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At the age of 88, American political giant and two-time former Secretary of Defense Donald Rumsfeld is dead. Donald Rumsfeld, the two-time defense secretary and one-time presidential candidate whose reputation as a skilled bureaucrat and visionary of a modern U.S. military was unraveled by the long and costly Iraq war, died Tuesday. He was 88. In a statement Wednesday, Rumsfeld’s family said he “was surrounded by family in his beloved Taos, New Mexico.” President George W. Bush, under whom Rumsfeld served as Pentagon chief, hailed his “steady service as a wartime secretary of defense — a duty he carried out with strength, skill, and honor.” Regarded by former colleagues as equally smart and combative, patriotic and politically cunning, Rumsfeld had a storied career in government under four presidents and nearly a quarter century in corporate America. June 30 - Associated Press If you're a journalist looking to know more about Rumsfeld's legacy and impact on American foreign policy, then let our expert help. Professor of Political Science and International Affairs Jason Davidson is an expert in American foreign and security policy, and international security. His study, The Costs of War to United States Allies Since 9/11, recently received an onslaught of media attention, landing in Forbes, The Guardian and Daily Mail. If you’re looking to arrange an interview with Dr. Davidson, simply click on his icon now to arrange an interview today.
Is a four-day workweek on the horizon?
Is Thursday about to become the new Friday? UConn’s Robert Bird spoke with the Washington Post about the possibility of a four-day workweek and what might be the driving force behind it: New Zealand's and Finland's prime ministers have floated the idea of a four-day workweek. The U.K. Labour Party in 2019 campaigned on the idea that workweeks would be shortened in the next decade. A number of employers have also begun to move in that direction. On Tuesday, Kickstarter announced it would reduce employees' hours without reducing pay next year, reported the Atlantic. Microsoft in Japan instituted a temporary three-day weekend in August 2019 - which resulted in a reported 40% increase in productivity, according to the company, and reduced electricity consumption and paper printing. "A five-day workweek was never a given," Robert Bird, a professor of business law at the University of Connecticut, told The Washington Post, adding that unions fought hard to scrap the six-day workweek norm in the early 1900s. "A five-day workweek was never something that was unchangeable or immutable." "Younger people are demanding more out of their work environment than just a paycheck," he said. "They want to work with someone who believes in their values - and the expression of a four-day workweek sends a signal that the company cares about work-life balance in a significant and meaningful way." June 25 – Washington Post It’s an interesting concept, and one that will be getting a lot of attention. If you are a journalist looking to cover this topic, let our experts help with your stories. Robert Bird is an expert in the areas of corporate compliance, employment law, legal strategy, business ethics, and corporate governance. Professor Bird is available to speak with media – simply click on his icon now to arrange an interview today.
Climate Change-Related Natural Disasters Impact Short-Lived Assets and Interest Rates
For decades, scientists across the globe have warned about the effects of climate change. Given that these changes—global warming, rising sea levels—happen over time and that their disastrous results may not be obvious for decades, studying the effects of climate change on financial markets has posed a problem. According to Christoph Herpfer, assistant professor of finance, Goizueta Business School, most of the existing literature that deals with the effect of climate change on financial markets considers “indefinitely lived assets,” such as owning stock or owning a home—assets that “don’t have an expiration date,” explained Herpfer. To evaluate the effect of climate change in the long run on these assets then requires discount models—ways to value something today based on what it could be worth decades from now. Herpfer, a banking and corporate finance specialist, studies short-lived assets that, on average, expire after 4.5 years. Herpfer wondered if there could be “an alternative channel in which climate change already impacts companies today,” he explained. One that didn’t have to deal with all the “challenges associated with long run discount rates,” he added. In “The rising tide lifts some interest rates: climate change, natural disasters, and loan pricing,” Herpfer and his colleagues—Ricardo Correa, deputy associate director, Board of Governors of the Federal Reserve System, Ai He, assistant professor of finance, University of South Carolina, and Ugur Lel, associate professor, Nalley Distinguished Chair in Finance, University of Georgia, Terry College of Business—consider this question by studying corporate borrowing costs. In 2020, the paper received the best paper award at the Boca Corporate Finance and Governance Conference. The foursome had a novel idea: In recent years, there has been scientific consensus that climate change fuels natural disasters. So Herpfer and his fellow authors wondered if financial institutions took climate change-amplified natural disasters into account when pricing short-term loans. Their answer was, unequivocally, “yes.” Their work and research is captured in a recent article in Emory Business - it's attached and well worth the read. If you're a journalist looking to know more - then let us help. Christoph Herpfer is an assistant professor of finance at Goizueta Business School. He is also a financial economist working at the intersection of banking, law, and accounting. Christoph is available to speak with media about this research - simply click on his icon now to arrange an interview today.
