Notes on "THE CFO's NEW VALUE ROLE" (Peter Clark, Stephen Neill, Greg Jones, Juliana Rowe)

THE CFO's NEW VALUE ROLE

By Peter Clark, Stephen Neill, Greg Jones, Juliana Rowe

The Stage 1 Managing for Value company focuses on those value creation options that begin end within financial officer's own function.

Achieving a value-optimal mix of debt and equity in the company's ongoing capital structure can and does generate significant - albeit one-time - incremental shareholder value.

As followers in that industry narrow their MFV gap, the pacesetting value firm must uncover and capture new value sources.

The Stage 2 successor adds Growth, Permanent Expense Reform/Efficiency Improvement and Investor Perceptions Management to the scope of value creation opportunities.

The Five Key Value Levers define the full range of value opportunities available.

(Five Key Value Levers from presentation by Stephen Neil and Greg Jones to the Australian Institute of Company Directors in Melbourne on May 9, 2002)

At the Stage 2, the CFO leader actively seeks to move MFV forward - away from his domain alone, into those areas of the company where even greater value opportunities reside.

In stage 3, the CFO-led MFV firm must add additional depth to the new breadth already introduced at the second stage. The key word is "maximum". MFV becomes Managing for Maximum Value.

Notes on "Structural bank regulation initiatives: approaches and implications" (Leonardo Gambacorta and Adrian van Rixtel)

Structural bank regulation initiatives: approaches and implications

Leonardo Gambacorta and Adrian van Rixtel 
Monetary and Economic Department
April 2013

The likely implications of initiatives for:

• finanical stability and systemic risk
• banks business models
• the international activities of global banks

How effective to improve the financial system?
What can be the impacts on banks' profitability and business models, both nationally and internationally?

The proposals for structural bank regulation break with the conventional wisdom that the banking sector's efficiency and stability stands only to gain from the increased diversification of banks' activities.

Structural bank regulation initiatives are designed to reduce systemic risk in several ways:

• shield the institutions carrying out the protected activities from losses incurred elsewhere
• prevent subsidies supporting the protected activities from cutting the cost of risk-taking and inducing moral hazard in other business lines
• reduce the complexity and possibly the size -> easier to manage, more transparent to outside stakeholders and easier to resolve

However, banks may respond to the reforms by shifting activities beyond the perimeter of consolidated regulation, structural regulation may affect the international activities of universal banks in particular, structural regulation may create business models that are in fact more difficult to supervise and resolve

Notes on "The Finance Function in a Global Corporation" (Mihir A. Desai)

The Finance Function in a Global Corporation

Desai, Mihir A.

HBS Centennial Issue Harvard Business Review 86, nos. 7/8 (July–August 2008)

Capital budgeting decisions and valuation must reflect not only divisional differences but also the complications introduced by currency, tax, and country risks.

Saddling the managers of subsidiaries with debt can cloud their profit performance, affecting how they are perceived within the larger organization and thereby limiting their professional opportunities.

The existence of an internal capital market broadens a firm's risk-management options.

Many multinationals let local subsidiaries and regions manage their risks separately.

Companies often limit- in arbitrary and puzzling ways - their considerable expertise in managing currency exposures.

Creating a Global finance function:

• Establish the appropriate geographic locus of decision making
• Create a professional finance staff that rotates globally
• Codify priorities and practices that can be adapted to local conditions

Notes on "How markets fail : the logic of economic calamities" (John Cassidy)

How markets fail : the logic of economic calamities

John Cassidy, 1963-

London: Penguin Books, 2010

• "The problem here is something which looked to a very solid edifice, and indeed, a critical pillar to market competition and free markets, did break down" (by Greenspan)
• Warning ignored (Rajan)
• The reaction to Rajan's paper demonstrated just how difficult it had become to query, even on a theoretical level, the dogma of deregulation and free market
• (not finished)