Welcome to teachers’ elections, offering a weekly selection of FT articles and for the faculty of the Business School to connect classrooms with current events and develop the critical thinking of students.
Read all presentations in www.ft.com/bschoolpicks. Save this link in Myft to receive emails that alert each new edition. Look for the relevant topics to illustrate the teaching points. Encourage students to join the debate in the comments section under the article.
Comments or contributions? Contact profpicks@ft.com
Financial management, investment
The great European unbridled of US actions has just begun
Tags: Portfolio, diversification, investment, assignment of global assets.
Summary: European values markets have surpassed their American counterparts so far this year. This is partly due to the flow of global funds: investors, particularly in Europe, have been diverting their investments from the US to their origin market.
According to the theory of diversification, the US capital market had had much overweight in global investment portfolios compared to its capitalization worldwide. The trend seems to be reversing as investors rebalance their assignments. However, the underlying reasons are not clear: it might that active investment administrators pursue better yields in advance of greater European growth or more disciplined execution of passive investments that replicate the weight of the market value of each country.
Classroom application: This article establishes an interesting context for the discussion of the global asset allocation under the theory of diversification, as well as the friction and challenges of the real world for theory.
Questions:
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Investigate the market value of securities markets in the US. UU. And Europe. Identify the approximate weights of capital investment in the United States and Europe. If investors diversify online investment with global capitalization, what would be the direction of capital flows and how great the flow flows would be?
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How do currency exchange rates play a role in the balance of weights? Could this explain the recent volatile currency market?
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The flow of funds caused by the expectation of greater European growth, or is it returning to the theory and practicing diversification by assigning assets according to its world -value weights?
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In behavioral finances, there is a call ‘bias in the home’. Do you think this is behind the recent European funds that date back to Europe?
Zhun LiuSenior Teaching Fellow, Warwick Business School
Audit, White Crime
Credit Suisse will pay $ 511mn for helping the rich Americans hide more than $ 4 billion
Tags: Financial crime, financial misconduct, denunciation of irregularities, credit, UBS, tax evasion
Summary: UBS bankers allegedly traveled For the US, 3,800 times a year to meet with clients with accounts on the high seas and even undergo training in counter-surveillance techniques to avoid the detection of the FBI. Credit Suisse was accused To closely define ‘American people’ to deliberately exclude many US taxpayers, falsifying the IRS forms and advising US clients who withdraw less than $ 10,000 at the same time to avoid activating automated alerts.
Many decades ago, US authorities identified fiscal evasion on the high seas as a billionaire problem and were apparently taking measures to restrict the use of fiscal paradises. But there may be no jurisdiction in the world provides less transparency than is available to companies in the Delaware status.
Classroom application: Auditors and qualification agencies have few incentives to deal with irregularities even though their own purpose is to help investors and regulators understand what is happening within those companies. They are hired by executives and paid by companies, creating a conflict with the public interest.
For some psychologists, crime comes from psychological aberration. Others attribute it to stress or arrogance. Some argue that it is just a result of excess greed or ambition. Promoting a discussion in the classroom will help students understand how poor management intuitions motivate fraudulent behavior that culminate in the use of disastrous means of embezzlement and erroneous reports.
Questions:
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Very few people leave a leading business school or embark on a new career with the intention of harming or committing a white -collar crime. What are the factors that motivate them to take this route? Nature or nutrition? Logic or intuition?
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Did the appointment of President Urs Rohner radically change the Credit Suisse plan to deal with regulators? How effective was your strategy to combat litigants instead of opting for an early settlement?
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When Credit Suisse finally decided to leave the business to help customers to avoid paying taxes, their so -called “exit projects” failed miserably. Why that?
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FT’s article explains how Credit Suisse’s misconduct breached a 2014 guilty agreement reached by the Bank with the United States Department of Justice. How can regulators detect (and even better, prevent) such cases before they begin to damage society?
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What measures could be adopted to protect complainants who still face great uncertainty, hard treatment and difficult dilemmas?
