Character is at the heart of global leadership

CHARACTER IS AT THE HEART OF GLOBAL LEADERSHIP

By Professors Stewart Black and Allen Morrison – March 2013

Ironically, most people think that the higher you go, the more authority and control you have.But our research finds that in today’s complex, global environment, the higher you go, the more you get things done because of the goodwill and trust you develop, not because of your formal authority.As one C-suite executive put it to us, “I can make proclamations all day long but the world is just too big.There are too many places to hide.By the time I find out that they are not following through in Russia or wherever, it’s too late.It takes goodwill and trust–it takes personal relationships–to really make things happen on a global scale.

Our research identified two primary aspects of personal character that lead to the trust and goodwill needed to get things done in a global business today.

Emotional connections

Global leaders need to establish personal, empathetic relationships with people from all backgrounds inside their company, and in the broader community. Doing this requires three distinct abilities: sincere interest in other people, a heightened ability to listen, and a strong capacity for understanding different viewpoints. Read more of this post

Analysis: Sitting on too much money, Norway risks going off course

Analysis: Sitting on too much money, Norway risks going off course

Sun, Mar 24 2013

By Balazs Koranyi and Victoria Klesty

OSLO (Reuters) – Middle East-style oil wealth combined with a generous Nordic welfare model is slowly throttling big chunks of Norway’s economy, threatening western Europe’s biggest success story.

On the surface, Norway is the envy of the world: growth is strong, per capita GDP has exceeded $100,000 and the nation sits on a $700 billion rainy day cash reserve, or $140,000 per man, woman and child.

But it may just be too much money as Norwegians, more keen on leisure and family life are working less and less.

Immigration is not filling the gap in the skilled part of the workforce, so productivity is stagnating, wages are surging and firms are pricing themselves out of their own market.

“Oil is a metaphor for winning the lottery,” said Ivar Froeness, a sociology professor at the University of Oslo. “Affluence has slowly crept into society… people just don’t really notice it because it’s been so gradual.”

“These days more people leave Oslo on Thursday afternoon than on Friday, taking long weekends,” he said. “We may take for granted that we have a house and a cabin in the mountain, and maybe another house on the beach.” Read more of this post

Taiwanese-Canadian designer Jason Wu who created fashion for Michelle Obama: From sewing toy clothes to running a $24 million fashion business

From sewing toy clothes to running a $24 million fashion business

First+Lady+Michelle+Obama+Donates+Inaugural+6pRPIWe5ZSQl

New York – For a man who is small in build, Jason Wu certainly has big dreams and he has taken calculated steps to make sure they are being realised.

In the past year alone, the slim, 1.7m-tall Taiwanese-Canadian designer has already collaborated with Brazilian plastic footwear label Melissa to launch a collection (priced from $100 for a pair of sandals); designed a one-off collection for American mass-market retailer Target (prices start from US$129 or S$160 for a blouse); and released his own contemporary diffusion line called Miss Wu (from US$195 for a silk crepe blouse to US$865 for a leather shift dress).

This September, he has announced, he is slated to launch his own make-up range with beauty giant Lancome.

And need we even mention the ruby red inauguration ball gown he created for Michelle Obama?

Having the global spotlight trained on him with that dress since January may mean extra pressure to do more, but he feels otherwise.

“Inauguration or not, there is always pressure to give something better than the last,” says the 30-year-old. “I need to constantly keep moving. You’re only as good as your last project, you know?” Read more of this post

Psy shares the pain of creation; the Korean superstar released a photo of himself apparently struggling to get some writing done, with one hand clutching his forehead

Psy shares the pain of creation
Posted: 25 March 2013 1449 hrs

SEOUL: Millions of people around the world have seen Korean singer Psy dance, thanks to his ultra-popular “Gangnam Style” music video, which currently holds the title of most-watched YouTube video of all time. But what does he look like when he’s working? Fans finally got a peek into Psy’s life away from the glitz and glamour of the stage, when the Korean superstar released a photo of himself apparently struggling to get some writing done, with one hand clutching his forehead, over Twitter on Thursday. Psy even posted the photo under the hashtag #PAINofCREATION. With his new single due to drop in April, it’s no wonder the 35-year-old singer is hard at work. While he has carved a niche for himself in the Korean entertainment industry prior to “Gangnam Style”, it’s still the song that put him on the international music map, and it will be his new single that decides whether he will be able to further develop his music career outside of Korea, when “Gangnam Style” loses its shine.

