Business, Economics

Shareholder Value Theory: Social Responsibility Can Increase ROI

In 1970 a group of reformers led a campaign to “Tame G.M.” via a proxy battle that called for “social responsibility.” The Harvard Crimson memorialized their demands. Quoting verbatim: changing GM new car warranties to give more guarantees that the automobile will work; improving health and safety standards for GM; asking GM to “substantially increase” …

Business, Law

Another predictably preventable securitization fail

The New York Times reports one of the top private student loan servicers, American Education Services (AES), routinely hires lawyers that file flawed lawsuits.¬†As Paperwork Goes Missing, Private Student Loan Debts May Be Wiped Away. We’ve been here before. Having looked at this issue during the financial crisis using data analysis or large datasets I’ve …

Economics, Law

Student Loans: A Recipe For Social Unrest

Rodrigo Rato led the IMF from 2004-2007. Before that he served as Spain’s economy minster. In both roles he was a staunch advocate of real-estate fueled economic growth. After the financial crisis Rato served as the head of Bankia, a 2010 rollup of seven regional banks. Today Bankia is 64% owned by the Spanish government …

Business, Fun

Lesbians Love Subarus (and why this matters)

Marketers know that lesbians prefer Subarus. From their scrappy advertisements with license plates subtly calling out Xenia the Warrior Princess to their more overt work sponsorship in “The L Word” lesbians love their Subarus. This is segmentation at it’s strangest: finding and marketing to a niche market to increase share. Lesbians are more the four …

Business

Invention & Innovation: They’re Different

Apple’s first iPhone was genuinely innovative. They really didn’t invent much: there were already phones that surfed the web, handled email and text messages, and made calls. Even the original iPhone announcement announced Apple was releasing all three in one device. Great, but really not much of an invention. Sales of that first phone were …

Business, Economics, Law

Original Shareholder Value Article – Milton Friedman to GM: Build Clunky Cars

On September 13, 1970, Milton Friedman published one of the most arguably economically destructive articles in history, “The Social Responsibility Of Business Is to Increase Its Profits,” in the New York Times. The article is available, in PDF form, for subscribers from the New York Times website. Friedman advanced the idea that managers are agents …

Business, Economics

Buybacks (or Corporate Suicide)

Prof. Robert Ayres asked me for help with a data project examining the relationship between buyback and growth in market value. Many have studied the effect on buybacks but rarely on overall market cap growth. What we found was surprising. Some items that pop out: Sears spent $6.92 billion buying stock. The company is now …