Accounting

Companies are increasingly paying for acquisitions with stock rather than cash. But both they and the companies they acquire need to understand just how big a difference that decision can make to the value shareholders will get from a deal.

It's not enough to stop investing in fossil fuels.

Few, if any, articles on finance that have appeared in HBR have enjoyed the influence of the 1962 article reprinted here as a “Classic.” Gordon Donaldson’s analysis of how many companies haphazardly established their debt capacity, and his careful explanation of what he considered a better way, seemed to strike a chord among corporate administrative […]

The financial worries of New York City in the early 1970s began registering in the bond market in October 1974, when the city first encountered difficulty selling its securities. These problems reached a crisis stage in 1976, and it was not until then that the bond rating services reduced the city’s bond rating. In this […]

When crucial financial estimates rely on judgment, companies can minimize their risk by turning to appraisers, actuaries, and evaluators, whether internal,...

Cisco’s CFO explains how the company has made real-time accounting a reality.

Quarterly earnings numbers dominate the decisions of executives, analysts, investors, and auditors. Yet for all the attention paid to these numbers, they're...

Companies doing business in the developing world have to contend with the staggering human and financial costs of HIV infection—and most would agree that conventional approaches to controlling the epidemic aren’t working. In our experience in the labor-intensive mining industries of Russia, South Africa, and Botswana, we’ve seen infection rates among workers exceeding 90% in […]

If we could better track the value of human capital, employees would be better off.

(Editor's note: This post forms part of the HBR Debate, "Finance: The Way Forward.") Asset price bubbles are obvious in hindsight. US housing prices in...

Saving money can be a creative act.

Revenue is one of the most misunderstood, mismanaged, and neglected measures in business. Consequently, many executives still rely on gut feel, rather than on hard data, to make revenue decisions—often destroying value in the process. We’ve seen this happen in the dozens of companies we’ve studied. Consider the short shrift revenue gets on accounting reports, […]

During a year-long research project, the authors developed a "balanced scorecard" performance measurement system that allows executives to view a company...

Do we really need to switch to replacement-cost accounting to understand how companies have performed?

The American health care industry is sick. Its huge fraction of our GNP—one out of every eight dollars—is double that of Japan and at least 50% higher than that of other developed countries. Because it is growing at rates 50% higher than the GNP, the industry’s cost hampers control of our disastrous trade deficit. Even […]

Less than a decade after the frantic merger activity of the late 1960s, we are again in the midst of a major wave of corporate acquisitions. In contrast to the 1960s, when acquirers were mainly freewheeling conglomerates, the merger movement in the 1970s includes such long-established giants of U.S. industry as General Electric, Gulf Oil, […]

Why do large corporations sell off business units to PE firms that make a fortune by selling them a few years later? The author, a former Rotman School...

The way we deal with risk depends on how we define it. This is often a more complicated task than appears. Risk is such a many-headed monster that selecting the right head to strike at can be a big challenge. Corporate executives have traditionally defined pension fund risk in terms of the trade-off between risk […]

Leaders can approach this challenging time with flexibility, transparency, and compassion.

Despite Sarbanes Oxley, corporate executives still seem awfully good at keeping their boards in the dark. I find it hard to blame board members, though....