R.E.S.-ilience in Value Creation 《竹经：经商经世离不得立根创新》
May 6, 2013 Leave a comment
What LinkedIn Looked Like When It Started 10 Years Ago
Kevin Smith | May 5, 2013, 10:11 AM | 2,688 | 1
Today is LinkedIn‘s 10th birthday. The professional social network is over 200 million members strong. LinkedIn has gone through many site redesigns and added features and services to help its users connect even further. But here’s what LinkedIn’s first profiles looked like 10 years ago:
May 6, 2013 Leave a comment
May 5, 2013, 5:20 p.m. ET
LinkedIn’s Real Value: Knowing All About People in All the Right Places
Dear LinkedIn LNKD -12.93% : Please put up a few more disappointing quarters so investors who have missed the boat can pile in.
Smart types long ago realized the professional social network is more than just an improved online job board.
LinkedIn Corp.’s main product, driving 57% of first-quarter sales, is enterprise software. It charges recruiters about $8,500 annually for premium tools to find, contact and track a wide pool of desirable job candidates. Alternatively, a headhunter may charge a quarter of a new hire’s first-year salary. Fill one slot and LinkedIn pays for itself. That should help the company to steadily raise prices, especially as more members sign up and it adds new features like “endorsements” where skills listed on a profile are verified by contacts. A more modest price increase went into effect this quarter. But LinkedIn raised prices to $8,200 from $7,000 in the first quarter of 2011. Since then, the number of corporate customers has risen nearly fivefold to more than 18,000.
One reason clients didn’t seem to mind the higher price is the expanding pool of potential hires: Over the same period, the number of LinkedIn users has leapt to nearly 220 million from 90 million. Read more of this post
May 6, 2013 Leave a comment
Updated May 5, 2013, 8:47 p.m. ET
Document-Review Software Gets Boost From AB InBev Deal With Grupo Modelo
In the legal arena’s contest of man versus machine, the U.S. Justice Department has given a big boost to the machines.
Department officials reviewing the proposed merger of Anheuser-Busch InBev NVBUD +1.00% and Mexico’s Grupo Modelo GMODELO.MX -0.64% SAB recently approved a request to use software—rather than a horde of lawyers—to determine which documents needed to be turned over to the government.
Cases involving large companies often require legal counsel to sift through millions of electronic documents. In the past decade, that task has typically fallen on armies of contract, or temporary, lawyers who earn $25 to $40 an hour. Industry experts peg the cost for clients at more than $1 per document. Read more of this post
May 6, 2013 Leave a comment
May 2, 2013, 3:58 p.m. ET
INTERVIEW
The Cold Truth About Emotional Investing
New research shows that even the pros invest more from the heart than from logic
When it comes to investing, emotion is commonly seen as a weakness that must be shunned. But new research from professors David Tuckett and Richard Taffler suggests that emotions play an inevitable part in all investing, by amateurs and pros alike.
In their recent book “Fund Management: An Emotional Finance Perspective,” the professors present the results of interviews with 52 experienced fund managers in the U.S., U.K., France and Asia. The picture that emerges is one of acute anxiety and emotional conflict.
The bottom line, they say: Individuals and pros perform better when they acknowledge that investing is inherently emotionally charged and when they understand how emotions affect their behavior.
We talked with Prof. Taffler, professor of finance and accounting at Warwick Business School in the U.K., and Prof. Tuckett, a fellow of the Institute of Psychoanalysis in London and visiting professor at University College London, about the role of emotions in investing. Here are edited excerpts of those conversations. Read more of this post
May 6, 2013 Leave a comment
Updated May 3, 2013, 1:29 p.m. ET
EXCHANGE-TRADED FUNDS
Companies Add to Lineups of ‘Free’ ETFs
Still, trading commissions are only one cost, so other funds may be more attractive on balance
How attractive is “free”? Some of the largest online brokers of exchange-traded funds are determined to find out.
Two have recently expanded the lineups of ETFs they offer without trading commissions, bringing their menus closer to the size of their competitors’.