Why is the FDA funded in part by the companies it regulates?
In a recent piece published in The Conversation, C. Michael White, Distinguished Professor and head of the Department of Pharmacy Practice at the University of Connecticut shares his perspective on the Food and Drug Administration and its past and current role and influence in America. “The Food and Drug Administration has moved from an entirely taxpayer-funded entity to one increasingly funded by user fees paid by manufacturers that are being regulated. Today, close to 45% of its budget comes from these user fees that companies pay when they apply for approval of a medical device or drug. As a pharmacist and medication and dietary supplement safety researcher, I understand the vital role that the FDA plays in ensuring the safety of medications and medical devices. But I, along with many others, now wonder: Was this move a clever win-win for the manufacturers and the public, or did it place patient safety second to corporate profitability? It is critical that the U.S. public understand the positive and negative ramifications so the nation can strike the right balance.” May 13 - The Conversation The entire piece is a captivating read and a remarkably interesting topic with regards to accountability, transparency, and the influence big pharma holds across many levels of the United States government. And if you are a journalist looking to cover this topic, then let us help. Dr. White is available to speak with media -- click on his icon now, to arrange an interview today.
Telecommuting Expert Predicts Permanent Changes to Work After the Pandemic
With the sudden shift to remote work brought about by the COVID-19 pandemic, many corporations have had to quickly assemble a patchwork of policies, procedures, and technologies. Timothy Golden, a professor in the Lally School of Management at Rensselaer Polytechnic Institute, foresees that many companies will adopt remote work on a permanent basis, and need to devote considerable attention and focus to systematically assessing the lessons they have learned. Golden is a leading expert in the field of telecommuting, telework, and the relationship between technology and managerial behavior. With more than 20 years of experience studying the impact of remote work on corporations and individuals, Golden’s insights about the future are rooted in a deep understanding of the history of remote work. In the wake of the pandemic, Golden envisions companies adding a Chief Remote Work Officer, who is responsible for maintaining the effectiveness of the company’s remote work program, to their C-Suite. This person will likely be a boundary spanner who garners resources and support from across silos in the company to ensure remote work remains effective in its long-term implementation. With the continuing importance of remote work, the Chief Remote Work Officer will need a seat at the executive table to ensure it receives the attention it needs. With remote work becoming even more firmly engrained in corporate cultures, Golden expects changes in the ways employees interact. With large numbers of employees continuing to work remotely, employees will expect support for this work mode in many forms — from promotion opportunities and performance metrics, to mentoring and technology support. Another implication of remote work going forward is that the demand for real estate will change, and companies will see real estate as platforms for collaborative work, rather than simply for work. With a significant permanent portion of the workforce likely to remain as remote workers, companies will be able to scale back their real estate yet also reallocate existing spaces to ones that are used for more collaborative interactions, rather than simply offices for individualized working. Golden is available to speak about these and other aspects of the future of remote work, as well as specific lessons he has learned through decades of studying this topic.
A federal budget is coming soon – and as Canada is still stuck in the grips of COVID-19 and the thin ice its economy is still walking on, it is expected sooner or later, the tab will have to be paid and that bill will be satisfied with taxes. Recently, Don Scott, Director of Tax Services at Welch wrote an insightful piece where he lends his many years of wisdom, experience and perspective to share what he thinks will be how Canada’s federal government digs itself out of what has been more than a year of bills and bailouts. In his piece, he looks at whether or not the government will raise such revenue streams as: corporate and business tax rates personal income taxes capital gains principle residence redemptions and even the GST It’s required reading for anyone interested in the finances of the federal government – and if you are a journalist looking to cover this topic, then let us help. Don Scott is the Director of Tax Services at Welch and is a nationally recognized expert for his extensive knowledge in the area of Personal and Corporate Tax Planning. Don is available to speak with media regarding the upcoming budget, to arrange an interview today – simply click on his icon now.
