HEC Paris

About: HEC Paris is a education organization based out in Jouy-en-Josas, France. It is known for research contribution in the topics: Investment (macroeconomics) & Market liquidity. The organization has 584 authors who have published 2756 publications receiving 104467 citations. The organization is also known as: Ecole des Hautes Etudes Commerciales & HEC School of Management Paris.

MEasuRing Intangibles To Understand and improve innovation Management (MERITUM)

Abstract: The aim of the project was to improve the policy-making capabilities of the European Union in the realm of science and technology policy, and particularly with respect to innovation, by means of providing a consistent basis for the reliable measurements of intangible investments. The specific objectives of the project were the following: a) Produce a classification of intangibles, which is theoretically meaningful and useful for empirical analysis. b) Analyse Management Control systems in order to get to know best practices within European companies in measuring intangible investments, in measuring the outcome from those investments, in using those measures for management decision making and in disclosing them for the use of stakeholders. c) Assess the relevance of intangibles for the purposes of equity valuation in capital markets and d) Produce a set of Guidelines for the Measurement and Disclosure of intangibles which should be useful both for private and public policy decisions. To do so, the project was organised into four activities: a) Classification of intangibles; b) Management Control Study; c) Capital Markets and d) Guidelines. The results obtained in these four activities are summarised next: ∑ Classification of intangibles: Both the definitions of intangibles and classification issues are still very open issues. However from a practical perspective firms seem to group intangibles into Human Capital, Structural Capital and Relational Capital. They also define intangibles in static and dynamic terms, thus distinguishing between intangible resources and intangible activities. ∑ Management Control Study: Several lessons could be drawn from the analysis of both firms with experience managing intangibles and non-experienced firms. Notably for non-experienced firms the external framework conditions and support is extremely important. Sectoral organisations seem to play a major role encouraging the management and disclosure of information on intangibles, especially for SMEs; Education is a crucial element. It is necessary to motivate firms before starting any project; The implementation of a model for the management of intangibles takes place usually in three steps: Identification of critical intangibles, measurement and action; Measurement without action is worse than no measurement at all; Generic metrics do not work for all firms. Specific intangibles require specific indicators; Size is not relevant in the successful implementation of a system for managing and reporting on intangibles. ∑ Capital Markets: The analysis conducted under this activity support the general idea that intangibles are relevant for financial market. Based on econometric analysis, it was found that both R&D and qualitative human resources were related to the value of the companies. Case studies also support this evidence. ∑ Guidelines: The most important outcome of the MERITUM project is the Guidelines for Managing and Reporting on Intangibles (Intellectual Capital Report). They provide the conceptual framework and describe the process to be followed by those firms who want to manage their intangibles and report externally. The Guidelines are the result of all the knowledge generated during the project in the previous activities. The Guidelines were found complete, useful and feasible by a variety of experts: firms, policy-makers, standard setting bodies, accounting and auditing firms, labour organisations, etc. mostly in Europe. MERITUM has become an international reference in the analysis of intangibles. The knowledge generated during the project will be further disseminated and exploited in E*KNOW-NET, a Thematic Network on Intangibles, financed by the STRATA programme, which will be launched in September 2001. More information about the MERITUM project (partners, downloadable documents, etc) can be found in www.kunne.no/meritum. Final Report MERITUM Project 2

When Organisations Deinstitutionalise Control Practices: A Multiple-Case Study of Budget Abandonment

Abstract: Drawing on a framework of deinstitutionalisation, this study explores the abandonment of budgeting through a multiple-case study of four companies. The findings illustrate how a number of antecedents to deinstitutionalisation acted in each setting and show that abandonment was only achieved through skilful agency by dominant insiders to construct the need and manage for change. In addition, a finding of the study is that two of the four companies reversed the deinstitutionalisation and reintroduced traditional budgeting. This is explained by highlighting the role of remnants of formerly institutionalised practices and by demonstrating the importance of administrative and cultural controls which can support the abandonment of a central accounting control practice in the first place. Overall, this research extends previous studies of deinstitutionalisation by analysing a taken-for-granted practice at the micro-level and by giving a more agentic account of its processes.

Platform re-use lessons from the automotive industry

Abstract: Firms move from the management of unique projects to multi-project management based on a platform strategy that reduces lead-time and development cost, enhances reliability, allows mass customization and increases manufacturing flexibility. While the major challenges of the platform design have been highlighted, the management of the platform lifecycle was under studied. We address this missing point by considering the evolution of the platform during its life cycle. For that purpose, we have carried out a field methodology research at a car manufacturer six years after the successful setting of the platform strategy. We analyzed at a fine-grained level the development of a second generation product on this existing platform. Using a model that traces the design decisions taken during this development, we have identified that in order to reuse the platform over two generations, the engineers implicitly apply, besides the design rules that correspond to the very definition of platform strategy as presented in the literature such as the carryover and the lean design, a learning routine that challenges these rules. We designated this routine by “smart reuse” because it enables the reuse of the platform from one generation to another. We highlight the interplay between the products and the platform that co-evolve. We point out the reciprocal prescription relationships between the products and the platform. This co-evolution operates through two levels: between the product planning and the platform on one hand and the product development and the platform on the other. It has organizational implications that point out the central role of the Platform Director in the platform reuse. Eventually, we outlined the platform architecture issue, mainly its modularity, and its impact on the platform progressive renewal. This research that addresses the sustainability of the platform is exploratory: it reveals ideas that need to be validated and tested through other methods and in other industrial contexts.

Illiquidity Contagion and Liquidity Crashes

Abstract: Liquidity providers often learn information about an asset from prices of other assets We show that this generates a self-reinforcing positive relationship between price informativeness and liquidity This relationship causes liquidity spillovers and is a source of fragility: a small drop in the liquidity of one asset can, through a feedback loop, result in a very large drop in market liquidity and price informativeness (a liquidity crash) This feedback loop provides a new explanation for comovements in liquidity and liquidity dry-ups It also generates multiple equilibria

The Dog that Did Not Bark: Insider Trading and Crashes

Abstract: This paper documents that at the individual stock level insiders sales peak many months before a large drop in the stock price, while insiders purchases peak only the month before a large jump. We provide a theoretical explanation for this phenomenon based on trading constraints and asymmetric information. We test our hypothesis against competing stories such as patterns of insider trading driven by earnings announcement dates, or insiders timing their trades to evade prosecution. Finally we provide new evidence regarding crashes and the degree of information asymmetry.