George Serafeim
Assistant Professor of Business Administration
George Serafeim is an Assistant Professor of Business Administration in the Accounting and Management Unit. He teaches the course "Leading the Global 1000" in the MBA elective curriculum and co-chairs the Executive Education program "Innovating for Sustainability." Previously he has taught the "Financial Reporting and Control" course in the MBA required curriculum, the field course "South Africa; Innovating for Sustainability in an Emerging Market" in the MBA elective curriculum, and the doctoral seminar "The Role of the Corporation in Society." These courses have been created by Professor Serafeim and Professor Robert Eccles as part of a broader research agenda on reconceptualizing the role of the corporation and capital markets in society.
Professor Serafeim's research interests are international, focusing on equity valuation, corporate governance, and corporate reporting issues. His work has been published in prestigious academic and practitioner journals such as the Strategic Management Journal, Journal of International Business Studies, Review of Accounting Studies, Journal of Accounting Research, Journal of Finance, Contemporary Accounting Research, Management Science, Financial Analysts Journal, MIT Sloan Management Review, Journal of Applied Corporate Finance, Director Notes, Harvard Business Review and has also appeared in media outlets including Bloomberg, Financial Times, The Wall Street Journal, The Guardian, NPR and Responsible Investor. He has written more than twenty business cases on organizations from around the world. He is the co-author of a book on the transparency and valuation of insurance companies and the co-author of a study, commissioned by the European Union, that evaluated the relevance of public information disclosed during the transition of European companies to IFRS.
Professor Serafeim's work with Professor Ioannis Ioannou on corporate sustainability and sell-side investment recommendations received the best paper award from the Academy of Management, and their work on corporate sustainability and access to finance received the best paper award from the United Nations Principles for Responsible Investment network. Professor Serafeim's research with Professor Paul Healy on corruption and firm performance was awarded the Hermes Fund Manager best paper prize and his work with Robert Eccles on The Performance Frontier was recognized as "The Big Idea" at Harvard Business Review. He currently serves on the Technical Review Committee of the Global Initiative for Sustainability Ratings that is designing a generally accepted standard for sustainability ratings. Moreover, he is a member of the Standards Council of the Sustainability Accounting Standards Board that is engaged in the development and dissemination of industry-specific sustainability accounting standards. He has served as an advisor to numerous organizations around the world and he is a partner at KKS Advisors.
Professor Serafeim earned his doctorate in business administration at Harvard Business School, where his dissertation was recognized with the Wyss Award for Excellence in Doctoral Research. He received a master's degree in accounting and finance from the London School of Economics and Political Science, where he was awarded the Emeritus Professors' Prize for best academic performance.
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The Performance Frontier
'The Big Idea' at the Harvard Business Review
By now most companies have sustainability programs. They’re cutting carbon emissions, reducing waste, and otherwise enhancing operational efficiency. But a mishmash of sustainability tactics does not add up to a sustainable strategy. To endure, a strategy must address the interests of all stakeholders: investors, employees, customers, governments, NGOs, and society at large. To do that, it has to increase shareholder value while at the same time improving the firm’s performance on environmental, social, and governance (ESG) dimensions. This article outlines a process that can be used to execute a sustainable strategy and extend the boundaries of The Performance Frontier.
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The Role of the Corporation in Society
An Alternative View and Opportunities for Future Research
A long-standing ideology in business education has been that a corporation is run for the sole interest of its shareholders. I present an alternative view where increasing concentration of economic activity and power in the world’s largest corporations, the Global 1000, has opened the way for managers to consider the interests of a broader set of stakeholders rather than only shareholders. Having documented that this alternative view better fits actual corporate conduct, I discuss opportunities for future research. Specifically, I call for research on the materiality of environmental and social issues for the future financial performance of corporations, the design of incentive and control systems to guide strategy execution, corporate reporting, and the role of investors in this new paradigm.
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What Makes Analysts Say 'Buy'?
Published at Harvard Business Review
We document which company characteristics are valued by research analysts in different geographic regions. Top management quality, innovation, strategy positioning, and strategy execution, among other factors, are examined.