Why customers hold the key to a company’s true valuation
When determining a fair valuation for a company—especially in anticipation of an initial public offering (IPO)—investors often rely heavily on “top down” approaches focusing primarily on traditional financial measures to do so. But what if this approach doesn’t paint the full picture? Daniel McCarthy, assistant professor of marketing at Emory’s Goizueta Business School, is building the case that augmenting traditional data sources with customer behavior data gives investors a more accurate company valuation. For the past several years, McCarthy and Peter Fader, professor of marketing at the Wharton School of the University of Pennsylvania, have worked to refine a customer-driven investment methodology they created. “Customer-based corporate valuation (CBCV) simply brings more focus to how individual customer behavior drives the top line,” they explained in “How to Value a Company by Analyzing Its Customers,” an article published in the Harvard Business Review (HBR) earlier this year. “This approach is driving a meaningful shift away from the common but dangerous mindset of ‘growth at all costs,’ towards revenue durability and unit economics—and bringing a much higher degree of precision, accountability, and diagnostic value to the new loyalty economy.” Fader, McCarthy’s PhD advisor while he was at Wharton, had done some of the seminal work on forecasting customer shopping/purchasing behaviors. This helped build baseline expertise for how one could go about the customer-level modeling. McCarthy recognized that this behavioral modeling could be put to good use in a financial setting, if done the right way. “There was this untapped source of intellectual property that’s been accumulating within marketing over the last 30 years,” McCarthy said. While other academics have done some conceptual work in the area, none, McCarthy noted, had done so in a way that was consistent with how financial professionals go about performing corporate valuation. McCarthy and Fader merged these well-validated customer-level models with standard corporate valuation methods, then put their resulting valuation tool head-to-head with alternative approaches. They found that their CBCV model subsequently outperformed. A full article on this subject is attached, within it, you will find key CBCV highlights such as: Using unit economics to more accurately predict revenue forecasts Gaining access to the right data The CBCV model is also good for managers and for customers Working to have publicly traded companies adopt CBCV McCarthy’s work on the CBCV methodology has earned him a number of awards, including the MSI Alden G. Clayton, American Statistical Association, INFORMS, and the Shankar-Spiegel dissertation awards. If you are a journalist covering this topic or if you want to learn more about this work or customer-based corporate valuation – then let our experts help. Daniel McCarthy is an Assistant Professor of Marketing at Emory University's Goizueta School of Business where his research specialty is the application of leading-edge statistical methodology to contemporary empirical marketing problems. If you are looking to contact Daniel – simply click on his icon now to arrange an interview today.
Why are U.S. corporate boards under-diversified?
Research tells us that firms with diverse workforces generally outperform those that do not. And in recent years, corporate America has taken significant strides towards greater heterogeneity in the employee base. But a problem remains at the top. U.S. boardrooms remain overwhelmingly Anglo Saxon and male. No less than 81 percent of the Standard & Poor (S&P) 1500 Index directors in America today are white men. White women account for 11 percent, while ethnic minority men make up 6 percent. Meanwhile, female minority board members account for just 2 percent of the total. For businesses, this is becoming problematic, not least because institutional investors and regulators like the Securities and Exchange Commission have started asking firms to open up about their processes in selecting board members. Where diversity is a criterion, firms are required to be transparent about specifications and frameworks. Shedding light on this issue is new research from Grace Pownall, professor of accounting, and Justin Short, assistant professor of accounting, at Emory University’s Goizueta Business School. Together with Zawadi Lemayian of Washington University, they parsed 12 years of data on gender, ethnicity, and salaries from the S&P 1500 to build a composite picture of who’s who and who’s paid what in U.S. boardrooms. What they found points to a systemic shortage of female and minority executives making it onto shortlists for board appointments. But that’s not all. Once women and minority men do make it onto the board, there’s another roadblock waiting for them: they are not getting promoted at the same rate as their white, male counterparts. There seem to be two complex dynamics at play, said Short: a glass ceiling effect hampering the upward trajectory of Black, female, and other minority executives, and what he and his co-authors call “myopic” bias on the part of corporate America. “We developed two hypotheses that might explain what’s behind the lack of diversity on boards,” explained Short. “The glass ceiling hypothesis comes from what we see as a shortfall of women and ethnic minorities in the workforce relative to white men—so the theory here is that these groups just aren’t getting promoted to the point where they would be considered for board positions.” “The alternative hypothesis we worked on was that there might actually be a plentiful supply, but that companies just don’t see directors from different backgrounds as being as valuable in the same way,” he said. “And we would put this down to some kind of institutional myopia or bias at the very highest echelons of business.” To put these hypotheses to the test, Short and his colleagues first collected demographical data on American board members from a database compiled by Institutional Shareholders Services. Here they were able to determine the gender and ethnicity of individuals. They also ran a simple statistical regression on