Corporate strategy used to be measured in the form of shareholder interest versus those of all the stakeholders. But now it takes in to account, he difference between holistic and narrow value creation settings. Companies are unfortunately pursuing narrow financial targets, thanks to the trend of short- term thinking that seems to have afflicted everywhere. Those companies that are actually admired now, as testified by the Fortune magazine, are those which have worked on quality of management and on innovations. They are good with their talent recruitment efforts, partly because they are known for their social responsibility. The ones doing worst on Fortune’s list are, inevitably performing badly, business- wise. All this, points to the urgent need for today’s managers to embrace corporate finance, as the way out. They need to understand the topic, so the company can make use of the concept. Managers will then be better able to gauge the cost of capital. It will also help them be aligned with the primary source of value creation.

Source:https://knowledge.insead.edu/economics-finance/why-managers-now-more-than-ever-need-to-understand-corporate-finance-11741

Uploaded Date:24 June 2019