Wednesday, October 31, 2018

IBM to buy Redhat.

An interesting deal.  IBM has a strong presence in this area, and of course Redhat is a Raleigh based company.   Details of the deal are here: https://www.marketplace.org/2018/10/29/business/ibm-bets-34-billion-cloud-computing-red-hat-purchase.

A back of the envelope analysis suggests that there's about $7bn in merger gains.


GE cuts dividends

Dividend cuts are quite rare and even rarer for a stallwart stock like GE.  But yesterday, GE cut it's dividend to a penny a share.

https://www.cnbc.com/2018/10/30/general-electric-earnings-q3-2018.html

There wasn't much of a price reaction, the stock had been on a downward trend, but the dividend cut certainly didn't help.


A dividend cut signaled that GE is struggling, but I don't think that was news to anyone.  Even an analyst upgrade didn't help the stock price.
https://www.barrons.com/articles/ge-has-problems-but-analyst-sees-upside-for-the-stock-1540998708

A lower dividend payout means that the company can retain more cash and invest in growth, but as basic finance theory would state, dividend policy should be largely irrelevant in firm value.


Thursday, January 11, 2018

Do pro-diversity policies lead to greater corporate innovation?

That's the question that we (myself, Roger Mayer of NC State and Jing Zhao at Portland State) recently studied in a paper that's forthcoming in the finance journal: Financial Management.

The answer is YES.   We found that firms that promote diversity have more new products, more patents and more influential patents.

You can read the paper here: http://onlinelibrary.wiley.com/doi/10.1111/fima.12205/full

Here's the summary on the NC State news page. https://news.ncsu.edu/2018/01/diversity-boosts-innovation-2018/

And here's a nice write up on WUNC radio's website, together with some additional links that talk about the benefit of diversity in teams.  http://wunc.org/post/study-diverse-companies-are-more-innovative