salaries using data from S&P. Then they compared the two. “Economic theory tells us that if there’s a high demand for diverse directors—women and ethnic minorities—and there’s a low supply of them, then these directors will be able to command higher salaries than others,” said Short. “It’s a simple case of supply and demand, and minorities will come at a greater premium.” Looking at the S&P 1500 data, they found that female and minority directors were indeed getting paid more on average than white male counterparts in other companies. And when they analyzed this more closely, Short and his co-authors found that these salaries were in general being paid by larger, more successful firms. “We can see that women and minorities are commanding higher compensation than the average white male director across the S&P universe of 1500 companies, and it’s the bigger, better paying firms that are hiring them,” Short said. “So that tells us that the top companies are proactively trying to build diversity in their boardrooms. At the same time, it shows there is a deficit of supply in this talent pool—the so-called glass ceiling dynamic.” To understand whether bias or institutional myopia might also be limiting the prospects of Black, female, and ethnic directors, Short et al. also looked at differences in compensation within the same company, and here they found something striking. While they made more on average than the typical white male director in U.S. firms, minority directors were being paid around 3 percent less than their direct counterparts – the white male directors on the same board. All this scrutiny begs the questions: What is going on in the American boardroom? And why is there still such a stark lack of diversity in the upper echelons of business in the U.S. today? “This tells us something important,” said Short. “Once these directors make it to the board, for most of them that’s it. They don’t advance or achieve promotion at the same rate.” This could be due to bias or what Short calls a Rolodex effect: “Maybe it’s because they didn’t go to the same school as the chairman of the board, or weren’t connected socially in the same way, so they don’t appear in the Rolodex of candidates with right or familiar credentials to get promoted within the board,” he said. “We know it’s not about hard skills or aptitudes because the data shows us that women and minority directors typically hold more qualifications than their counterparts. But for whatever reason, once they are on the board, they fail to advance in the same way as white men.” Interestingly, Short and his colleagues found that there was a very small number of women and minority directors sitting on the boards of multiple companies in the U.S. “Pulling it all together, we see that there’s a generalized shortage of women and ethnic group candidates in the U.S.,” Short said. “Successful companies are proactively on the lookout for them and offer higher compensation to attract them. “But there seems to be a glass ceiling effect acting as a bottle neck for talent. We also see that minority directors become a bit stuck once they’re on a board. The upward momentum tails off relative to their white, male colleagues. This could be due to bias or myopic thinking.” All of this should provide rich food for thought for the most senior decision-makers in U.S. enterprises, according to Short and his co-authors. With the pressure on to drive board-level diversity in corporate American, leaders need to be cognizant of the roadblocks or cut-off points to tie to ethnicity and gender. “Diversity is something we urgently need to enable and nurture in the United States. Without diversity, creativity and innovation can stall, and in business you run the risk of deferring to group think—sourcing ideas and perspectives from the same small pool of shared experience or expertise,” said Short. “It’s encouraging to see that diversity has increased over time and the largest companies are proactive. But there are still vast gaps of representation on the board compared to the workforce. There’s still work to be done because diversity in American business should be commonplace.” If you are a journalist looking to cover this research or to learn more about the diversification of corporate boards in America, then let our experts help. Grace Pownall, professor of accounting, and Justin Short, assistant professor of accounting, at Emory University’s Goizueta Business School are both available for interviews; simply click on either expert's icon to arrange a time today.
This is a business imperative, not a tech issue, says Brunswick’s Cybersecurity and Privacy team Cyber threats are generating some scary statistics: $400 billion a year in losses from attacks, with some larger businesses experiencing more than 12,000 attacks each year. But there is also good news. Companies are recognizing that cybersecurity is not a technology concern but rather a critical business issue and one they are preparing to deal with. To address the significant business and reputational risks involved, companies are using a cross-functional, top-to-bottom approach, one that treats cybersecurity as a business imperative. Many companies are beginning to strengthen their “human firewall,” creating a business culture where every employee sees cybersecurity as their responsibility. People, not software, are often the weakest link in a security system and that is a problem no software patch will solve. Regulation is growing increasingly complex and governments’ expectations differ from those of companies and consumers. The rules are murky and lag far behind the technology – and the threat. To deal with competing and at times conflicting requirements, some companies are moving beyond the minimum demanded of them, and aiming for a higher standard. To be effective, a company’s cybersecurity program needs to weave these threads into its underlying business plan. Cybersecurity is more than just a strong defense, more than compliance. It must be a part of corporate culture. It represents an opportunity to differentiate yourself from your competitors, increase the efficiency of your operations and earn a greater level of trust from customers, shareholders and the community.