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The Stock Selection and Performance of Buy-Side Analysts
Forthcoming at Management Science
We examine the selection and performance of stocks recommended by buy-side analysts relative to those of sell-side analysts from mid-1997 to 2004. We find that the buy-side firm’s analysts issue less optimistic recommendations for stocks with larger market capitalizations and lower return volatility than their sell-side peers, consistent with their facing fewer conflicts of interest and having a preference for liquid stocks. Annualized buy-side Strong Buy/Buy recommendations underperform those for sell-side peers by 5.9% using market-adjusted returns and by 3.8% using four-factor model abnormal returns. However, these findings are driven by differences in the stocks recommended and their market capitalization. After controlling for these selection effects, we find no difference in the performance of the buy- and sell-side analysts’ Strong Buy/Buy recommendations.
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Corporate Social Responsibility and Access to Finance
Published at Strategic Management Journal
We investigate whether superior performance on corporate social responsibility (CSR) strategies leads to better access to finance. We hypothesize that better access to finance can be attributed to a) reduced agency costs due to enhanced stakeholder engagement and b) reduced informational asymmetry due to increased transparency. Using a large cross-section of firms, we find that firms with better CSR performance face significantly lower capital constraints. Moreover, we provide evidence that both of the hypothesized mechanisms, better stakeholder engagement and transparency around CSR performance, are important in reducing capital constraints. Finally, we show that the relation is driven by both the social and the environmental dimension of CSR.
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What Drives Corporate Social Performance? The Role of Nation-level Institutions
Published at Journal of International Business Studies
Using a sample of firms from 42 countries spanning seven years, we construct an annual composite CSP index for each firm based on social and environmental metrics. We find that the political system, followed by the labor and education system, and the cultural system are the most important NBS categories of institutions that impact CSP. Interestingly, the financial system appears to have a relatively less significant impact. We discuss implications for research, practice and policy-making.
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Integrating Sustainability in Corporate Strategy
Professors Robert Eccles and George Serafeim discuss the companies and business models that are and have been effective.
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New Capitalism, New Socio-economic Policy and the Role of the Capital Markets
Professor George Serafeim delivers the keynote speech at the Korea Capital Markets Institute
Professor George Serafeim spoke about the important role that capital markets can play as a catalyst for creating a more sustainable society and why investors that integrate environmental, social and governance (ESG) metrics in their investments decisions will make better capital allocation decisions.
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George Serafeim on How Sustainability Contributes to Long-term Corporate Performance
An ESG Corporate Culture Creates High Performance in the Long-term
In this video, Professor George Serafeim discusses the results of research presented in the paper 'The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance', which he co-authored with Professor Robert G. Eccles (Harvard Business School) and Prof. Ioannis Ioannou (London Business School).
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Professor Bob Eccles and Professor George Serafeim present their research on the role of innovation in extending what they call the "Performance Frontier."
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Corporate Governance in South Africa
Professor Bob Eccles and Professor George Serafeim of Harvard Business School on their investigation into the King Code of Governance and how it has impacted the way corporations do business in South Africa.
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The Need for Sector-Specific Materiality and Sustainability Reporting Standards
Published at Journal of Applied Corporate Finance
The market continues to show growing interest in how well companies are performing across a broad range of environmental, social, and governance (ESG) dimensions. Partly as a result, the companies themselves are paying more attention to these performance dimensions, how they contribute to financial performance, and how to evaluate tradeoffs that arise. One of the greatest challenges facing both investors and companies in using ESG performance information is the absence of standards. Another challenge is knowing which of the many ESG dimensions are most material for a company in terms of creating value for shareholders and stakeholders over the long term. The authors argue that materiality and reporting standards must be developed on a sector‐by‐sector basis, and that failure to do so will result in inconsistent and even misleading disclosures. The SEC has already issued interpretive guidance on climate change disclosures, making it quite clear that existing regulations require companies to report on material effects of climate change, from both an upside and downside perspective. Based on an analysis of 10K filings in six industries, we show that, even within a given industry, there is substantial variation in reporting among companies that ranges from no disclosure, to boilerplate disclosure, industry‐specific interpretation, and the use of quantitative metrics. We conclude by offering a methodology for defining material ESG issues on a sector‐by‐sector basis that could provide the basis for developing key performance indicators.
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Presentation at the Ernst & Young Integrated Reporting Awards
Ernst & Young organized this event to announce the awards to the companies that produced the best integrated reports for 2011. Professor Bob Eccles and Professor George Serafeim discussed the importance of integrated reporting, what makes good integrated reporting and the state of play in integrated reporting around the world.
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