In February, Charles Schwab Corp.SCHW +6.27% expanded its commission-free ETF menu to 105 funds, up from just its own 15 broad-based index offerings. A few weeks later, Fidelity Investments expanded its exclusive partnership with BlackRock Inc.BLK +3.43% to offer 65 of BlackRock’s iShares ETFs commission-free, up from 30, in addition to Fidelity’s one ETF.
Both programs now challenge TD Ameritrade Holding Corp. AMTD +6.08% and Vanguard Group, whose commission-free ETF choices were already large and diverse. TD Ameritrade offers 101 funds and exchange-traded notes selected by researcher Morningstar Inc., and Vanguard features all 65 of its own ETFs. Read more of this post
May 6, 2013 Leave a comment
Updated May 3, 2013, 11:37 a.m. ET
A New Era for Do-It-Yourself Investing
Many investors want to call the shots—while turning to tools and people for help as needed
Instead of going it entirely on their own, more investors are pursuing a kind of modified DIY approach, tapping an array of increasingly sophisticated online tools and a-la-carte advice services offered by financial firms. The result is that there has been strong growth in customer assets at the mutual-fund and discount-brokerage companies that have traditionally served the do-it-yourself market, a group that includes Vanguard Group, Fidelity Investments and Charles Schwab Corp.SCHW +6.27%
May 6, 2013 Leave a comment
Shedding some light on the dark world of party discipline
Monday, 06 May, 2013, 12:00am
Wang Xiangwei xiangwei.wang@scmp.com
Lawyers and media commentators say the harsh system known as shuanggui contravenes efforts to push for rule of law
In China’s uphill battle against rampant corruption, no other Communist Party agency evokes more fear among officials than the Central Commission for Discipline Inspection (CCDI), the country’s top anti-graft watchdog.
The commission’s name may sound innocuous, and so does its most potent weapon, known as shuanggui – a two-word abbreviation from a clause in the party’s regulations that requires members to explain their so-called disciplinary violations at a specific time and venue.
But those two words have given the commission sweeping powers to indefinitely detain and question any official suspected of wrongdoing. Read more of this post
May 6, 2013 Leave a comment
May 5, 2013
‘Boring’ Blue Chips Lead Record-Setting Market Runup
Boring bulls are powering the market higher.
That the stock market has climbed as much as it has this year surprises many analysts. Perhaps the biggest shocker: the kinds of companies leading the charge.
Technology, Internet or other companies making cutting-edge products? Hardly. A group of decidedly unsexy companies—from Procter & Gamble PG +0.55% (PG) and Johnson & Johnson JNJ +0.69% (JNJ) to Colgate-Palmolive CL +0.35% (CL), Clorox (CLX) and General Mills GIS +0.54% (GIS)—are en vogue. Read more of this post
May 6, 2013 Leave a comment
Updated May 5, 2013, 9:18 p.m. ET
Unmeltable, Uncrushable: The Holy Grail in Painkillers
By TIMOTHY W. MARTIN and JONATHAN D. ROCKOFF
The arms race to build a safer painkiller is under way.
In the wake of a key decision by the Food and Drug Administration, more than a dozen pharmaceutical companies—from startups to Pfizer Inc. PFE -1.06% —are vying to create painkilling drugs that are difficult to abuse.
The FDA moved last month to block the manufacture and sale of generic versions of the original OxyContin, which has gone off patent but which is easier to abuse than the current version. A newer version of OxyContin, introduced by its maker, Purdue Pharma LP, in 2010, contains an infusion of polymer that makes the pill difficult to crush, meaning addicts can’t get all of the extended-release ingredients at once to get high. Read more of this post
May 6, 2013 Leave a comment
Buffett devotees stick by him even as growth slows
4:04pm EDT
By Jonathan Stempel and Jennifer Ablan
OMAHA, Nebraska (Reuters) – Short-seller Douglas Kass, Warren Buffett’s handpicked bear, raised a concern on the minds of many shareholders at the “Woodstock for capitalists” this weekend: Has Berkshire Hathaway Inc become so big that it will find it hard to grow?