COVID-19 has raised the stakes for boards, argues Brunswick’s Paddy McGuinness, former UK Deputy National Security Adviser. We now live with COVID-19. Fewer business leaders are making the mistake of talking about “post-COVID” or “when this is over.” The better of them have factored in COVID-19 related constraints to their medium-term plans and are even thinking about how the world may change in the long-term. They are building capacity to take advantage of an early recovery within months, yet they are modeling and encouraging grit for current and indeed harder conditions to last much longer. In the past, when health emergencies—say the Spanish Flu pandemic of a century ago—subsided, there was a greater return to economic normality than had been expected during the crisis. Extreme events often heighten or even distort our perception of wider risks. That old journalistic cliché “one thing is certain, nothing will be the same again” is rarely true. But the pandemic has created the expectation that businesses will be resilient—that they will be able to respond to an event and recover to the state prior to the event, incorporating the lessons learned into business practice. Many business leaders feel they have not done too badly responding to a once-in-a-hundred-years event. Business Continuity Plans (BCPs), which were understandably sketchy for pandemics, were pulled out of second-line risk management and owned and improved in real-time by executive committees. The transition to remote working and, at least in Asia and some of Europe, the gradual return to offices again, has been managed. Services and even vital production have been maintained. Leaders have absorbed the personal and collective strain of this. Good reason then for some satisfaction as they delegate certain COVID-19 responses and focus on the economic tsunami that follows the pandemic. The public seems to largely agree with business leaders’ assessments. While many national and scientific leaders find themselves beset by “blamestorming,” corporate executives have been given more slack. They weren’t expected to have foreseen a pandemic. Their sometimes scrabbling responses are understood. However, behind this lucky pass lurks an expectation that businesses will now be more prepared for crises and foreseeable risks. Resilience cannot be relegated to BCPs and traditional risk-management structures. It is categorically a board issue—regulators, lawyers, politicians and the public say so. The reputations of individual board members and the collective are at stake. Think how fast leaders have been expected to respond to the issues raised by the Black Lives Matter movement. Alacrity will be required. The speed and scale of decisions in response to the pandemic leaves board committees playing catch up to assure themselves that risks have been managed. The move to working from home has been rapid, so too the digitization of the business. Some see these as new, streamlined ways of working, yet the negative consequences are not yet fully apparent. Working from home, for instance, is attractive to some employees as well as chief financial officers, who may relish the chance to reduce fixed costs. Concerns about the impact on the coherence of the business’s culture, its productivity and innovation, the security of data held at home, hardships for those in difficult home conditions, and, indeed, the needs of the younger demographic who seem to favor a return to the office, need to be given due consideration. It may be a case of “decide in haste, repent at leisure.” Resilience is categorically a board issue—regulators, lawyers, politicians and the public say so. The reputations of individual board members and the collective are at stake. Boards also need assurance that the business has regained its balance and can manage parallel or interrelated crises. In recent weeks we have been helping several clients respond to major cyber events unrelated to the COVID-19 outbreak. They have probably needed more external support than otherwise because their leadership capacity was inevitably denuded by pandemic response. And they have benefitted from us already knowing each other and having experience of how to work together in crisis. After the Great Financial Crash there was a heavy focus on balance-sheet resilience and having the requisite finance skills on boards. Business leaders are now beset by advice on the heightened obligation to be resilient in much a broader sense of the word. Regulators, lawyers and risk consultants are sharing checklists of factors for executive committees to take into account when managing risks and for boards to oversee. The challenge here is defining what changes your specific business needs and how to actually bring those about. Shareholders will be expecting a judicious move away from “just in time” systems to ones that can endure foreseeable risks. This isn’t just about potential legal liability or reputational risk. This is about setting your business culture for success. Undermanage risks and the business is wide open to damage from foreseeable shocks with all the loss of confidence and capability that follows. Overmanage and the business losses its competitive edge just when there is opportunity in the recovery. In order to track broader resilience, boards and their committees will need access to a wider set of skills and insight. Board membership emerges as an obvious area of focus. Yet each board will take more time and belonging to too many—“over boarding”—may well be unacceptable. Risk methodology and information flows will also have to be reviewed, alongside how to strengthen board members’ awareness and skills. Before the pandemic, chairs and CEOs were already wrestling with this for their difficult-to-price risks, such as data, technology risks and cyber. Individual experts on boards created siloed responsibility for what should have been a shared risk. A focus on process and method often led to a focus on the management, rather than genuine oversight of, risks. External advice didn’t always help (as we have learned from the plethora of competing advice around COVID-19). No single intervention will meet the new standard for resilience. Nor will simple prescription. A broader and more articulated approach is required if governance is to maintain stakeholder confidence and corporate reputation.
