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- All HBS Web (735)
- Faculty Publications (434)
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- Research Summary
Corporate Bond Pricing and Different Sources of Asset Return Volatility (with George Chacko and Jens Hilscher)
This paper presents a pricing model for defaultable bonds. Default is defined by a cash flow, not value, covenant. The cash flow (total distributions) yield is stochastic. We find that different sources of volatility, cash flow versus discount rate news, affect... View Details
- 2020
- Working Paper
Short-Termism, Shareholder Payouts, and Investment in the EU
By: Jesse M. Fried and Charles C.Y. Wang
Investor-driven “short-termism” is said to harm EU public firms' ability to invest for the long term, prompting calls for the EU to better insulate managers from shareholder pressure. But the evidence offered—in the form of rising levels of repurchases and dividends—is... View Details
Keywords: Short-termism; Quarterly Capitalism; EU; Dividends; Equity Issuances; Equity Compensastion; Capital Flows; Capital Distribution; R＆D; Innovation; Investment; Corporate Governance; Investment Return; Acquisition; European Union
Fried, Jesse M., and Charles C.Y. Wang. "Short-Termism, Shareholder Payouts, and Investment in the EU." Harvard Business School Working Paper, No. 21-054, October 2020.
- 2023
- Working Paper
The Optimal Stock Valuation Ratio
By: Sebastian Hillenbrand and Odhrain McCarthy
Trailing price ratios, such as the price-dividend and the price-earnings ratio, scale prices by trailing cash flow measures. They theoretically contain expected returns, yet, their performance in predicting stock market returns is poor. This is because of an omitted... View Details
Keywords: Price; Investment Return; AI and Machine Learning; Valuation; Cash Flow; Forecasting and Prediction
Hillenbrand, Sebastian, and Odhrain McCarthy. "The Optimal Stock Valuation Ratio." Working Paper, November 2023.
- February 2006 (Revised October 2006)
- Background Note
Introduction to Valuation Multiples
By: Robin Greenwood and Lucy White
Outlines the definition and applicability of financial multiples and their relationship to discounted cash flow analysis. View Details
Greenwood, Robin, and Lucy White. "Introduction to Valuation Multiples." Harvard Business School Background Note 206-095, February 2006. (Revised October 2006.)
- December 1997 (Revised December 1998)
- Case
Valuing Capital Investment Projects
By: W. Carl Kester
A collection of problems that introduces students to the application of discounted cash flow analysis in the evaluation of capital budgeting problems. View Details
Kester, W. Carl. "Valuing Capital Investment Projects." Harvard Business School Case 298-092, December 1997. (Revised December 1998.)
- April 2008
- Supplement
ProfitLogic (CW)
By: Lynda M. Applegate, Richard G. Hamermesh and Michael J. Roberts
This interactive spreadsheet accompanies the ProfitLogic case (#802-110) to enable analysis of the cash flow implications of three business models that the company is considering. Students are able to change key assumptions and see the impact on cash flow. View Details
- January 2005
- Tutorial
Buying Time
By: Robert S. Kaplan
Managers must frequently make decisions involving trade-offs between cash flows to be paid or received at different points in time. Accountants, in turn, must describe transactions that involve the payment and/or receipt of cash far in the future. This interactive... View Details
- December 2000 (Revised December 2016)
- Technical Note
Valuing Companies in Corporate Restructurings: Technical Note
By: Stuart C. Gilson
This case provides a technical overview of different valuation techniques for use in valuing companies in corporate restructuring. Techniques covered include adjusted present value, WACC, capital cash flow, and discounted cash flow valuation. Specific numerical... View Details
Gilson, Stuart C. "Valuing Companies in Corporate Restructurings: Technical Note." Harvard Business School Technical Note 201-073, December 2000. (Revised December 2016.)
- June 1992 (Revised June 1993)
- Case
Crystal Meadows of Tahoe, Inc.
By: William J. Bruns Jr.
An introductory case in cash flow analysis and the preparation of statements of cash flows. Based on the 1991 income statement and balance sheet at a ski resort company, the case provides additional information which allows a student to prepare both a direct and an... View Details
Bruns, William J., Jr. "Crystal Meadows of Tahoe, Inc." Harvard Business School Case 192-150, June 1992. (Revised June 1993.)
- April 2010
- Case
Groupe Ariel S.A.: Parity Conditions and Cross-Border Valuation
By: Timothy A. Luehrman and James Quinn
Groupe Ariel evaluates a proposal from its Mexican subsidiary to purchase and install cost-saving equipment at a manufacturing facility in Monterrey. The improvements will allow the plant to automate recycling and remanufacturing of toner and printer cartridges, an... View Details
Keywords: Exchange Rates; Securities Analysis; Project Evaluation; International Finance; Debt Securities; Currency Exchange Rate; Cash Flow; Cross-Cultural and Cross-Border Issues; Capital Budgeting; Europe; Mexico
Luehrman, Timothy A., and James Quinn. "Groupe Ariel S.A.: Parity Conditions and Cross-Border Valuation." Harvard Business School Brief Case 104-194, April 2010.
- April 2012
- Article
The Predictive Value of Accruals and Consequences for Market Anomalies
By: Francois Brochet, Seunghan Nam and Joshua Ronen
We revisit the role of the cash and accrual components of accounting earnings in predicting future cash flows using out-of-sample predictions and market value of equity as a proxy for all future cash flows. We find that, on average, accruals improve upon current cash... View Details
Keywords: Forecasting and Prediction; Investment Return; Value; Equity; Markets; Cash Flow; Information Management; Accrual Accounting; Earnings Management; Corporate Governance; Stocks
Brochet, Francois, Seunghan Nam, and Joshua Ronen. "The Predictive Value of Accruals and Consequences for Market Anomalies." Journal of Accounting, Auditing & Finance 27, no. 2 (April 2012).
