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Making a Better Business Case for ESG - By Tensie Whelan
"As COVID-19 kills and sickens millions of people around the world, it is also stress testing many institutions and cultural norms, among them companies and their compact with society. It's an extraordinary challenge joining many already connected deeply to the business world, from economic inequality to racial injustice to climate change. When questioned about their role in responding to deep-rooted problems facing all of society, companies often indicate that they can't afford to invest in environmental protection, strong employee compensation, or other elements of a social issue because they must return sufficient profits to shareholders."
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Grants vs. Loans, but Equity is the Need of the Hour - By Marti Subrahmanyam
In a joint op-ed, Professor Marti Subrahmanyam suggests that the European Union needs to create a Pandemic Equity Fund to provide equity to profitable businesses all across Europe.
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America’s Public Pension Challenges Can Be Fixed. Canada Is Proof. - By Ingo Walter
"There are about 5,300 public pension funds in the U.S. today, overseeing some $4 trillion in assets. The 25 largest account for more than half the total. The rest of the market is highly fragmented, with thousands of public pension portfolios managed independently and locally. Fragmentation results in less efficient portfolios and higher operating costs, potentially leading to lower net returns and ultimately a greater funding burden on taxpayers. Especially given the impact of Covid-19 on public finances, there must be a better way."
—— Opinion
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Euro Area Bank Bailout Policies After the Global Financial Crisis Sowed Seeds of the Next Crisis - By Viral Acharya
"When considering interventions in the banking sector during crises, governments can either use system-wide or bank-specific measures (Farhi and Tirole 2012). Bank-specific measures can be grouped into three categories (Pazarbasioglu et al. 2011) – (1) guarantees, (2) capital injections, and (3) asset restructuring/resolution – the implementation of which induces different fiscal costs (Stavrakeva 2020)."
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Value Investing Is Still Moribund - By Baruch Lev
"For the unfamiliar: Value investing is a popular investment scheme of buying low-valued stocks (e.g., low market-to-book or price-to-earnings stocks), and selling short highly valued stocks. The natural rebound of the former ('value” stocks) and the price drop of the latter ('growth” stocks) — namely, mean reversion ― generated the gains from value investing in the 1970s and 1980s."
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Revisiting the White Swans of 2020 - By Nouriel Roubini
"At the start of the year, when COVID-19 was barely on anyone's radar outside of China, the global economy was entering a fraught phase, facing a range of potentially devastating tail risks. And though the pandemic has since turned the world on its head, all of these threats remain – and some have become more salient."
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The US Should Look to Canada to Reform its Public Pension System - By Ingo Walter
"Observers of the diverse and often challenged American public pension system look north to Canada with a certain degree of admiration. Canadian public pension plans tend to be fully funded — some even have healthy surpluses. Most U.S. plans are in deficit, and several are unlikely to be sustainable. So what makes the Canadian system better? The inevitable response has to do with better governance. But it goes a lot deeper. It is the legal structure of Canadian public pension plans that enables strong governance."
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Monetary Easing Explains the Coincidence of Leveraged Payouts and Lack of Real Investments - By Viral Acharya
"The ultra-low US policy rates that followed the 2008 Global Crisis have been coincident with significantly large positive shareholder payouts by US firms, or in other words, negative net equity issuances, largely due to higher share buybacks (repurchases) than ever in the past. Net share repurchases and total shareholder payouts (the sum of net share repurchases and dividend payouts) have increased steadily since 2001 (in absolute terms as well as relative to assets), especially so in the past decade, reaching a peak of more than $800 billion in 2018. Over this period, fixed business investment growth has failed to keep pace with firm assets, leading to lower normalised investment despite cheap funding due to aggressive monetary easing and favorable tax reforms."
—— Opinion
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How a Trump-Pompeo Commission Gets Human Rights All Wrong - By Michael Posner
"Yesterday, the State Department’s Commission on Unalienable Rights issued its draft report, the culmination of a yearlong study by a group of scholars and activists, chaired by Mary Ann Glendon of Harvard Law School, and chosen by Secretary of State Mike Pompeo. He convened the Commission to elaborate on the core principles framing the US approach to human rights, which Pompeo referred to yesterday as “our enduring dedication to unalienable rights and our tradition of constitutional self-government.” The Commission’s report has some troubling aspects, but what is most striking is the stunning gap between the broad principles the Commission articulates and the dramatic abandonment of these principles by the current administration, both at home and abroad."
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CSB Sustainable Market Share Index™ 2020 Update - By NYU Stern Center for Sustainable Business
Results from the 2020 CSB Sustainable Market Share Index™ examine trends and consumer demographics for sustainable products and highlight the impact of COVID-19 on sustainable CPG brands
—— Research Highlights
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The Federal Reserve's Biggest Success during the Coronavirus Crisis: Keeping Itself out of Politics - By Simon Bowmaker and Paul Wachtel
"Central bank independence — the ability of central bankers to make policy without interference from political authorities — became the holy grail of monetary economists in the 1990s. It was agreed that independence from political pressure was the bulwark that protected the world's economies from inflation."
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Why Facebook Must Do More to Stamp Out Hate on its Platforms - By Michael Posner
"Facebook and the other social media companies are at a crossroads, in this country and around the world. The Stop Hate for Profit campaign shows that business as usual will no longer suffice. As politicians of both parties call for reform, these companies must do more than make public statements and attach labels. Instead, they should reexamine their core business models and accept responsibility for moderating their sites in a way that comports with their values and their public commitments to be a force for good."
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Do Asset Write-Offs Matter? Not Really - By Baruch Lev
"What is the relevance of such asset write-offs, often of staggering amounts, to investors? Is it a signal to dump the stock, as some Shell investors did on June 30?"
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To Fight the Coronavirus Budget Crisis, Act Like Alexander Hamilton - By Marti Subrahmanyam
In a joint op-ed, Professor Marti Subrahmanyam suggests that the U.S. needs an act of solidarity, as exemplified by Alexander Hamilton in 1790, to combat the coronavirus budget crisis.
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Fighting Racial Injustice Starts in Preschool - By Zur Shapira
In the wake of George Floyd’s killing in Minneapolis, activist demands for defunding the police have reverberated across the country. Even if these steps are taken, the “new normal” of policing will provide only a partial solution for the underlying problem – the racial injustice and inequality that is deeply ingrained in our society. In order to effectively combat racism and persistent inequality, we must begin actively educating our youth, as early as preschool, before attitudes form and develop into deep-seated prejudice.
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