Finance is a featured research topic at Harvard Business School.
Our intellectual roots are based in a long line of scholars from Robert Merton whose collaborative work on risk management and option pricing won him the Nobel Prize in Economics in 1997, to John Lintner who co-created the Capital Asset Pricing Model and made significant contributions to dividend policy, and Gordon Donaldson whose work helped shape the field of corporate finance. We strive to understand how managers and firms make value-enhancing decisions; and how financial institutions, markets, and instruments contribute to this process. Our approach to research is distinguished by its unique combination of theory, empirical analysis, mathematical modeling, and field observations at companies. 
  1. Lessons Unlearned? Corporate Debt in Emerging Markets

    Laura Alfaro, Gonzalo Asis, Anusha Chari and Ugo Panizza

    This paper documents a set of stylized facts about leverage and financial fragility in the nonfinancial corporate sector in emerging markets since the Global Financial Crisis (GFC). Corporate debt vulnerability indicators prior to the Asian Financial Crisis (AFC) attributed to corporate financial roots provide a benchmark for comparison. The firm-level data suggest that emerging markets post-GFC have lower leverage ratios than the five Asian crisis countries (Asian Five) in the run-up to the AFC. However, a broader set of emerging market countries show weaker liquidity, solvency, and profitability indicators. More countries are also in the Altman Z-score's “grey zone,” that is, at risk for corporate distress. Regression estimates confirm that leading up to the AFC and in the aftermath of the GFC, firms with higher leverage have Z-scores that are closer to the financial distress range. The data also corroborate two macro-related hypotheses: first, that leverage interacted with currency depreciation had a statistically significant adverse impact on Z-scores in pre-AFC; and second, that in countries with higher GDP growth leverage is correlated with less corporate financial fragility. Consistent with Gabaix (2011) this paper finds a granularity effect in that large firms are systemically important—idiosyncratic shocks to large firms significantly correlate with GDP growth in our emerging markets sample. Also, the more-levered large firms are more vulnerable to exchange rate shocks than smaller firms with comparable levels of leverage. While this result holds for the average country in our sample, there is substantial cross-country heterogeneity.

    Keywords: emerging markets; corporate debt; financial fragility; firm-level data; Large Firms; Emerging Markets; Borrowing and Debt; Corporate Finance; Financial Condition;


    Alfaro, Laura, Gonzalo Asis, Anusha Chari, and Ugo Panizza. "Lessons Unlearned? Corporate Debt in Emerging Markets." Harvard Business School Working Paper, No. 17-097, May 2017. (Also NBER Working Paper w23407.) View Details
  2. Restructuring Ukraine

    Kristin Mugford, Seema Amble and Tian Feng

    In 2015, Ukraine needs IMF funding to bridge a projected $40 billion funding shortfall and is proposing a 40% “haircut” to Ukraine’s $18 billion of Eurobonds. Can Ukraine negotiate a deal with its many creditors that will give it the funding the country needs on terms they can accept?

    Keywords: insolvency and bankruptcy; financial crisis; economy; Exchange rates; banks and banking; macroeconomics; politics; Economic Slowdown and Stagnation; bonds; sovereign finance; capital markets; credit; debt securities; financial liquidity; Financial Markets; Financial Crisis; Insolvency and Bankruptcy; Restructuring; Economy; Currency Exchange Rate; Banks and Banking; Macroeconomics; Economic Slowdown and Stagnation; Bonds; Sovereign Finance; Capital Markets; Credit; Debt Securities; Financial Liquidity; Financial Markets; Government and Politics; Ukraine;


    Mugford, Kristin, Seema Amble, and Tian Feng. "Restructuring Ukraine." Harvard Business School Case 217-049, April 2017. View Details
  3. Ant Financial

    Feng Zhu, Ying Zhang, Krishna G. Palepu, Anthony K. Woo and Nancy Hua Dai

    Headquartered in Hangzhou (China), Ant Financial has grown into a fintech “Unicorn.” The fintech empire that the company established spanned verticals such as mobile and online payment (Alipay), money market fund (Yu’e Bao), wealth management (Ant Fortune), digital-only banking (MYbank), credit scoring (Zhima Credit ), and consumer credit portal (Ant Credit Pay) among others. After another sales record during the 2016 11.11 Global Shopping Festival along with Alibaba, Long Chen, Chief Strategy Officer of Ant Financial was contemplating the various opportunities and challenges associated with the firm’s international expansion, inclusive finance in rural regions, and regulatory uncertainties.

    Keywords: Growth and Development Strategy; Global Strategy; Finance; Opportunities; Financial Services Industry; Technology Industry;


    Zhu, Feng, Ying Zhang, Krishna G. Palepu, Anthony K. Woo, and Nancy Hua Dai. "Ant Financial." Harvard Business School Case 617-060, March 2017. (Revised April 2017.) View Details
  4. Mubadala and EBX: To X or to X It?

