More from these Authors

• Case | HBS Case Collection | 2013

  Cummins, Inc.: Building a Home Community for a Global Company

  Joseph L. Bower and Michael Norris

  In 2010, Tom Linebarger, president and COO of Cummins, Inc., the Columbus, Indiana-based manufacturer of diesel engines, has to decide where to locate the company's new manufacturing line for high horsepower engines. He has three choices to decide from: Seymour, Indiana; Daventry, England; and Pune, India. The Community Education Coalition (CEC) in Columbus has had success in improving the city's schools to make the area more competitive in attracting and retaining highly educated employees to this small Midwestern city. The CEC is planning an expansion into Seymour with Cummins' help. Will the CEC be able to improve the school system in Seymour enough to make it a viable choice for the new high horsepower engine line?

  Keywords: manufacturing; education; competitiveness; Manufacturing Industry; United States;

  Citation:

  Bower, Joseph L., and Michael Norris. "Cummins, Inc.: Building a Home Community for a Global Company." Harvard Business School Case 313-024, March 2013.

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• Working Paper | HBS Working Paper Series | 2012

  Finding the God Particle of the Sustainability Business Case: Greener Pastures for Shareholder Value

  Marc L Bertoneche and Cornis van der Lugt

  The start of the 2000s saw a flurry of international publications on "the business case" for sustainability, seeking to map out the returns on investment and to differentiate recommended actions from cases of corporate philanthropy. Reports by business organisations and others identified different categories of justifications, incentives, benefits and levels of making the business case. 1) Research over the last decade has pointed to a complex relation between sustainability and financial performance. 2) Results have been influenced by different input and output variables applied, by what is defined as: "sustainability" or "socially responsible" actions, the scope of the agenda covered and the definition of what is the ultimate goal (e.g. increased profit, shareholder value or longer term success and value of the business).

  Citation:

  Bertoneche, Marc L., and Cornis van der Lugt. "Finding the God Particle of the Sustainability Business Case: Greener Pastures for Shareholder Value." Harvard Business School Working Paper, No. 13–072, February 2013.

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• Article | Journal of Finance | 2012

  Mutual Fund Trading Pressure: Firm-Level Stock Price Impact and Timing of SEOs

  Mozaffar Khan, Leonid Kogan and George Serafeim

  In tests of the equity market timing theory of external finance, the prior literature has used overvaluation identifiers such as high market-to-book and high prior returns that are likely correlated with other determinants of SEOs. We use price pressure resulting from purchases by mutual funds with large capital inflows to identify overvalued equity. This is a relatively exogenous overvaluation indicator as it is associated with who is buying-buyers with excess liquidity-rather than what is being purchased. Using this indicator we document that 1) inflow-driven buying pressure by mutual funds has a pronounced and persistent stock price impact, 2) the probability of an SEO increases by 59%, 3) insider sales increase by 7%, and 4) the probability of completing a stock-based acquisition increases by 20% in the four quarters following the buying pressure. These results provide new evidence that firm managers are able to identify and exploit overvalued equity.

  Keywords: Equity; Market Transactions; Valuation; Capital Structure; Market Timing; Mathematical Methods; Acquisition;

  Citation:

  Khan, Mozaffar, Leonid Kogan, and George Serafeim. "Mutual Fund Trading Pressure: Firm-Level Stock Price Impact and Timing of SEOs." Journal of Finance 67, no. 4 (2012): 1371–1395.

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