Ever since Bruce Henderson introduced the growth-share matrix, corporate portfolio management has been a big part of the CEO agenda. But a recent BCG survey, conducted with Freiberg University in Germany, reveals a major gap between the effort companies put into portfolio management and its impact on corporate decision-making.

Editor's Note: includes and excellent overview of CPM including history and common criticisms.

Day-traders might say the Dow’s direction depends on the morning’s news. Pundits may cite the next winner of the Super Bowl or the political party of the next elected president. Fundamental analysts might say it depends on earnings growth. The DJIA is swayed both by economic and non-economic factors. This article estimates what portion of the Dow is economically driven and what portion is not explained by economic forces.

Editor's Note: this article is less topical than it sounds

The fundamental success of a strategy depends on three critical factors: a firm’s alignment with the external environment, a realistic internal view of its core competencies and sustainable competitive advantages, and careful implementation and monitoring. This article discusses the role of finance in strategic planning, decision making, formulation, implementation, and monitoring.

Editor's Note: I don't think this article really adds any new learning value or even does a good job meeting it's stated objective. I include it however, because it does provide a decent high-level look at strategic planning and the role of finance in the balanced scorecard for those who are weak on either of those concepts.

When asked to predict activity in the stock market, J.P. Morgan replied that stock prices would fluctuate. Modern finance theory ascribes meaning to these fluctuations. The stocks of successful, well-run, or lucky companies rise. Those of unsuccessful, misgoverned, or unlucky companies fall. While portfolio managers view the volatility of individual stocks as a problem to be overcome through diversification, corporate executives watch their stocks rise or fall with euphoria or dismay. A soaring stock price helps a company grow, by raising bond ratings and bringing in more money from additional share offerings. A plummeting stock price unsettles creditors and raises the dilution cost of each dollar of new equity.

Inflation has a corrosive effect on business performance, but like any economic threat, it tends to separate the wheat from the chaff. Those companies able to protect themselves from inflation’s negative effects can exploit an inflationary period to improve their competitive advantage. With prospects for inflation on the rise over the midterm, companies need to start now to make sure their organizations are “inflation ready.” This report, the second in a series, describes a two-step preparation process.

Identifying and understanding important individual investors can help corporate executives predict the direction of share prices.

This measure of business performance is the best indicator of corporate success.

Even though CAPM does not work, many (most) still use it with some bad results. Why? One reason may be that few people understand other models. Thus Wes Gray (the mastermind behind the Empirical Finance Blog) goes on to explain the Fama French model, link to Sharpe's page for data, and then gives spreadsheet examples of how to use it. Simply great job! [FinanceProfessor annotation]

Four principles can help you make great financial decisions—even when the CFO’s not in the room.

When performance is an issue, most executives focus on the income statement—they cut costs. But tight management of the balance sheet often liberates cash and creates more value for shareholders.

This paper explains how companies try to use the budgeting system to integrate everything, but that the different needs are incompatible, leading to companies having problems with their planning and budgeting systems. It goes on to suggest a series of actions to improve the planning and budgeting process.

Many executives strive for stable earnings growth, but research shows that investors don’t worry about variability.

Although receiving a venture term sheet to fund your company is a cause for celebration, please consider the various booby traps that it may contain before you break out the party hats. This is a top 10 list of things an entrepreneur should understand about term sheets.

Good companies haven't always been good investments. Total returns to shareholders may not necessarily be a good measure of management performance. How fast is your treadmill moving?

Researchers find no connection between improved overall firm performance and the offering of stock option compensation to rank-and-file workers.

If inflation rises again, companies will have to do more than just match it to keep up—they’ll have to beat it.

Multimedia bonus: An interactive exhibit allows you to see over time how much a company's earnings must increase in order to keep cash flow stable.

As the Initial Public Offering (IPO) market gains momentum, more organizations are evaluating the option of becoming a publicly traded company, and the processes associated with an IPO. Going public certainly represents a significant event and major achievement for any company. With all of its rewards, however, an IPO can be complicated, time-consuming, and involve a high degree of risk. The process requires an extraordinary level of management knowledge, skill, and commitment.

This publication will assist you through the IPO process by providing practical, working knowledge of the IPO stages. Comprehensive in scope, it addresses both pre- and post-IPO considerations, so you remain well informed and prepared at every stage. Along with key information on the requirements and regulations of a successful offering, this publication also includes helpful tools, such as a timetable for going public, a sample due diligence checklist, and a discussion of the different securities exchange listing requirements.

No company can afford a flawed understanding of customer profitability, least of all in a recession when the margin for error (as well as profit) is whisper-thin. The flip side is that improvements in this area can be a very effective way of bolstering the bottom line — and companies can often make those improvements with only a modest initial investment.

Skittish investors will not be surprised to learn that the bottom line of a company's income statement fails to tell the whole story. New research by Jan Barton, an associate professor of accounting at Emory University’s Goizueta Business School, suggests that subtotals near the center of the income statement, such as operating income, have a much stronger association with contemporaneous stock returns than do the top-line and bottom-line numbers. In a paper entitled, “Which Performance Measure Attributes Do Investors around the World Value the Most—and Why?” slated for publication in The Accounting Review in May, Barton and co-authors Grace Pownall, professor of accounting and associate dean of the doctoral program at Goizueta, and Bowe Hansen of the University of New Hampshire, argue that no one single performance measure can serve as a Rosetta Stone for investors as they shop for stocks around the world. Still, Barton says, the research suggests that helpful metrics tend to be those that quickly and directly reflect information about a firm’s future cash flow.

An entrepreneur's guide to offering trade credit, crafting a credit application, and evaluating a customer's credit-worthiness.

In 2008, market events showed that some of the protection provided by diversification is lost when correlation among asset classes changes rapidly. Now, the question is: Are traditional diversification concepts no longer applicable due to some systemic change? Or is there still a simple, repeatable approach to diversification that can lead to significant protection against loss of principle?

Many factors could be contributing to recent volatile market behavior, for example, globalization, investor fear, government policies, and alternative investments. This article explores a methodology that attempts to address these factors.

Strategies to improve working capital deficiencies and unearth excess cash from corporate balance sheets.

Executives need to embrace transparency if they want to help investors make investment decisions. But what should be disclosed?

Differing beliefs lead to price drift: The standard view of how stock prices move—that investors act rationally on information and that markets are efficient—does not account for price drift. Snehal Banerjee explains that price drift may occur because investors agree to disagree about the average valuation of an asset.

Cost performance may be a useful measure for companies that want to trim spending as effectively as possible.