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Risk Management: History, Definition and Critique

Risk Management: History, Definition and Critique

Georges Dionne HEC Montreal – Department of Finance

March 11, 2013

Abstract: 
La version française de ce document est disponible à http://ssrn.com/abstract=2198583
The study of risk management began after World War II. Risk management has long been associated with the use of market insurance to protect individuals and companies from various losses associated with accidents. Other forms of risk management, alternatives to market insurance, surfaced during the 1950s when market insurance was perceived as very costly and incomplete for protection against pure risk. The use of derivatives as risk management instruments arose during the 1970s, and expanded rapidly during the 1980s, as companies intensified their financial risk management. International risk regulation began in the 1990s, and financial firms developed internal risk management models and capital calculation formulas to hedge against unanticipated risks and reduce regulatory capital. Concomitantly, governance of risk management became essential, integrated risk management was introduced and the first corporate risk officer positions were created. Nonetheless, these regulations, governance rules and risk management methods failed to prevent the financial crisis that began in 2007.

In Strange Company: The Puzzle of Private Investment in State-Controlled Firms

In Strange Company: The Puzzle of Private Investment in State-Controlled Firms

Mariana Pargendler Fundação Getulio Vargas School of Law at São Paulo

Aldo Musacchio Harvard Business School – Business, Government and the International Economy Unit; National Bureau of Economic Research

Sergio G. Lazzarini Insper Institute of Education and Research

February 14, 2013
Harvard Business School BGIE Unit Working Paper No. 13-071 

Abstract: 
A large legal and economic literature describes how state-owned enterprises (SOEs) suffer from a variety of agency and political problems. Less theory and evidence, however, have been generated about the reasons why state-owned enterprises listed in stock markets manage to attract investors to buy their shares (and bonds). In this Article, we examine this apparent puzzle and develop a theory of how legal and extralegal constraints allow mixed enterprises to solve some of these problems. We then use three detailed case studies of state-owned oil companies – Brazil’s Petrobras, Norway’s Statoil, and Mexico’s Pemex – to examine how our theory fares in practice. Overall, we show how mixed enterprises have made progress to solve some of their agency problems, even as government intervention persists as the biggest threat to private minority shareholders in these firms.

Hole in the Wall: A Study of Short Selling and Private Placements

Hole in the Wall: A Study of Short Selling and Private Placements

Henk Berkman University of Auckland – Faculty of Business & Economics

Michael D. McKenzie University of Sydney – Discipline of Finance; University of Cambridge – Cambridge Endowment for Research in Finance (CERF); Financial Research Network (FIRN)

Patrick Verwijmeren Erasmus University Rotterdam (EUR) – Erasmus School of Economics (ESE)

March 23, 2013

Abstract: 
Companies planning a private placement typically gauge the interest of institutional buyers before the offering is publicly announced. Regulators are concerned with this practice, called wall-crossing, as it might invite insider trading, especially when the potential investors are hedge funds. We examine privately placed common stock and convertible offerings and find widespread evidence of pre-announcement short selling. We show that pre-announcement short sellers are able to predict announcement day returns. The effects are especially strong when hedge funds are involved and when the number of buyers is high.

‘Hidden Recommendations’: A Re-Classification of Stock Recommendations

‘Hidden Recommendations’: A Re-Classification of Stock Recommendations

Ronald Espinosa University of California, Berkeley – Accounting Group

December 14, 2012

Abstract: 
Using a large database of analysts’ target prices and recommendations issued over the period 1999-2011, this paper documents the presence of inconsistencies between recommendation and implied return in the sell-side analysts’ target prices, and analyzes its impact on market prices. In particular, it analyzes if these inconsistencies are identified by investors at the announcement and if they are related to incentives to manipulate the recommendations. The paper finds that investors are capable to identify these inconsistent signals among the rest of recommendations. This study also shows that the inconsistencies between recommendation and implied return would be explained by analysts’ incentives to bias the stock recommendation upward (downward), against the direction suggested by the implied return, when the stock presents higher (lower) recent past performance, higher (lower) “glamour” characteristics and higher (lower) brokerage fee potential.