- October 2000
- Case
Tree Values
By: Richard S. Ruback and Kathleen Luchs
Describes two alternative tree cutting strategies. The first is to cut all trees that are at least 12 inches in diameter at breast height. The second is to thin the forest by cutting less desirable trees immediately and harvesting the crop trees later. The case... View Details
Keywords: Strategy; Decision Making; Cash Flow; Decision Choices and Conditions; Management Practices and Processes; Value Creation; Forestry Industry
Ruback, Richard S., and Kathleen Luchs. "Tree Values." Harvard Business School Case 201-031, October 2000.
- February 1998 (Revised January 1999)
- Case
Digital Everywhere, Inc.
By: Paul A. Gompers
Presents a valuation problem in a fictitious firm, Digital Everywhere. Students have the opportunity to compare various discounted cash flow valuation models in an entrepreneurial firm. View Details
Gompers, Paul A. "Digital Everywhere, Inc." Harvard Business School Case 298-099, February 1998. (Revised January 1999.)
- 2010
- Case
New Heritage Doll Company: Capital Budgeting: Brief Case No. 4212.
By: Timothy A. Luehrman and Heide Diener Abelli
A manufacturer and retailer of specialty doll products must decide which of two projects to fund. The decision requires the student to compute cash flows for the 2 projects, discount values to the present and compare and contrast different project performance measures. View Details
- November 2001 (Revised December 2003)
- Case
Whirlpool Europe
By: Richard S. Ruback, Sudhakar Balachandran and Aldo Sesia
This case presents a capital budgeting problem. Whirlpool Europe is evaluating an investment in an enterprise resource planning (ERP) system that would reorganize the information flow throughout the company. Students derive the cash flows from working capital, sales,... View Details
Keywords: Working Capital; Cash Flow; Investment; Capital Budgeting; Consumer Products Industry; Europe
Ruback, Richard S., Sudhakar Balachandran, and Aldo Sesia. "Whirlpool Europe." Harvard Business School Case 202-017, November 2001. (Revised December 2003.)
- January 1989 (Revised September 1995)
- Case
MSDI-Alcala de Henares, Spain
By: Timothy A. Luehrman
Merck & Co., Inc. is evaluating a proposed cost-saving investment by its Spanish subsidiary. The case introduces techniques of discounted cash flow valuation analysis in a multicurrency setting. Can be used to teach basic international parity conditions as they relate... View Details
Keywords: Business Subsidiaries; Cash Flow; Cost Management; Currency; Investment; Management Analysis, Tools, and Techniques; Valuation; Spain
Luehrman, Timothy A. "MSDI-Alcala de Henares, Spain." Harvard Business School Case 289-029, January 1989. (Revised September 1995.)
- January 1989 (Revised October 1993)
- Background Note
Note: Valuing a Business Acquisition Opportunity
Describes how to value an acquisition opportunity as a capital budgeting problem. Cash flows are discounted at the cost of capital and debt is deducted to value the equity capital of the target company. A key contribution of the note is the discussion of five methods... View Details
Fruhan, William E., Jr. "Note: Valuing a Business Acquisition Opportunity." Harvard Business School Background Note 289-039, January 1989. (Revised October 1993.)
- March 2022
- Article
Loan Types and the Bank Lending Channel
By: Victoria Ivashina, Luc Laeven and Enrique Moral-Benito
Using credit-registry data for Spain and Peru, we document that four main types of commercial credit—asset-based loans, cash flow loans, trade finance and leasing—are easily identifiable and represent the bulk of corporate credit. We show that credit growth dynamics... View Details
Keywords: Bank Credit; Loan Types; Bank Lending Channel; Credit Registry; Banks and Banking; Credit; Financing and Loans
Ivashina, Victoria, Luc Laeven, and Enrique Moral-Benito. "Loan Types and the Bank Lending Channel." Journal of Monetary Economics 126 (March 2022): 171–187.
- August 2000 (Revised July 2002)
- Background Note
Fundamental Enterprise Valuation: Introduction
The purpose of this series of notes is to define the key "drivers" of the fundamental value of equity and to illustrate how these drivers determine the future cash flows and the "present value pattern" of the underlying common stock. The series includes one technical... View Details
Baldwin, Carliss Y. "Fundamental Enterprise Valuation: Introduction." Harvard Business School Background Note 801-121, August 2000. (Revised July 2002.)
- November 2008 (Revised November 2024)
- Case
Tottenham Hotspur plc
By: Lauren H. Cohen, Joshua D. Coval and Christopher J. Malloy
Tottenham Hotspur Football Club is a publicly-owned professional soccer team based in London, England. The club's chairman, Daniel Levy, is contemplating a significant investment in physical assets, including the development of a new stadium as well as the acquisition... View Details
Keywords: Valuation; Capital Budgeting; Decision Making; Competency and Skills; Cash Flow; Investment; Buildings and Facilities; Sports; Investment Portfolio; Financial Strategy; Sports Industry; London
Cohen, Lauren H., Joshua D. Coval, and Christopher J. Malloy. "Tottenham Hotspur plc." Harvard Business School Case 209-059, November 2008. (Revised November 2024.)