    Nori Gerardo Lietz and Ricardo Andrade

    In April 2012, Mubadala, Abu Dhabi's sovereign wealth fund invested $2 billion in Brazilian conglomerate EBX, believing the company to be undervalued by the public markets. Shortly thereafter, however, EBX and its multiple business lines began to spiral downward. Hani Barhoush and Oscar Fahlgren, members of Mubadala's investment team, were now charged with leading the restructuring efforts on behalf of Mubadala. The situation was exceptionally complex and involved dealing with different creditors, untangling cross-collateral clauses from EBX’s subsidiaries’ loans, and foreclosing on personal guarantees from Batista. There were also strong political challenges, since most companies operated in tightly regulated markets, some were publicly-traded, and many had received substantial subsidized financing from Brazil’s Development Bank (BNDES). Finally, the country’s economic and political environments were rapidly deteriorating, with a combination of stagflation, rising interest rates, and successive popular demonstrations causing the gradual loss of governability and ultimate impeachment of President Dilma Vana Rousseff.

    Keywords: sovereign wealth funds; conglomerates; Investing; corporate structure; International; restructuring; Sovereign Finance; Business Conglomerates; Investment; Financing and Loans; Restructuring; Organizational Structure; Economy; Brazil; Abu Dhabi;


    Lietz, Nori Gerardo, and Ricardo Andrade. "Mubadala and EBX: To X or to X It?" Harvard Business School Case 217-065, March 2017. View Details
  5. PharmAccess and the M-TIBA Platform: Leveraging Digital Technology in the Developing World

    Kevin Schulman, Sashidaran Moodley and Anant Vasudevan

    PharmAccess is an Amsterdam based NGO working to support the development of the private health care market in Africa. This work is critical as over 50% of care is delivered through the private sector, but well-intentioned efforts to address global health through the public sector have the unintended consequence of crowding-out capital formation in the private sector. PharmaAccess is working to crowd-in funding instead through the development of a three-pronged effort in Kenya. They are working to address supply through efforts to improve the quality of health care facilities through education and through a micro-lending program. At the same time, they are working to address demand through the development of the M-TIBA mobile health wallet. The critical question for this case is whether these efforts, in essence the development of a novel platform simultaneously addressing supply and demand, will be enough to change the dynamics of the private health care market.
    The case provides a background on private health care in Africa and in Kenya.

    Keywords: Finance; Entrepreneurship; Health Care and Treatment; Online Technology; Health Industry; Africa; Kenya;


    Schulman, Kevin, Sashidaran Moodley, and Anant Vasudevan. "PharmAccess and the M-TIBA Platform: Leveraging Digital Technology in the Developing World." Harvard Business School Case 317-103, March 2017. View Details
  6. The Financial Regulatory Reform Agenda in 2017

    Robin Greenwood, Samuel G. Hanson, Jeremy C. Stein and Adi Sunderam

    We take stock of the post-crisis financial regulatory reform agenda. We highlight and summarize areas of clear progress, where post-crisis reforms should either be maintained or built upon. We then identify several areas where the new regulations could be streamlined or rolled back in an effort to reduce the burden on the financial sector, particularly on smaller banks.

    Keywords: Finance; Governing Rules, Regulations, and Reforms; United States;


    Greenwood, Robin, Samuel G. Hanson, Jeremy C. Stein, and Adi Sunderam. "The Financial Regulatory Reform Agenda in 2017." Working Paper, February 2017. View Details
  7. Royal DSM: From Continuous Transformation to Organic Growth

    William W. George, Carin-Isabel Knoop and Amram Migdal

    Royal DSM CEO Feike Sijbesma was pondering the challenges of shifting DSM’s global organization from the constant transformations of the past 100 years to creating organic growth. When Sijbesma took the helm as CEO in 2007, he further pushed and completed the company’s final moves away from commodity chemicals and toward more sustainable businesses whereby DSM could create value with differentiated offerings. Sijbesma emphasized innovation and moving into “sunrise” businesses that would fuel future growth by playing a positive role in the broader society. Sijbesma asked himself, did DSM’s current portfolio in life sciences and materials sciences provide sufficient growth opportunities to sustain consistent and superior performance? Would DSM’s 21,000 employees worldwide embrace the DSM Strategy 2018: “Driving profitable growth through science-based sustainable solutions,” anchored via the Lead & Grow support and development program for key managers of the company? Should DSM continue making moves in mergers and acquisitions (M&A) to complement organic growth, or could its growth goals be achieved by focusing on organic growth for now, followed later by M&A activities again? What new markets should it look to in order to ensure sustainable growth? Sijbesma felt that after a decade of transformations (divestments and acquisitions), it would be healthy for the company to focus fully on organic growth for several years. During that period, the company had already indicated it would divest three of its major holdings in joint venture companies, which would generate the financial capacity for M&A activities again in later years. In the meantime, Sijbesma wanted the company to prove it could grow organically as well.

