Rassier D.G.,PricewaterhouseCoopers |
Earnhart D.,University of Kansas
Environmental and Resource Economics | Year: 2010
Previous research provides opposing theoretical arguments regarding the effect of environmental regulation on financial performance. As one important argument, the Porter hypothesis claims that tighter regulation improves financial performance. This study provides empirical evidence on this debated effect. In particular, we employ panel data analysis to examine the effect of Clean Water Act regulation, as measured by permitted wastewater discharge limits, on expected future financial performance, as measured by Tobin's q, for publicly owned firms in the chemical manufacturing industries. We find that tighter permitted discharge limits lower Tobin's q; i. e., more stringent Clean Water Act regulation undermines expected future financial performance. By decomposing Tobin's q into its constituent components-market value and replacement costs-and estimating each component separately, we find that tighter permitted discharge limits lower both components with a larger impact on market value, which implies that investors revise their expectations of the discounted present value of future profits in response to changes in Clean Water Act regulation. © Springer Science+Business Media B.V. 2009. Source
News Article | August 29, 2016
Sloane Menkes is no stranger to crises. The former U.S. Air Force first lieutenant and current global crisis center leader for PricewaterhouseCoopers helps clients deal with situations that disrupt business as usual, advising them on how to identify and gather the resources and knowledge necessary to respond. Menkes recently spent some time in Nepal helping to rebuild homes destroyed in a pair of 7.3 and 7.8 magnitude earthquakes in 2015 that killed more than 8,000 people and left another half a million families without homes. During her time in Nepal this past April, Menkes witnessed the resiliency of the local population as she assisted in the rebuilding effort. "Crises can have many definitions and come in many different forms," she tells Fast Company. Here are a few lessons her experience in Nepal taught her about managing any business crises. Menkes explains that during a crisis everyone wants to contribute something to the relief effort, but without clearly defined roles those resources will overlap or otherwise not be used to their fullest extent. "When clients are in crisis everyone wants to pile on and solve the problem," Menkes says. "I try and help clients understand the importance of the roles that they play in a crisis," she explains, "and disentangle those roles so people can make decisions and weed out misinformation and have respect for what each person can contribute." For example, Menkes said that many of the villages in Nepal had elected a project manager, who was responsible for checking the quality of each home as it was being built. A village elder prioritized whose homes were to be built first. "I think back to how the local villagers managed and prioritized who would get the homes, and then in a crisis how you're prioritizing and managing different people's activities, I see that inspiring what I do for my clients," she says. When the Nepalese began rebuilding following the earthquakes of April 27 and May 12, 2015, they used the resources that were most readily available. Since that time, over 2,750 homes have been built using bamboo, a small amount of aluminum sheeting, and 18 buckets of mud. "18 buckets of mud changed these people's lives," she said. "That was one of the key things that I took away and use in my professional life," says Menkes. Getting clients to understand that sometimes they already have resources available to make things happen doesn't have to be a challenge, she says. "You may not have to look too far, if you're creative, to find those resources," Menkes asserts. When a crisis hits, you don't want to be caught unprepared, without any predefined roles, or considerations of how to move forward, says Menkes. She advises organizations to prepare a crises management plan that identifies all of the resources they have readily available, as well as where to find those that aren’t. "Do they know who they will rely on should a crisis hit?" she asks. "Sometimes that's the resources and talent they have in-house, and sometimes they need to look beyond," Menkes says. "Crises simulations (tabletop exercises that simulate a crisis) allow the client to exercise their response plan, but also helps clients see the importance of respecting those roles the same way I saw that happening in the villages." In spite of having those plans readily available, however, Menkes warns that a crisis, by its very nature, will require some on-the-fly adjustments. For example, Menkes explains that the bamboo and mud homes that were being built in Nepal had to be adjusted in some of the 14 hardest-hit districts to respond to their unique climates. "The villagers modified the design without having to modify the materials in a large way," she says, explaining that the villagers had to use the equivalent of a sealant to strengthen the bamboo in certain districts. "Your best-laid plans may not survive reality," she admits. "You have to rely on your plans," Menkes adds, "but be ready to modify them so that in the midst of a crisis you're still able to respond and recover." Though there were many lessons Menkes brought back from Nepal, what stuck out to her the most was the resilience and perseverance demonstrated by the villagers as they adjusted to life following the disaster. Though buildings, homes, and monuments lay in ruins, Menkes says that the local population learned to adjust, and carried on living their lives among the rubble. Menkes says that she'll never forget the pride and spirit of the Nepalese she encountered when she arrived. "When clients encounter crises, they have to get back to business as usual or get back to the new normal that exists on the other side," she observes. "It's kind of like living among the rubble of what has happened, and figuring out a way to survive and thrive."
