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- Faculty Publications (218)
- August 2013
- Background Note
A Simple Free Cash Flow Valuation Model
Explores some of the issues involved in valuing cash flow streams. A simple model is presented that reveals the effect on value of changing assumptions about the appropriate discount rate, the level of profitability, the growth rate of sales, the asset intensity ratio,...
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Sahlman, William A. "A Simple Free Cash Flow Valuation Model." Harvard Business School Background Note 814-027, August 2013.
- 2013
- Article
Inflated Applicants: Attribution Errors in Performance Evaluation by Professionals
By: S. A. Swift, D. Moore, Z. Sharek and F. Gino
When explaining others' behaviors, achievements, and failures, it is common for people to attribute too much influence to disposition and too little influence to structural and situational factors. We examine whether this tendency leads even experienced professionals...
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Keywords:
Evaluations;
Correspondence Bias;
Selection Decisions;
Attribution;
Prejudice and Bias;
Selection and Staffing;
Decision Choices and Conditions;
Performance Evaluation;
Cognition and Thinking
Swift, S. A., D. Moore, Z. Sharek, and F. Gino. "Inflated Applicants: Attribution Errors in Performance Evaluation by Professionals." e69258. PLoS ONE 8, no. 7 (July 2013).
- 2012
- Chapter
Firing Your Best Customers: How Smart Firms Destroy Relationships Using CRM
By: Jill Avery and Susan Fournier
With incidences in the 20%–25% range, the practice of firing customers has become increasingly attractive as firms try to maximize the lifetime value of their customer portfolios. This chapter traces the relationship trajectory of a 30-year customer of Filene's...
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Keywords:
Brands;
Brand Management;
CRM;
Customer Relationship Management;
Customer Focus and Relationships;
Customers;
Marketing;
Brands and Branding;
Marketing Communications;
Marketing Strategy;
Consumer Products Industry
Avery, Jill, and Susan Fournier. "Firing Your Best Customers: How Smart Firms Destroy Relationships Using CRM." In Consumer-Brand Relationships: Theory and Practice, edited by Susan Fournier, Michael Breazeale, and Marc Fetscherin, 301–316. Routledge, 2012. (Paperback edition published in 2013.)
- February 2013 (Revised November 2016)
- Case
Assured Guaranty
By: Robin Greenwood, Adi Sunderam and Jared Dourdeville
Nate Katz at Yokun Ridge Capital Management is evaluating an investment in Assured Guaranty, a municipal bond insurance company that is trading at a discount to book value.
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Keywords:
Value Investing;
Investments;
Valuation;
Insurance;
Behavioral Finance;
Financial Services Industry
Greenwood, Robin, Adi Sunderam, and Jared Dourdeville. "Assured Guaranty." Harvard Business School Case 213-100, February 2013. (Revised November 2016.)
- December 2012
- Case
Coca-Cola: Residual Income Valuation
By: Suraj Srinivasan, Beiting Cheng and Edward J. Riedl
The case illustrates the use of the residual income (also known as the abnormal earnings) valuation approach. Students are asked to provide a valuation of Coca-Cola Company using the residual income valuation methodology and understand how it maps into the discounted...
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Srinivasan, Suraj, Beiting Cheng, and Edward J. Riedl. "Coca-Cola: Residual Income Valuation." Harvard Business School Case 113-056, December 2012.
- Article
Agency Costs, Mispricing, and Ownership Structure
By: Sergey Chernenko, C. Fritz Foley and Robin Greenwood
Standard theories of corporate ownership assume that because markets are efficient, insiders ultimately bear all agency costs that they create and therefore have a strong incentive to minimize conflicts of interest with outside investors. We argue that if equity is...
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Keywords:
Business and Shareholder Relations;
Ownership;
Conflict of Interests;
Investment;
Valuation
Chernenko, Sergey, C. Fritz Foley, and Robin Greenwood. "Agency Costs, Mispricing, and Ownership Structure." Financial Management 41, no. 4 (Winter 2012): 885–914.
- November 2012
- Exercise
Coca-Cola: Residual Income Valuation Exercise
By: Suraj Srinivasan
The exercise illustrates the use of the residual income (also known as the abnormal earnings) valuation approach. Students are asked to provide a valuation of Coca-Cola Company using the residual income valuation methodology and understand how it maps into the...
