Accounting & Management

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Assistant Professor Dawn Jorgensen Navigates the Hybrid Classroom

By: V.G. Narayanan

January 2022 |
Case |
Faculty Research

Hybrid Classroom - an Opportunity or a Threat?

By: V.G. Narayanan

January 2022 |
Case |
Faculty Research

When the Covid pandemic struck in the spring of 2020, HBS pivoted to remote instruction while maintaining the interactive and engaged discussions which distinguished the case system pedagogy. In fall 2020 HBS adopted a hybrid approach, fitting out its classrooms with monitors and technology to enable some students being in-person and others remote, investing significant time and resources. The senior leadership of the school believed that this was a sound long-term investment with rewarding payoffs for several years to come. Dean Datar in 2022 now has to decide how best to leverage the hybrid classroom and whether remote learning for MBA students, Global alumni and Executive Education participants was feasible and financially viable. Study from Anywhere, seemed possible, but was it the right thing for HBS to offer, and if so to whom, and how?

Keywords: Education; Teaching

TXU (A) and (B): Powering the Largest Leveraged Buyout in History

By: Trevor Fetter

January 2022 |
Teaching Note |
Faculty Research

Whistleblowing at Veolia: A Technology Solution

By: Aiyesha Dey and Jonas Heese

January 2022 |
Teaching Note |
Faculty Research

Residual Income Valuation Model

By: Charles C.Y. Wang and Albert Shin

January 2022 |
Background Note |
Faculty Research

This note explains the residual income valuation model (RIM), how it relates to "traditional" valuation models, the intuition behind its use, and empirical research related to its value relevance. RIM is theoretically equivalent to the dividend discount model and the discounted free cash flow model. However, it expresses future cash flows to equity in terms of accounting measures of capital (e.g., book value of equity) and performance (e.g., return on equity). Implementing the RIM requires forecasting the amount of expected future "economic profits," which depends on how business strategy plays out in the context of industry competitive dynamics, effective management of financial capital, and governance.

Introducing EVA at ISS: A Better Way to Evaluate CEO Performance and Compensation?

By: Jonas Heese, Charles C.Y. Wang and James Weber

January 2022 |
Case |
Faculty Research

In early 2019, Anthony Campagna, the global director of fundamental research at ISS EVA, a unit of the proxy advisory firm Institutional Shareholder Services (ISS), was preparing to release ISS's analyses of public company performance and CEO compensation ahead of Say on Pay (SOP) voting. ISS's reports helped institutions and other investors determine how to vote their shares at annual shareholder meetings. The report's assessment of CEO compensation for SOP relied on the degree of alignment between a CEO’s industry-relative compensation and the firm's industry-relative performance. ISS had long used total shareholder return (TSR)—a measurement based on a company’s stock price appreciation and dividend payouts—to measure company performance. In 2019, for the first time, ISS supplemented the TSR measure with economic value added (EVA)—a measurement based on accounting data that combined operating profit and a charge for capital—to measure performance. ISS believed that using EVA as a complement to TSR painted a more complete picture of company performance than TSR alone. EVA was, however, a far more complicated and not widely understood performance metric. Interpreting EVA for certain types of firms—young, high-growth, investment-intensive—could also be challenging. Campagna wondered how market participants would respond to ISS’s use of EVA in its voting recommendations, particularly when TSR and EVA could make company performance look quite different. Did the benefits of EVA make managing its complexities worthwhile? Was EVA too complicated for investors to understand? Would EVA work equally well for young and high-growth firms as for mature firms? How might Campagna best promote the use of EVA?