Many retail investors who converged on Omaha, Nebraska, for Berkshire’s annual meeting on Saturday acknowledged that its fastest growth days are likely behind it. But they said Berkshire is still a good long-term bet as faith remains in Buffett and his management team’s more than 4-decade-long record of stellar returns, and the company’s tentacles into many sectors of the U.S. economy.
“Yes, it is a concern, but I have to get my expectations in line,” said Julie Fehrnstrom, a mother of three from Orinda, California, attending her fifth meeting. “They are not driven by short-term decision making and they have really smart management. You really don’t always find that.” Read more of this post
May 6, 2013 Leave a comment
May 5, 2013, 10:14 p.m. ET
Leaders Pore Over Southeast Asia’s Investment Hurdles
GREATER NOIDA, India—Asian policy makers have been working hard to improve access to funding for regional infrastructure projects, but other hurdles could be a bigger constraint to investment in the sector. Read more of this post
May 6, 2013 Leave a comment
MAY 5, 2013, 11:00 AM
Disruptions: New Motto for Silicon Valley: First Security, Then Innovation
By NICK BILTON
At Facebook’s headquarters in Palo Alto, Calif., are stark white posters with bright red statements like “Done is better than perfect” and “Move fast and break things.”
These disruptive philosophies embody the spirit not just of Facebook but of Silicon Valley. Yet today, when technology companies have become the prime targets of rogue governments and hackers, the ideologies that drive these companies to provoke could end up disrupting these companies.
Conversely, the signs sitting in security research firms across the country warn, “Carelessness causes security incidents.”
Although technology companies say they take security seriously, protecting their customers seems to come second to announcing new products. Take Twitter, where people’s accounts are frequently hacked. In the last few months alone, this has happened to Burger King, BBC, NPR, The Associated Press and a slew of celebrities and users. In that time, Twitter has proudly announced updates to features on its mobile and desktop apps, introduced a music Web site and redesigned its company blog. But it still hasn’t released two-factor authentication, a security tool used by the rest of the industry to deter hackers. Read more of this post
May 6, 2013 Leave a comment
May 5, 2013
Media Giants Chase Online Ads With Original Shows
By LESLIE KAUFMAN and TANZINA VEGA
Everyone wants to be in show biz, and these days — on the Web at least — it seems as if everyone is.
Digital and traditional media companies, including newspapers and magazines, have for years been building a video presence on the Internet. But until now the offerings have largely been low-budget, single-camera affairs featuring talking heads.
Last week, however, major media companies like Condé Nast, The Wall Street Journal and Univision presented ambitious slates of original programming to advertisers for the first time.
Companies that were already producing Web content, like Yahoo and Hulu, also announced greatly expanded offerings.
As a result, viewers are being bombarded with an array of new Internet programs — 11 from Yahoo, 14 from AOL and a whopping 30 from Condé Nast, including one that will let viewers watch a Vogue editor, Hamish Bowles, as he shops around the world. Read more of this post
May 6, 2013 Leave a comment
Warren Buffett Says He’s Not a Buyer of Gold After Price Slump
Billionaire investor Warren Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., comments on the investment appeal of gold. He spoke to reporters in Omaha, Nebraska, on May 2. Gold rallied 4.9 percent in the past two weeks after entering a bear market April 12. Futures in New York are still down 13 percent this year to $1,464.20 an ounce. On whether he would buy gold after recent declines:
“No. Gold’s not reproduced or anything since I wrote about it a year or two ago. It just sits there, and you hope somebody pays you more for it. ‘‘If gold went to $1,000 I wouldn’t be a buyer. If it went to $800, I wouldn’t be a buyer. It’s never interested me. If you go back to 1965, Berkshire was at $15 and gold was at $35, so you could’ve bought two shares of Berkshire for an ounce of gold, a little more than two shares. And so far, two shares of Berkshire’s been better.” Read more of this post
May 6, 2013 Leave a comment
Sweden a Crisis Casualty No More Shows How Haven Appeal Is Won
After suffering through devaluations, three years of economic contraction and a banking crisis in the 1990s, Sweden has learned how to handle financial turmoil.
Now, the largest Nordic economy is emerging as a permanent haven from global market turbulence, according to the nation’s debt office.
