodore Sougiannis, Jennifer Tucker, and Emanuel Zur. Many colleagues provided vital information, including Massimiliano Bonacchi, Mary Billings, Dan Cohen, Melissa Lewis, and Suresh Radhakrishnan.
.....
Much of the research I use in this book, is, however, based on U.S. data. The reason: U.S. financial databases—for corporate financial reports, stock prices, executive compensation, analyst forecasts, and R&D—are more comprehensive and cover longer time periods than in most other countries. Also, many trends, such as earnings forecasts and guidance, litigation, and stock options, start, for better or worse, in America. In addition, more researchers in the United States engage in empirical financial markets and accounting research than in other countries, accounting for the abundance of capital markets research using U.S. data. I strongly believe, however, that with few exceptions this research is relevant across the globe. Nevertheless, wherever available I use research from non-U.S. countries.
There are three major themes in this book. The first deals with handling emergencies—putting out fires. The company’s performance unexpectedly stalls—earnings decline, consensus analysts’ forecast is missed, an IPO bombs, or a drug is rejected by the FDA. I prescribe what to do in such cases, particularly when you fail to meet the consensus analysts’ forecast or otherwise disappoint investors, and how best to communicate with investors. I outline the detrimental consequences of earnings management and information manipulation, and advance strategies to fend off class-action lawyers.
.....
