Value is Now Generated Pre-IPO; for companies going public before 2000, almost 75 percent of their eventual market value was realized in the public market, post-IPO; Who would have imagined that Splunk, which started out just analyzing log files, could be worth over $4 billion?

The Right Now Economy: The Next Wave of Startup Success

Mark Siegel6/12/13Follow @msiegel11

[Editor’s Note: Mark Siegel, managing director at Menlo Ventures, was the keynote speaker at IBF’sVenture Capital Investing Conference today in San Francisco. The post below summarizes his talk, in which he argued that the convergence of mobility, cloud infrastructure, social and big data—what he calls the Right Now Economy—sets the stage for $500 billion in venture returns over the next decade.]

Every technology cycle is driven by a huge disruptive new trend in innovation, such as the PC, the Internet/telecom boom, or the rise of social networking. We’re in the midst of the latest cycle, and it’s particularly compelling because it marks the convergence of four important trends: mobile, social, cloud infrastructure and Big Data.

These technological mega-trends have converged to create the real-time marketplaces of the Right Now Economy, which are already disrupting trillions of dollars in aggregate market value and have produced an incredibly fertile area for entrepreneurs to grow ideas into well-funded companies with the potential to take on established stalwarts. Read more of this post

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China braces for capital flight and debt stress as Fed tightens; There have been signs of serious stress in China’s interbank lending markets, with short-term SHIBOR rates spiking violently. Bank Everbright missed an interbank payment last week in a technical default

China braces for capital flight and debt stress as Fed tightens

China appears increasingly worried that monetary tightening by the US Federal Reserve could trigger capital flight from the People’s Republic and set off a Chinese corporate debt crisis.

There have been signs of serious stress in China’s interbank lending markets, with short-term SHIBOR rates spiking violently. Photo: Alamy

By Ambrose Evans-Pritchard

1:50PM BST 14 Jun 2013

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A front-page editorial on Friday in China Securities Journal – an arm of the regulatory authorities – warned that capital inflows have slowed sharply and may have begun to reverse as investors grow wary of emerging markets. “China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens.” it wrote. The journal said foreign exodus from Chinese equity funds were the highest since early 2008 in the week up to June 5, and the withdrawal Hong Kong funds were the most in a decade.

Read more of this post

China estimates fake trade invoicing at S$94 billion in Jan-April

China estimates fake trade invoicing at S$94 billion in Jan-April

SHANGHAI – Fake invoicing inflated China’s official import and export totals by US$75 billion (S$94 billion) in the first four months of this year, local media reported on Friday, citing an internal review by China’s commerce ministry.

BY –

1 HOUR 5 MIN AGO

SHANGHAI – Fake invoicing inflated China’s official import and export totals by US$75 billion (S$94 billion) in the first four months of this year, local media reported on Friday, citing an internal review by China’s commerce ministry.

An alternate estimate found that actual year-on-year export growth for January to April was only about 7 per cent, while import growth was about 6 per cent, the 21st Century Business Herald reported, citing an unidentified source and an internal commerce ministry document.

The second estimate was based on excluding data from the port of Shenzhen, where much of the fraud is suspected to have occurred. Read more of this post

India is Asia’s weakest link in QE-driven rout

India is Asia’s weakest link in QE-driven rout

Thu, Jun 13 2013

By Vidya Ranganathan

SINGAPORE (Reuters) – India is emerging Asia’s canary in the ‘hot money’ mine.

As financial markets sell off on concerns over rising U.S. rates, what happens in India, an economy with slowing growth and a heavy dependence on foreign money, could well determine if this is merely a short-term rout or a full-blown crisis.

India’s rupee currency has weakened the most among emerging markets after the South African rand since May as investors flee assets most vulnerable to the end of super-loose U.S. monetary policy. Read more of this post

MD&A Disclosure and the Firm’s Ability to Continue as a Going Concern

MD&A Disclosure and the Firm’s Ability to Continue as a Going Concern

William J. Mayew Duke University – Fuqua School of Business

Mani Sethuraman Duke University – Fuqua School of Business

Mohan Venkatachalam Duke University – Fuqua School of Business

March 22, 2013

Abstract: 
This paper explores the role of textual disclosures in the MD&A section of a firm’s SEC 10K filing to predict a firm’s ability to continue as a going concern. Using a sample of firms that filed for bankruptcy over the period 1995-2011 and a matched set of control firms we find that both management’s opinion about going concern stated in the MD&A and the linguistic tone of the MD&A together provide significant explanatory power in predicting whether a firm will cease as a going concern. Moreover, the predictive ability of MD&A disclosure is incremental to financial ratios, auditor going concern opinion, and market based variables. The striking feature of our findings is that the information in MD&A disclosures is more useful in predicting bankruptcy relative to financial ratios three years prior to bankruptcy. This suggests that MD&A disclosures are more timely than financial ratios and hence, a leading indicator of going concern problems. Our findings have important implications for current standard setter deliberations on whether to mandate qualitative disclosures about management’s assessment of the firm’s ability to continue as a going concern.

Distracted Directors: Does Board Busyness Hurt Shareholder Value?

Distracted Directors: Does Board Busyness Hurt Shareholder Value?

Antonio Falato Federal Reserve Board

Dalida Kadyrzhanova University of Maryland

Ugur Lel Virginia Polytechnic Institute & State University – Department of Finance, Insurance, and Business Law

May 31, 2013

Abstract: 
This paper examines the impact of independent director busyness on firm value in a setting that addresses a key challenge that the board of directors is an endogenously determined institution. We use the deaths of directors and CEOs as a natural experiment to generate exogenous variation in the time and resources available to independent directors at interlocked firms. The sudden loss of such key co-employees is an ‘attention shock’ because it increases the board committee workload for some independent directors at the interlocked firm – the ‘treatment group,’ but not others – the ‘control group.’ In a hand-collected sample of 2,551 (592) firms that share a non-deceased independent director with 633 (189) firms subject to director (CEO) deaths, difference-in-difference estimates reveal that investors react negatively to these attention shocks. There is a significant negative stock market reaction of -0.79% (-0.95%) for director-interlocked firms in the treatment group, but no reaction for those in the control group. The treatment effect is significantly magnified by interlocking directors’ busyness (e.g., board size and number of outside directorships), the importance of their roles in the firm (e.g., type of committee membership), and their degree of actual independence (e.g., entrenchment). Overall, these results provide direct evidence that director attention shocks are interpreted as negative events for firms and that independent directors’ busyness entails costs for shareholders.

Are Investors Guided by the News Disclosed by Companies or by Journalists?

Are Investors Guided by the News Disclosed by Companies or by Journalists?

Zilu Shang ICMA Centre, Henley Business School

Chris Brooks University of Reading – ICMA Centre

Rachel McCloy University of Plymouth – School of Psychology

June 1, 2013

Abstract: 
Most previous studies demonstrating the influential role of the textual information released by the media on stock market performance have concentrated on earnings-related disclosures. By contrast, this paper focuses on disposal announcements, so that the impacts of listed companies’ announcements and journalists’ stories can be compared concerning the same events. Consistent with previous findings, negative words, rather than those expressing other types of sentiment, statistically significantly affect adjusted returns and detrended trading volumes. However, extending previous studies, the results of this paper indicate that shareholders’ decisions are mainly guided by the negative sentiment in listed companies’ announcements rather than that in journalists’ stories. Furthermore, this effect is restricted to the announcement day. The average market reaction – measured by adjusted returns – is inversely related only when the announcements are ignored by the media, but the dispersion of market reaction – measured by detrended trading volume – is positively affected only when announcements are followed up by journalists.

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