“Sweden is looked at in a different light than before,” Thomas Olofsson, head of the Swedish government’s debt management, said in an interview in Stockholm. “There’s definitely a completely different interest in Sweden than five to 10 years ago. In the past, the Swedish exchange rate and interest rates often suffered during times of turbulence in a way that we haven’t seen this time around.”
The country cemented its status as a haven from Europe’s debt crisis last year, after posting the biggest economic rebound in the European Union in 2010 while keeping its budgets in surplus. Sweden boasts the lowest default risk in the world, after oil-rich Norway, credit derivatives suggest, and has managed to produce some of Europe’s best-capitalized banks.
The success in navigating way through the current crisis follows lessons learned two decades ago. Swedes suffered three years of economic decline from 1991 through 1993, culminating in the 1992 currency crisis, when the Riksbank abandoned the krona peg after failing to stem capital flight even with a 500 percent interest rate. Read more of this post
May 6, 2013 Leave a comment
Berkshire Skips Apple Bonds as Buffett Says Not at Those Yields
Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A), said he isn’t investing in corporate debt, including Apple Inc. (AAPL)’s record offering, because yields are too low. “We’re not buying corporate bonds of any kind now,” Buffett, 82, said May 4 during an interview with Bloomberg Television’s Betty Liu in Omaha, Nebraska, where Berkshire held its annual meeting. “Not at those yields.” Berkshire held $12.2 billion of corporate bonds as of March 31, according to a quarterly filing issued on May 3. That’s down 14 percent from two years earlier. The value of Berkshire’s equity portfolio climbed 54 percent to $97.2 billion in the two years ended March 31 as markets rallied and Buffett added shares of International Business Machines Corp. Yields on debt from corporate securities to Treasuries have tumbled as the Federal Reserve slashed interest rates and bought bonds to help the economy recover from recession. The payout rate on dollar-denominated company debt fell to a record 3.35 percent on May 2, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield Index. Yields have averaged 5.87 percent during the past decade.
May 6, 2013 Leave a comment
Asian Leaders’ Tough Talk Hides Failure of Leadership
Visiting China in 1928, when a rising Japan had begun to prey on its neighbor, the Japanese poet Akiko Yosano took a surprisingly broad-minded view of anti-Japanese passion among the Chinese: “It’s surely frightful from the imperialists’ point of view,” she wrote in her travelogue, “but for the Chinese people it must be celebrated in the name of humanity.”
Writing last year in the Asahi Shimbun, as anti-Japanese rioting erupted in China, the writer Haruki Murakami had a wholly unsympathetic take on the same phenomenon. He assailed the “cheap alcohol” of nationalism that “makes you speak loudly and act rudely” and leaves you “with nothing but an awful headache the next morning.”
I was recently reminded of these contrasting responses, as Chinese and Korean leaders protested high-profile Japanese visits to Tokyo’s Yasukuni Shrine, which commemorates, among others, Japanese indicted for war crimes during Japan’s early 20th-century invasions and occupations of China and Korea.
The South Korean foreign minister canceled his visit to Japan. Japan’s conservative Prime Minister Shinzo Abe then caused further outrage by appearing to question whether Japan had actually invaded its neighboring countries. Read more of this post
May 6, 2013 Leave a comment
Banks in Singapore agonize over rich clients in tax evasion clampdown
5:29pm EDT
By Rachel Armstrong, Saeed Azhar and John O‘Callaghan
SINGAPORE (Reuters) – Banks in Singapore are urgently scrutinizing their account holders as an imminent deadline on stricter tax evasion measures forces them to decide whether to send some of their wealthiest clients packing.
The Southeast Asian city-state has grown into the world’s fourth-biggest offshore financial center but, with U.S. and European regulators on the hunt for tax cheats, the government is clamping down to forestall the kind of onslaught from foreign authorities that is now hitting Switzerland’s banks.
Before July 1, all financial institutions in Singapore must identify accounts they strongly suspect hold proceeds of fraudulent or wilful tax evasion and, where necessary, close them. After that, handling the proceeds of tax crimes will be a criminal offence under changes to the city-state’s anti-money laundering law.