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The new 2024 Corporate Transparency Law requires that the corporations present to the federal authorities the names of key beneficial owners and those who control all corporations in the US. UU. How effective is this regulation?
Krishnan RangerhanFaculty Invited in Indian Business Schools
Sustainability, marketing
Corporate buyers still fall in love with Green Marketing Puff, discover the study
Tags: Corporate Sustainability, Green Marketing, Green Washing, Company to Business
Summary: A new study reveals that corporate purchasing managers in the EU are as susceptible to ecological washing as retail consumers, often favor products with striking but not certified environmental claims. Despite being willing to pay significant premiums for “green” products, many managers seem unable to distinguish between credible and superficial sustainability claims. The results point to the need for clearer certification standards, better acquisition training and a stronger regulation, such as the next directive of EU Green claims.
Classroom application: This article presents an excellent opportunity for business and marketing students to discuss the promoters and negative implications of being influenced by green washing practices as a commercial client. It also provides the opportunity to participate in a potential simulation roles game.
For example, students can be divided into acquisition and marketing equipment. Marketing equipment has simulated products to launch, some with certified sustainability claims and others with an “green” not certified language. Then, acquisition equipment chooses a product and justify their decision. Finally, the teacher reveals what statements were justified and facilitates a discussion about these questions.
Questions:
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Why do you think corporate buyers were more influenced by “green” language than independent certification?
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What are the risks for companies that base acquisition decisions on sustainability claims not verified?
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How could the proliferation of ecological labels affect the credibility of legitimate certifications?
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How could internal green marketing training help procurement professionals make more informed decisions about sustainability claims?
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Do you think the EU green claims directive will be effective to reduce green washing? Why or why not?
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How could the skepticism of corporate buyers towards the environmental claims of the products affect the environmental performance of your company?
Karolos PatrosAssociate Professor, University of York
Finance
US actions end up after Trump relieves independence concerns
Discipline: Finance, International Entrepreneurship, International Strategy
Tags: Federal Reserve Bank, US Stock Market, Monetary Policy, Investor Trust
Summary: After President Donald Trump assured investors that he had no intention of saying goodbye to the president of the Jay Powell Federal Reserve, investors were dissipated regarding the independence of the Central Bank and that the United States stock markets increased. This promise occurred after a period of turbulence of the market caused by fear of possible political interference in monetary policy. The experience emphasizes how crucial it is for political leaders to communicate clearly about economic governance and how sensitive are financial markets with opinions about the authority of the Central Bank.
Classroom application: This article can be used in the classroom to discuss broader issues such as the independence of the Bank of the Federal Reserve of the United States, how monetary policy is affected by politics and how and why markets react to political statements. In addition, it can be used as a catalyst for conversations about leadership, controls and balances of the different branches of the federal government, ethics and the historical precedent of the independence of the Fed.
Questions:
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What effects does the idea of the central bank’s independence have on market stability and investor confidence? What could happen if this independence was undermined?
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How can economic decision making be affected by political pressure on monetary authorities? Talk about the balance between the autonomy of the Central Bank and democratic responsibility
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What makes the markets react so strongly to the pronouncements of monetary policies made by political leaders? Examine how such pronouncements affect financial markets
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Evaluate how important it is for political and financial leaders to communicate clearly and consisting to preserve economic stability. How could misunderstandings increase market volatility?
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Talk about the moral ramifications of a politician who tries to influence or fire an employee of the Central Bank. What governance frames exist to stop this type of incidents, and are adequate?
Positioning of the discussion of cases: According to a March articleThe Fed will probably need to reduce the growth forecast of the United States, partly due to President Trump’s policies. Kevin Warsh is a Trump ally and a former fed governor. It could also be a contender to succeed President Powell. The Fed remains ready and capable of stabilizing markets if required. According to an April articleThe legal route to eliminate the Fed chair is still dark.
Gregory StollerMaster Professor, Boston University Questrom School of Business
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