Finance
(View the letter as it appeared in the Financial Times)
November 9, 2010
The Basel III bank-regulation proposals that G20 leaders will discuss fail to eliminate key structural flaws in the current system. Banks’ high leverage, and the resulting fragility and systemic risk, contributed to the near...
Since the 2008 market crash, banking interests and economists have clashed over how much of their operations banks should fund with equity as opposed to debt. Bankers and others often say that, "equity is expensive." By contrast, a recent paper, coauthored by three faculty of the Stanford Graduate...
STANFORD GRADUATE SCHOOL OF BUSINESS—Over the past decade, companies increasingly have been called on to create more value for their owners. Led by aggressive institutional shareholders like the California Public Employees Retirement System and fueled by widely published reports of overcompensated...
STANFORD GRADUATE SCHOOL OF BUSINESS—You might think that the head of state of a global power would be an unlikely individual to jump into a technical debate on accounting standards. Yet in 2003 French President Jacques Chirac did just that—taking an active role in voicing concern regarding the...
STANFORD GRADUATE SCHOOL OF BUSINESS—Major accounting fraud aside, there are few business activities the news media seem to delight in exposing as much as excessive executive compensation. But recent research shows that these types of headlines might not make all that much difference in how...
Despite growing public skepticism over how useful financial statements are in providing information to investors, researchers at Stanford's Graduate School of Business have found that the value of financial ratios for predicting bankruptcy has not declined significantly over time.
Professors...
STANFORD GRADUATE SCHOOL OF BUSINESS—Data on intangibles such as customer satisfaction can yield significant forecasts of earnings only when they are analyzed in conjunction with financial statistics, according to recent research. Accounting Professor Madhav Rajan used a collection of wide-ranging...
STANFORD GRADUATE SCHOOL OF BUSINESS—For years, return on investment (ROI) and related financial accounting ratios have been widely used as key measures of business profitability. But what three accounting professors from the Stanford Graduate School of Business recently discovered was that,...
STANFORD GRADUATE SCHOOL OF BUSINESS—How should companies price goods that they ship between their own divisions correlated companies?
Internationally, that quandary confronts the producers of nearly half of all U.S. imported goods, a third of all U.S. exports, and a huge proportion of global...
By Anat Admati and Martin Hellwig
An edited version of the following text appeared as an op-ed in Financial Times, June 3, 2011.
Full text version appeared online in "Martin Wolf's Economists' Forum," FT.com, June 6, 2011.
Bankers on both sides of the Atlantic are lobbying furiously against...