“Because of banking secrecy, Singapore used to be an attractive place to put money if you didn’t want the authorities back home to know about it,” said Erik Wilgenhof Plante, head of compliance at Germany’s DZ Privatbank in Singapore.
“That has left legacy problems for some banks.” Read more of this post
May 6, 2013 Leave a comment
Chinese Growth – Real Or Imagined?
Tyler Durden on 05/05/2013 16:15 -0400
We toyed with titling this post “Lies, Damned Lies, And Chinese Statistics” but perhaps that is a little harsh, though one glance at the chart below and one instantly comprehends the efforts that are being undertaken to ‘show’ the world that China’s transition is on target (and crumbling into collapse). As we recently noted, it is actually unlikely that China can complete this transition to organic (as opposed to investment-led) growth (with moderate growth the exception not the rule), and China’s recent trade data does not pass the smell test. As GREED & Fear’s Chris Wood notes, with the Hong Kong trade data being released last week, it is worth noting a growing discrepancy between the data on China’s exports to Hong Kong reported by mainland’s customs department and the corresponding data on Hong Kong’s imports from China reported by Hong Kong’s Census and Statistics Department in March. Such inconsistency in China’s export numbers relative to the imports data from its trading partners has generated growing speculation about the credibility of China’s trade figures. Various explanations have been put forward (below) but the divergence would seem far too large to be simply explained by “different statistical methods” as the Chinese government’s official line notes.
Via GREED & Fear,
…Hong Kong’s reported imports from China rose by “only” 13.8%YoY to US$20.6bn in March and were up 10%YoY to US$56bn in 1Q13. By contrast, China reported that exports to Hong Kong surged by 93%YoY to US$48.4bn in March and were up 74%YoY to US$106bn in 1Q13. As a result, the ratio between China’s reported exports to Hong Kong and Hong Kong’s reported imports from China has surged to 2.35 times in March, up from 1.36x in 2012 and an average of 1.11x during the previous five years between 2007 and 2011. Such inconsistency in China’s export numbers relative to the imports data from its trading partners has generated growing speculation about the credibility of China’s trade figures.
May 6, 2013 Leave a comment
Insight: ‘Speed money’ puts the brakes on India’s retail growth
6:02am EDT
By Nandita Bose
MUMBAI (Reuters) – Hong-Kong entrepreneur Ramesh Tainwala spent 18 months operating branded clothing retail stores in India before deciding it was impossible to succeed without paying bribes.
Tainwala, a 55-year-old expatriate Indian, owns Planet Retail, which held the India franchise rights for U.S. fashion labels Guess and Nautica as well as UK retailers Next and Debenhams. He sold the brands last September to various Indian businesses.
“Right now it’s not possible to do business in India without greasing palms, without paying bribes,” said Tainwala, who is also luggage maker Samsonite’s president for Asia Pacific and West Asia. Tainwala said he himself refused to pay bribes to licensing officials, though that could not be independently confirmed. Read more of this post
May 6, 2013 Leave a comment
Big drugmakers think small with nanomedicine deals
Fri, May 3 2013
LONDON (Reuters) – Is nanomedicine the next big thing? A growing number of top drug companies seem to think so. The ability to encapsulate potent drugs in tiny particles measuring billionths of a meter in diameter is opening up new options for super-accurate drug delivery, increasing precision hits at the site of disease with, hopefully, fewer side effects. Three deals struck this year by privately held Bind Therapeutics, together worth nearly $1 billion if experiments are successful, highlight a new interest in using such tiny carriers to deliver drug payloads to specific locations in the body. U.S.-based Bind is one of several biotechnology firms that are luring large pharmaceutical makers with a range of smart drug nanotechnologies, notably against cancer.
