The WACC is just the rate at which the Free Cash Flows must be discounted to obtain the same result as in the valuation using Equity Cash Flows discounted at the required return to equity (Ke) The WACC is neither a cost nor a required return: it is a weighted average of a cost and a required...

shareholders ($4.5 trillion). In 1991-1999 it created value ($5.1 trillion), but in 2000-2010 it destroyed $9.6 trillion. The market value of the S&P 500 was $2.8 trillion in 1991 and $11.4 trillion in 2010. We also calculate the created shareholder value of the 500 companies during the 18-year...

Can Corporate Social Responsibility (CSR) provide new arguments to "humanize" the theory of the firm and the management profession? Several arguments (the legal, ethical, social and business cases) have contributed to the discussion of why companies should be socially responsible. In this paper...

Although virtue ethics has gained a firm presence in the theory and practice of corporate management, humility is not ranked as one the chief virtues in the business world. This is probably due to an incomplete or incorrectly focused view of what it means to be a humble person, why a good...

This paper addresses 10 corporate finance topics that are not well treated (or not treated at all) in many Corporate Finance Books. The topics are: 1. Where does the WACC equation come from? 2. The WACC is not a cost. 3. What is the WACC equation when the value of the debt is not equal to its...

It has often been said that the financial crisis which has been hitting the world economy since mid-2007 is an ethical crisis. By studying the behaviors of the agents who made the decisions that led to the crisis, we do find evidences of many unethical mistakes. But bad conducts were also...

The financial crisis which started in the United States in 2007 and which has spread throughout the world has many causes, one of which is the abundance of unethical behavior on the part of many of those who made the financial decisions, such as regulators, supervisors, managers and employees,...

During 2004, 64% of the companies in the S&P 500 created value, while in 2003 the figure was 87%. The market value of the 500 companies was $11.2 trillion in 2004, compared to $10.1 trillion in 2003. The top shareholder value creators in 2004 were Exxon, General Electric, Ebay, Johnson & Johnson...

In January 2005, The Economist published a survey on corporate social responsibility (CSR), joining a long-running debate on the meaning and need for CSR in a market economy. The British weekly's thesis, widely accepted among economists, was first stated years ago by Milton Friedman (1962): a...

The “Ibercorp affair” was front-page news in Spain at various times between 1992 and 1995. In itself, there was nothing particularly new about it: a newly formed financial group engaged in legally and ethically reprehensible behaviour that eventually came to light in the media, ruining the...