    Keywords: organic growth; Organizational change; M&A; mergers and acquisitions; divestment; Business Ventures; Business Divisions; Business Growth and Maturation; Restructuring; Change; Change Management; Transformation; Transition; Engineering; Chemicals; Mining; Ethics; Values and Beliefs; Finance; Capital Markets; Financial Markets; Food; Globalization; Global Strategy; Globalized Firms and Management; Globalized Markets and Industries; Health; Nutrition; History; Leadership; Leadership Development; Leadership Style; Leading Change; Management; Business or Company Management; Growth and Development Strategy; Growth Management; Management Practices and Processes; Management Style; Organizations; Corporate Social Responsibility and Impact; Mission and Purpose; Organizational Change and Adaptation; Organizational Culture; Organizational Design; Ownership; Public Ownership; Performance; Strategy; Adaptation; Consolidation; Corporate Strategy; Value; Value Creation; Biotechnology Industry; Chemical Industry; Food and Beverage Industry; Mining Industry; Pharmaceutical Industry; Europe; Netherlands;


    George, William W., Carin-Isabel Knoop, and Amram Migdal. "Royal DSM: From Continuous Transformation to Organic Growth." Harvard Business School Case 317-063, January 2017. (Revised March 2017.) View Details
  8. Shisong Cardiac Center: Kumbo, Cameroon

    Kevin Schulman and Nelly-Ange Konthcou

    Shisong Cardiac Center in Kumbo, Cameroon, is a regional cardiac referral center in central Africa. As the continent transitions from communicable to non-communicable diseases, there is a critical shortage of surgical care required to treat these conditions. This case describes an innovation solution to the shortage of professional skills, an international collaboration between a hospital in Milan and a hospital in Cameroon. The case highlights the challenges of building and staffing the facility, and then discusses the ongoing operational and financial challenges of operating a heart center in Africa. Can this model be sustained? Can Cameroon develop their own capability to deliver advanced cardiac services domestically? These are critical questions to consider. In spite of these challenges, Co-Founder Sr. Alphonsa finds hope in her favorite African proverb, “Your heart can take you where your feet cannot.”

    Keywords: Finance; Operations; Health Care and Treatment; Health Industry; Africa;


    Schulman, Kevin, and Nelly-Ange Konthcou. "Shisong Cardiac Center: Kumbo, Cameroon." Harvard Business School Case 317-085, January 2017. (Revised March 2017.) View Details
  9. The Six CEOs of Tyco International Ltd.

    John R. Wells and Gabriel Ellsworth

    In September 2016, Johnson Controls, Inc. completed the acquisition of Tyco International PLC, a $9.9 billion business with operating profits of $884 million. The purchase consideration was $14.4 billion. Although the deal was billed as a merger, Ireland-based Tyco effectively acquired U.S.-based Johnson Controls in a tax inversion deal that saved $150 million a year in taxes. Operating synergies were estimated at $500 million over three years. Tyco International was all that remained of what 15 years earlier, in 2001, had been a $36.4 billion conglomerate with a market capitalization of $120 billion. It took the charismatic CEO, Dennis Kozlowski, 10 years to grow the business from $3 billion to $36 billion, increasing its value by more than 60 times along the way. But Kozlowski went to prison on fraud charges in 2005, and the portfolio was slowly unwound under his successor. Now in 2016, Tyco was to disappear.

    Keywords: Tyco; Dennis Kozlowski; Edward Breen; fire safety; fire protection; Security; packaging; Securities and Exchange Commission; fraud; Accounting; Accounting Audits; Earnings Management; Financial Statements; Goodwill Accounting; Acquisition; Mergers and Acquisitions; Business Conglomerates; Business Divisions; Business Exit or Shutdown; Business Growth and Maturation; Business Headquarters; Business Model; Business Organization; For-Profit Firms; Restructuring; Crime and Corruption; Engineering; Applied Optics; Chemicals; Construction; Metals and Minerals; Ethics; Finance; Cash Flow; Public Equity; Stock Options; Financing and Loans; Initial Public Offering; Profit; Revenue; Geographic Location; Geographic Scope; Global Range; Globalized Firms and Management; Multinational Firms and Management; Corporate Accountability; Corporate Disclosure; Health Care and Treatment; Business History; Executive Compensation; Selection and Staffing; Courts and Trials; Lawfulness; Lawsuits and Litigation; Business or Company Management; Goals and Objectives; Growth and Development Strategy; Market Entry and Exit; Public Ownership; Problems and Challenges; Strategy; Business Strategy; Competition; Competitive Strategy; Competitive Advantage; Consolidation; Corporate Strategy; Diversification; Expansion; Horizontal Integration; Value; Chemical Industry; Construction Industry; Consumer Products Industry; Electronics Industry; Energy Industry; Industrial Products Industry; Manufacturing Industry; Medical Devices and Supplies Industry; Mining Industry; Pharmaceutical Industry; Semiconductor Industry; Telecommunications Industry; Utilities Industry; Republic of Ireland; Switzerland; Bermuda; United States; New Hampshire;


    Wells, John R., and Gabriel Ellsworth. "The Six CEOs of Tyco International Ltd." Harvard Business School Case 717-459, January 2017. View Details
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