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• Background Note | HBS Case Collection | 2013 (Revised from original 2012 version)

  Inventory-Based Lending Industry Note

  C. Fritz Foley, Ananth Raman and Nathan C. Craig

  Inventory-based lending is a form of asset-based lending used by retailers and wholesalers. This note describes the development and the current state of the inventory-based lending industry.

  Keywords: Banks and Banking; Financing and Loans; Banking Industry;

  Citation:

  Foley, C. Fritz, Ananth Raman, and Nathan C. Craig. "Inventory-Based Lending Industry Note." Harvard Business School Background Note 612-057, May 2013. (Revised from original January 2012 version.)

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• Case | HBS Case Collection | 2013 (Revised from original 2012 version)

  Doing Business in Malaysia

  C. Fritz Foley, Michael Shih-Ta Chen and Keith Chi-Ho Wong

  This case focuses on the current business environment in Malaysia as of 2012 by introducing the main economic, political and cultural aspects of the country for those interested in doing business there. The advantages and challenges of investing and doing business in Malaysia are also noted by HBS alumni who have experience in the country. Finally, the case deals with the subject of talent recruitment and staff management, a top issue in developing economies. Stuart Dean (MBA 1979, a current Director of the HBS Asia-Pacific Advisory Board who lives in Malaysia and CEO of General Electric ASEAN), who oversees GE's businesses across Southeast Asia, had to decide in 2012 whether he should appoint another expat for the position of Managing Director of GE Engine Services Malaysia (a division of GE Aviation), which is one of the leading aircraft maintenance, repair and overhaul facilities in the region, or to promote a local from within, for the first time in the company's history. Making the choice entailed criteria such as historical and culture sensitivities, and an ability to understand complex technology and socio-political and regulatory environments.

  Keywords: emerging market finance; emergent countries; strategy; business history; Economic History; fieldwork; Emerging Markets; Business Ventures; Strategy; Malaysia;

  Citation:

  Foley, C. Fritz, Michael Shih-Ta Chen, and Keith Chi-Ho Wong. "Doing Business in Malaysia." Harvard Business School Case 713-431, January 2013. (Revised from original September 2012 version.)

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• Article | Financial Management | Forthcoming

  Agency Costs, Mispricing, and Ownership Structure

  Robin Greenwood, C. Fritz Foley and Sergey Chernenko

  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 overvalued, however, mispricing offsets agency costs and can induce a controlling shareholder to list equity. Higher valuations may support listings associated with greater agency costs. We test the predictions that follow from this idea on a sample of publicly listed subsidiaries in Japan. Subsidiaries in which the parent sells a larger stake and subsidiaries with greater scope for expropriation by the parent firm are more overpriced at listing, and minority shareholders fare poorly after listing as mispricing corrects. Parent firms often repurchase subsidiaries at large discounts to valuations at the time of listing and experience positive abnormal returns when repurchases are announced.

  Keywords: Business and Shareholder Relations; Ownership; Conflict of Interests; Investment; Valuation;

  Citation:

  Greenwood, Robin, C. Fritz Foley, and Sergey Chernenko. "Agency Costs, Mispricing, and Ownership Structure." Financial Management (forthcoming).

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