May 6, 2013 Leave a comment
Compliance, Detection, and Mergers and Acquisitions
Vivek Ghosal Georgia Institute of Technology; Center for Economic Studies and Ifo Institute for Economic Research (CESifo)
D. Daniel Sokol University of Florida – Levin College of Law; University of Minnesota School of Law; George Washington University Law School Competition Law Center
May 1, 2013
University of Minnesota Law School, Legal Studies Research Paper Series, Paper No. 13-21
Abstract:
Firms operate under a wide range of rules and regulations. These include, for example, environmental regulations (in which some industries have increased regulatory exposure) and finance and accounting (where all industries have reporting requirements). In other areas, such as antitrust cartels, enforcement is unregulated and antitrust leaves the market as the default tool to police against anti-competitive behavior. In all of these areas, detection of non-compliance by a firm can result in significant penalties. This issue of non-compliance has implications in the merger and acquisitions (M&A) context. In a transaction between an acquiring firm (buyer) and a target firm (seller), there is asymmetric information about the target’s quality. In our framework, we link a target’s quality directly to the strength of its regulatory compliance. In an M&A transaction, an acquirer seeks information about the target’s compliance, as a compliance failure may result in substantial penalties and sanctions, post-acquisition. In the presence of quality (compliance) uncertainty about target firms, low quality targets can masquerade as high quality. This would tend to give rise to a M&A market with Lemons-like characteristics, resulting in low transactions prices and dampening of M&A activity. We examine how M&A transactions in such regulatory areas – environmental, finance and accounting, and antitrust compliance problems – might function to alleviate quality uncertainty.
May 6, 2013 Leave a comment
Classification Shifting Using the ‘Corporate/Other’ Segment
Bradley E. Lail Baylor University
Wayne B. Thomas University of Oklahoma – Michael F. Price College of Business
Glyn J. Winterbotham Winthrop University
April 26, 2013
Accounting Horizons, Forthcoming
Abstract:
In this paper, we examine management’s use of the “corporate/other” segment to mask the true performance of operating (or core) segments. The corporate/other segment represents firm-wide expenses not allocated to core segments. We find that managers take advantage of vague cost allocation requirements to shift expenses between the corporate/other segment and core segments. Specifically, in the presence of agency problems (i.e., transfer of resources to underperforming segments), our evidence is consistent with expenses being shifted from core segments to the corporate/other segment. This shifting increases the reported performance of underperforming core segments. In addition, when proprietary concerns are high (i.e., operations in less competitive industries), we find evidence consistent with corporate/other expenses being shifted to core segments. By shifting expenses to core segments, core profits are concealed when proprietary motives are present. Our research contributes to a growing literature on earnings manipulation through expense shifting (rather than accrual manipulation or real activities management).
May 6, 2013 Leave a comment
Susan M. Young Fordham University
Emma Y. Peng Fordham University – Accounting Area
April/May 2013
Journal of Business Finance & Accounting, Vol. 40, Issue 3-4, pp. 399-437, 2013
Abstract:
This paper provides a comprehensive exploration of the types of accounting fraud committed by firms over the period 1995–2009. Using detailed data from US SEC Accounting and Auditing Enforcement Releases (AAER), we examine the likelihood and timing of analyst coverage decisions and recommendation revisions related to fraud firms versus firms without accounting fraud. We find that analysts have a higher probability of taking the more severe action of dropping coverage rather than only revising down recommendations for firms with any type of accounting fraud and also for specific egregious types of accounting fraud. Through the use of competing hazards models, we also find that accounting frauds and their egregiousness are positively (negatively) associated with the timeliness of the analysts’ action to drop coverage (revise only). Overall, we find that analysts’ actions may be useful in determining the occurrence of accounting fraud prior to the public announcement of the fraud.
May 6, 2013 Leave a comment
Is the Decline in the Information Content of Earnings Following Restatements Short-Lived?
Xia Chen Singapore Management University
Qiang Cheng Singapore Management University
Alvis K. Lo Boston College
May 1, 2013
Singapore Management University School of Accountancy Research Paper No. 1
Abstract:
Prior research finds that the decline in the information content of earnings after restatement announcements is short-lived and that the earnings response coefficient (ERC), the proxy for the information content of earnings, bounces back after three quarters. We re-examine the persistence of the drop in the ERC after restatement announcements using a more comprehensive and recent sample of restatements. We find that material restatement firms experience a significant decrease in the ERC over a prolonged period – close to three years after restatement announcements. In contrast, other restatement firms experience a decline in the ERC only for one quarter after restatement announcements. In cross-sectional analyses, we find that among material restatement firms, those that are subject to more credibility concerns and those that do not take prompt actions to improve reporting credibility are associated with a longer drop in the ERC than others. Lastly, we reconcile our findings with prior studies. Our analyses indicate that using a potentially more powerful proxy for material restatements and imposing less restrictive sampling requirement help increase the power of the tests to detect the long-run drop in the ERC.