The next billion internet users are not going to be English-speaking, so the next big batch of new domain names will be in Arabic, Chinese or Cyrillic; Australian firm ARI Registry Services is the technology provider for four of the TLDs in the first batch to pass ICANN evaluation

First new top domains Arabic, Chinese

March 25, 2013 – 8:04PM

Trevor Chappell, AAP

The next billion internet users are not going to be English-speaking, so the next big batch of new domain names will be in Arabic, Chinese or Cyrillic.

The global governing body for domain names, the Internet Corporation for Assigned Names and Numbers (ICANN), has completed its evaluation of the first 27 of 1,898 new Top Level Domains (TLDs).

All 27 are in scripts other than Roman script, which is used for the English language.

The new TLDs are expected to join .com, .net and .au on the internet once they get approval from government advisory bodies, the applicants sign the ICANN registry contract, and the TLDs undergo technical testing.

Australian firm ARI Registry Services is the technology provider for four of the TLDs in the first batch to pass ICANN evaluation. Read more of this post

Steve Blank: An Epitaph for Entrepreneurs

March 25, 2013, 12:27 PM

Steve Blank: An Epitaph for Entrepreneurs

STEVE BLANK: Raising our kids and being an entrepreneur wasn’t easy. Being in a startup and having a successful relationship and family was very hard work. But entrepreneurs can be great spouses and parents.

This post is not advice, nor is it recommendation of what you should do. It’s simply what my wife and I did to raise our kids in the middle of starting multiple companies. Our circumstances were unique and your mileage will vary.
Biological Clocks

I met my wife on a blind date and we discovered that not only did we share the same interests, but we were both ready for kids. My wife knew a bit about startups. Out of Stanford Business School she went to work for Apple as an evangelist and then joined a startup of a Mac-database.

Our first daughter was born about four months after I started at my fourth startup. We ended up sleeping in the hospital lounge for five days as she ended up in intensive care. Our second daughter followed 14½ months later.

Family Rules

My wife and I agreed to a few rules upfront and made up the rest as went along. We agreed I was still going to do startups, and she knew what that meant –probably more than most spouses. To her credit, she also understood that meant that child-raising wasn’t going to be a 50/50 split. I simply wasn’t going to be home at 5 p.m. every night.

In hindsight, this list looks pretty organized, but in reality we made it up as we went along, accompanied with all the husband and wife struggles of being married and trying to raise a family in Silicon Valley. Here are the some of the rules that evolved that seemed to work for our family.

We would have a family dinner at home most nights of the week. Regardless of what I was doing I had to be home by 7 p.m. (My kids still remember mom secretly feeding them when they were hungry at 5 p.m., but eating again with dad at 7 p.m.) But we would use dinner time to talk about what they did at school, have family meetings, etc. Read more of this post

Saving Cyprus Means Nobody Safe as Europe Breaks More Taboos

Saving Cyprus Means Nobody Safe as Europe Breaks More Taboos

By Simon Kennedy  Mar 25, 2013

The devil lies in the detail of Cyprus’s salvation.

The island nation’s rescue sets precedents for the euro zone that may stick in the memory of depositors and bondholders alike as investors debate who will next fall victim to the debt crisis. Under the terms of the agreement struck early this morning in Brussels, senior Cypriot bank bond holders will take losses and uninsured depositors will be largely wiped out.

The message that stakeholders of all stripes can be coerced into helping a cash-strapped nation may make investors more skittish they’ll be targeted should SloveniaItaly, Spain or even Greece again be next in line to need help. The risk is that bank runs and bond market selloffs become more likely the moment a country applies for a new rescue, said economists and academics from Nicosia to New York.

“We now have a new type of rule and everyone within the euro zone has to sit down and see what that implies for their own finances,” Nobel laureate Christopher Pissarides, an adviser to the Cypriot government, told “The Pulse” on Bloomberg Television. Read more of this post