More from the Author

• 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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• Case | HBS Case Collection | 2012 (Revised from original 2005 version)

  Liston Mechanics Corporation

  Marc L. Bertoneche

  Reviews, through a rather simple and straightforward situation, the various methods of valuation--free cash flow, weighted average cost of capital, equity cash flow, adjusted present value, multiples, etc.

  Keywords: Valuation; Cost of Capital; Equity; Cash Flow; Value; Financial Management;

  Citation:

  Bertoneche, Marc L. "Liston Mechanics Corporation." Harvard Business School Case 205-070, January 2012. (Revised from original February 2005 version.)

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