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Keywords:
Business Analysis;
Valuation;
Residual Income Valuation;
Accounting;
Financial Accounting;
Financial Analysis;
Financial Statement Analysis;
Financial Statements;
Discounted Cash Flows
Srinivasan, Suraj, Beiting Cheng, and Edward J. Riedl. "Coca-Cola: Residual Income Valuation Exercise." Harvard Business School Exercise 113-056, November 2012.
- November 2012
- Teaching Note
Groupon (TN)
By: Sunil Gupta, Ray Weaver and Yien Hao Lock
On November 4, 2011, Groupon, a marketing services company that promoted local businesses by selling deeply discounted vouchers for their products and services, completed its initial public offering that valued the company at $17 billion. Within a year Groupon's share...
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- August 2012 (Revised August 2012)
- Case
HealthAllies (A)
By: Regina E. Herzlinger and Michael Sherman
This case describes a "do good and do well" firm that enables individuals to buy health care services at discounted prices. It delineates the characteristics of the uninsured and others who are the primary targets for the firm. "HealthAllies (B)" provides information...
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Keywords:
Entrepreneurship;
Health Care and Treatment;
Marketing Channels;
Demand and Consumers;
Commercialization;
Health Industry
Herzlinger, Regina E., and Michael Sherman. "HealthAllies (A)." Harvard Business School Case 302-019, August 2012. (Revised from original August 2001 version.)
- January – March 2012
- Article
Bond Risk, Bond Return Volatility, and the Term Structure of Interest Rates
By: Luis M. Viceira
This paper explores time variation in bond risk, as measured by the covariation of bond returns with stock returns and with consumption growth, and in the volatility of bond returns. A robust stylized fact in empirical finance is that the spread between the yield on...
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Keywords:
Bonds;
Volatility;
Forecasting and Prediction;
Interest Rates;
Inflation and Deflation;
Investment Return;
Risk and Uncertainty;
Currency Exchange Rate;
Cash Flow;
Stocks
Viceira, Luis M. "Bond Risk, Bond Return Volatility, and the Term Structure of Interest Rates." International Journal of Forecasting 28, no. 1 (January–March 2012): 97–117.
- Article
Entry into Platform-based Markets
By: Feng Zhu and Marco Iansiti
This paper examines the relative importance of platform quality, indirect network effects, and consumer expectations on the success of entrants in platform-based markets. We develop a theoretical model and find that an entrant's success depends on the strength of...
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Keywords:
Platform-based Markets;
Winnter-take-all;
First-mover Advantage;
Indirect Network Effects;
Video Game Industry;
Quality;
Network Effects;
Market Entry and Exit;
Digital Platforms;
Motion Pictures and Video Industry
Zhu, Feng, and Marco Iansiti. "Entry into Platform-based Markets." Strategic Management Journal 33, no. 1 (January 2012): 88–106.
- Article
Power, Competitiveness, and Advice Taking: Why the Powerful Don't Listen
By: L. P. Tost, F. Gino and R. Larrick
Four experiments test the prediction that feelings of power lead individuals to discount advice received from both experts and novices. Experiment 1 documents a negative relationship between subjective feelings of power and use of advice. Experiments 2 and 3 further...
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Tost, L. P., F. Gino, and R. Larrick. "Power, Competitiveness, and Advice Taking: Why the Powerful Don't Listen." Organizational Behavior and Human Decision Processes 117, no. 1 (January 2012): 53–65.
- November 2011 (Revised December 2013)
- Case
The Long and Short of Apollo Group and the University of Phoenix (A)
By: Luis M. Viceira, Joel Heilprin, Andrew S. Holmes and Damian M. Zajac
A hedge fund is deciding whether to liquidate its position in Apollo Group, a for-profit education firm, in light of significant political and macro-economic uncertainty facing the industry. As part of the investment analysis a complete discounted cash flow analysis...
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Viceira, Luis M., Joel Heilprin, Andrew S. Holmes, and Damian M. Zajac. "The Long and Short of Apollo Group and the University of Phoenix (A)." Harvard Business School Case 212-045, November 2011. (Revised December 2013.)
- June 2011 (Revised March 2013)
- Case
Wal-Mart Update, 2011
By: David B. Yoffie and Renee Kim
In 2011, Wal-Mart was the world's largest company with $420 billion in sales and operations in 14 countries. Yet it found itself searching for the right growth strategy moving forward. U.S. same-store sales had declined for eight consecutive quarters and Wal-Mart was...