May 6, 2013 Leave a comment
Using MD&A to Improve Earnings Forecasts
Khrystyna Bochkay Rutgers, The State University of New Jersey – Rutgers Business School at Newark & New Brunswick
Carolyn B. Levine Rutgers, The State University of New Jersey – Rutgers Business School at Newark & New Brunswick
April 17, 2013
Abstract:
We estimate and compare quantitative and text-enhanced earnings forecasting models to evaluate the extent to which MD&A disclosures improve earnings forecasts. Incorporating MD&A disclosures into forecasting models significantly improves forecasting accuracy. The gains in accuracy are much greater following regulatory reforms, providing some of the first large-sample empirical evidence on the success of recent MD&A regulatory actions. The MD&A section is less informative between 2007-2009, particularly for those firms hardest hit by the financial crisis (i.e., firms with low cash and large changes in performance). Further, we find that text improves forecast accuracy most for firms in the consumer staples sector, firms with low profit margins, large changes in performance, high political and/or legal costs and high complexity. Last, we find that models enhanced by MD&A disclosures are generally less accurate than analysts’ consensus forecasts for large and medium sized firms, but equally accurate for small firms.
May 5, 2013 Leave a comment
Warren Buffett and Charlie Munger’s Advice for a Good Life
By Matt Koppenheffer | More Articles | Save For Later
May 4, 2013 | Comments (0)
“Find what turns you on.” – Warren Buffett
Get your head out of the gutter. When Buffett spoke those words at Berkshire Hathaway‘s (NYSE: BRK-A ) (NYSE: BRK-B ) annual meeting, he was responding to a question about what advice he’d give to himself if he could go back 50 years and give himself some advice. And with that quip, Buffett was referring to finding something that “turns you on” to do for a living. Buffett’s right-hand man Charlie Munger didn’t disagree. He piled on: “You gotta work where you’re turned on.” Not that that comment did anything to squelch the innuendo.
It’s hard to argue the importance of that if you’re trying to live a satisfied life. But this isn’t just solid life guidance, it’s also a reminder of an critical aspect of Berkshire: Just how much Buffett and Munger love what they do. There’s a reason that Fortune‘s Carol Loomis titled her most recent book about Buffett “Tap Dancing to Work.” Is it warm and fuzzy? Sure it is, but it’s also a big reason why shareholder have, over the years, seen such incredible returns from Berkshire Hathaway. Buffett and Munger love what they do and that allows them to think in terms of the long term and what will drive long-term success. During the meeting, both executives opined on how big of an advantage it is that they don’t have outside forces — read quarterly earnings pressures — weighing on them. Since it’s not about a bigger bonus or more stock options, they’re free to make tough decisions — like not writing unprofitable insurance business — rather than always putting the pedal to the metal. As shareholders look ahead to whomever will succeed Buffett and Munger, this shouldn’t be overlooked. It’ll be great to get someone in there who’s tack-smart, cool-headed, and value-oriented at heart. But over the long term, the transition will work best if the current duo is able to find somebody that simply loves the job as much as they do (or, at least, close).
May 5, 2013 Leave a comment
Here’s What Buffett’s Saying at the Berkshire Annual Meeting
By Matt Koppenheffer | More Articles | Save For Later
May 4, 2013 | Comments (0)
Before Warren Buffett and Charlie Munger even sat down at Berkshire Hathaway‘s (NYSE:BRK-A ) (NYSE: BRK-B ) annual meeting, the annual “Berkshire video” showed a cartoon version of Buffett and Munger dancing to “Gangnam Style.” With that under your belt, it’s hard to feel that your day didn’t start off right. But that was just the warm-up for the much-awaited Q&A session with Buffett and Munger. Here is a look at some of what Buffett and Munger have been saying so far.