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Keywords:
Corporate Strategy;
Business Growth and Maturation;
Growth and Development Strategy;
Competitive Strategy;
Global Range;
Business Strategy;
Retail Industry
Yoffie, David B., and Renee Kim. "Wal-Mart Update, 2011." Harvard Business School Case 711-546, June 2011. (Revised March 2013.)
- March 2011 (Revised August 2012)
- Case
Groupon
By: Sunil Gupta, Ray Weaver and Dharmishta Rood
On November 4, 2011, Groupon, a marketing services company that promoted local businesses by selling deeply discounted vouchers for their products and services, completed its initial public offering that valued the company at $17 billion. Within a year Groupon's share...
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Keywords:
Budgets and Budgeting;
Customers;
Entrepreneurship;
Growth and Development;
Marketing Channels;
Competitive Strategy;
Value Creation
Gupta, Sunil, Ray Weaver, and Dharmishta Rood. "Groupon." Harvard Business School Case 511-094, March 2011. (Revised August 2012.)
- 2010
- Working Paper
Cognitive Barriers to Environmental Action: Problems and Solutions
By: Lisa L. Shu and Max Bazerman
We explore interventions at the individual level and focus on recognized cognitive barriers from behavioral decision-making literature. In particular, we highlight three cognitive barriers that impede sound individual decision making that have particular relevance to...
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Keywords:
Decision Choices and Conditions;
Judgments;
Consumer Behavior;
Environmental Sustainability;
Cognition and Thinking;
Prejudice and Bias
Shu, Lisa L., and Max Bazerman. "Cognitive Barriers to Environmental Action: Problems and Solutions." Harvard Business School Working Paper, No. 11-046, November 2010.
- 2010
- Working Paper
Valuation When Cash Flow Forecasts Are Biased
This paper focuses adaptations to the discount cash flow (DCF) method when valuing forecasted cash flows that are biased measures of expected cash flows. I imagine a simple setting where the expected cash flows equal the forecasted cash flows plus an omitted downside....
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Keywords:
Forecasting and Prediction;
Cash Flow;
Cost of Capital;
Performance Expectations;
Prejudice and Bias;
Valuation
Ruback, Richard S. "Valuation When Cash Flow Forecasts Are Biased." Harvard Business School Working Paper, No. 11-036, October 2010.
- July 2010 (Revised August 2021)
- Supplement
Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships (CW)
By: Benjamin C. Esty and Albert W. Sheen
After booming for more than five years, the global shipping (maritime) industry experienced a dramatic crash in late 2008 as the global financial system froze and the global economy slid into recession. Ship charter rates (revenue) fell by as much as 90% causing prices...
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- June 2010 (Revised August 2021)
- Case
Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships
By: Benjamin C. Esty and Albert Sheen
After booming for more than five years, the global shipping (maritime) industry experienced a dramatic crash in late 2008 as the global financial system froze and the global economy slid into recession. Ship charter rates (revenue) fell by as much as 90% causing prices...
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Keywords:
Fair Value Accounting;
Financial Crisis;
Capital Markets;
Financial Liquidity;
International Finance;
Globalized Markets and Industries;
Valuation;
Banking Industry;
Shipping Industry;
Germany
Esty, Benjamin C., and Albert Sheen. "Vereinigung Hamburger Schiffsmakler und Schiffsagenten e.V. (VHSS): Valuing Ships." Harvard Business School Case 210-058, June 2010. (Revised August 2021.)
- 2010
- Chapter
The Euro as a Reserve Currency for Global Investors
By: Luis M. Viceira and Ricardo Gimeno
This article explores the demand for the euro for risk management purposes and the evidence of stock market integration in the euro area. We define a reserve currency as one that investors demand either because it helps them hedge real interest risk and inflation risk,...
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Keywords:
Volatility;
Inflation and Deflation;
Capital Markets;
Currency;
Stocks;
Financial Markets;
Financing and Loans;
Investment Return;
Investment Portfolio;
Risk Management
Viceira, Luis M., and Ricardo Gimeno. "The Euro as a Reserve Currency for Global Investors." Chap. 4 in Spain and the Euro. The First Ten Years, 149–178. Madrid, Spain: Banco de España, 2010.