On first quarter earnings. Buffett noted that closures and persistentcy in GEICO policies. He called this trend “solid gold.”
On challenging Ariel Hsing in ping-pong at Borsheims. Buffett: “If you’re courageous you’ll show up with your paddle and you’ll look like an idiot.”
On trailing the market. Buffett conceded that if the market continues on the trajectory it’s on so far in 2013, Berkshire could trail the S&P 500 (SNPINDEX: ^GSPC ) for a five-year period for the first time. Buffett said that it “won’t be a happy day, but won’t totally discourage us.” Munger chimed in with: “We’re slowing down, but it’ll still be very pleasant.”
On selling things to Berkshire shareholders. A shareholder asking a question thanked Buffett for letting everyone in early (it was cold and raining in Omaha this morning). Buffett quipped: “If we had a company that sold coats we would have left you out there.”
On selling Berkshire shares. To head off any rash moves by family members, Munger warned: “I want to say to the many Mungers in the audience, don’t be so stupid as to sell these shares.” Buffett quickly followed up with: “That goes to the Buffetts too.”
On negative implications of the H.J. Heinz (NYSE: HNZ ) deal. A questioner wondered whether Berkshire’s preferred position in the Heinz deal and the high price paid suggested that Buffett isn’t optimistic about the returns available in the market. Buffett responded simply that that was “totally inaccurate.” Munger later added on: “As you said, the report was totally wrong.”
On hiring executives from AIG (NYSE: AIG ) . Buffett pointed out that “these are people that reached out to Berkshire, in the case at least one of them had reached out numerous times in the past” and added that “we’ve had a number of people reach out since the announcement was made.” That’s a big positive for Berkshire since it’s looking to aggressively build out its commercial insurance capabilities.
May 5, 2013 Leave a comment
May 3, 2013, 2:57 p.m. ET
Where Were You in 1979?
The final year of the 1970s witnessed epochal shifts in power that ushered in the modern world.
By Jonathan Karl
The 1970s seem destined to be a justly forgotten decade—a time of disco, stagflation and little of the social upheaval that defined the previous decade or the epic global changes of the one that followed. But Christian Caryl sees more than malaise when he looks at the 1970s; he sees one of history’s great turning points. “With the passage of time,” Mr. Caryl writes in “Strange Rebels: 1979 and the Birth of the 21st Century,” “the 1970s begin to appear less like a sideshow than the main event.”
Strange Rebels
By Christian Caryl
Basic, 407 pages, $28.99
As the title of Mr. Caryl’s book suggests, his focus is 1979—a year that brought Iran’s Islamic revolution, the siege of the U.S. embassy in Tehran, the Soviet invasion of Afghanistan, and the emergence of four leaders who, he argues, changed the course of history: Margaret Thatcher, the Ayatollah Khomeini, Deng Xiaoping and Pope John Paul II.
It is hard to imagine figures as different as these or a year quite as grim as 1979, but suspend your disbelief for a moment. Mr. Caryl makes a fairly compelling case that this was a year when history made a sharp turn and that each leader set in motion the seismic changes that came to shape our world today: the fall of the Soviet Union, the rise of China and the emergence of radical Islam. In 1979, Mr. Caryl says, “the twin forces of markets and religion, discounted for so long, came back with a vengeance.”
In January of that year, China’s new paramount leader, Deng Xiaoping, made a nine-day visit to the United States. He was not technically China’s head of state (he never held that title), but President Jimmy Carter welcomed him to the White House with a state dinner. At the dinner, Deng found himself seated at a table with actress Shirley MacLaine, who had spent time in China working on a documentary extolling the virtues of Maoism during the bloody Cultural Revolution. She told Deng how wonderful it had been for her to meet a professor plowing a field on a collective farm. “Deng looked at her scornfully . . . ,” Mr. Caryl writes. “Professors, he told her, should be teaching university classes, not planting vegetables.” Read more of this post
咬定青山不放松，立根原在破岩中。 千磨万击还坚劲，任尔东西南北风。