$14.5 billion: that’s how much the European Union has ruled Apple owes Ireland in back taxes. It’s a big number, though not nearly the tax bill Apple would owe the U.S. if it pulled the $92 billion in profits it is currently storing in Irish and other overseas accounts back to its home country. CEO Tim Cook says 40 percent of that would go in taxes to the U.S. and state governments, an amount he recently told the Washington Post Apple would not be willing to pay. “It’s not a matter of being patriotic or not patriotic,” Cook said. “It doesn’t go that the more you pay, the more patriotic you are.” Cook thinks the tax law should be changed and U.S rates lowered. As for the EU tax ruling, he vowed to appeal. “At its root, the Commission’s case is not about how much Apple pays in taxes,” he wrote. “It is about which government collects the money.” But no government seems to be collecting very much. According to the EU, Apple’s corporate tax rate in Ireland has been as low as 0.005 percent in recent years. And an extensive review of the company’s tax practices performed by the U.S. Senate’s Permanent Subcommittee on Investigations in 2013 found that Apple pays taxes of less than 2 percent on its overseas income, and significantly less than the 35 percent U.S. statutory corporate tax rate on its domestic income. Many applaud companies for making smart financial moves, including minimizing what they pay in taxes. But there are consequences to Apple’s decision to make global tax planning one of its core capabilities. While the company’s money sits in foreign accounts, it is being invested in securities like U.S. Treasuries, stocks, and other investments, not in the kind of research that could help to generate new tech breakthroughs, innovation, and jobs. Apple has consistently spent less than competitors on research. Even in 2015, when it put a record $6 billion into R&D, that was just 3.3 percent of its $183 billion in revenue. By contrast, Intel spent more than 20 percent of its 2015 revenue on R&D. Microsoft spent 13 percent, Google 15 percent, and Amazon more than 10 percent, all according to data compiled by PricewaterhouseCoopers. Apple has more cash than any other company—$216 billion in total, according to Moody’s Investors Service. But spending it would mean bringing it back to the U.S. and paying taxes on it. It’s far cheaper to borrow money, and that’s exactly what Apple has done, going from debt-free as recently as 2012 to $80 billion in debt as of March this year. That money has gone to finance much of the company’s current spending, which includes a large program to buy shares back. Such buybacks help support a company’s stock price, but do little to stoke innovation. Apple isn’t the only company hoarding profits overseas, either: Microsoft has $108 billion overseas, and General Electric has $104 billion. It’s a trend that’s helping to create a disparity between corporate performance and overall economic growth. Recent research by a trio of Columbia Business School professors found that under current tax rules and practices, less profit is being channeled into U.S. investments, contributing to lower overall economic growth.
News Article | August 22, 2016
A report released this month by PricewaterhouseCoopers (PwC) indicates hydropower development in India can play a crucial role in the country’s sustainable energy security if sites for new installed capacity -- among other things -- are accessible, stable and affordable.
News Article | March 31, 2016
When PricewaterhouseCoopers (PwC) recently modernized the majority of its 83 U.S. offices, it added more common space and made each office smaller, reducing the space per employee by 30%. "More and more we are a virtual company," says Toni Cusumano, a principal in the company’s global human capital practice. "People don’t go into our offices the way they used to. We’ve shifted down." PwC’s shrinking office space is a common phenomena. Office workers in North America had 176 fewer square feet of personal space in 2012 than they did in 2010, according to commercial real estate association CoreNet Global, and at least anecdotally, that trend has continued. Meanwhile, more people are working independently. As work changes, so has the space that best accommodates it. Companies like WeWork, which offers small offices within a shared community of workers on a monthly basis and recently raised funding at a $16 billion valuation, have helped building owners adapt as the renting of vast swaths of cubicle farms in three- or five-year increments falls out of style. But as these real estate developers have watched WeWork rise, they’re looking for ways to more directly tap into the trends that have made the company so successful. "When you look at the growth of, for example, the coworking companies, it’s clear that long-term leases with little flexibility are probably not entirely the way of the future," says Deborah Boyer, EVP and director of asset management for the SWIG Company, which owns almost 9 million square feet of real estate. Some real estate companies have developed their own prebuilt spaces to accommodate growing companies. Others have partnered with WeWork to design entire buildings with a new type of work in mind. If WeWork is the Marriott of work—it fills spaces with receptionists, refreshments, and programming the same way a hotel company designs and operates its space—then companies like LiquidSpace, PivotDesk, and ShareDesk are work’s Airbnbs, offering flexible small work spaces. They allow businesses with excess office space or unused conference rooms to list them for rent by the day, week, or month. Initially, many advertised as "on-demand" meeting space. PivotDesk initially focused on monetizing extra desks at offices occupied by quickly growing companies, which often sign long-term leases for spaces that are larger than they might need for the first year. The 2 million bookings LiquidSpace has facilitated have mostly been inside hotel conference rooms, in coworking spaces, or in work centers. But as companies like WeWork continue to prove demand for flexible, short-term leases, these companies have been creeping into a similar territory, facilitating coworking spaces or even longer-term rentals on behalf of building owners. ShareDesk, which advertises office space in 4,500 venues, also makes software tools for coworking spaces. PivotDesk says that 30% to 40% of our customers come through partnerships with brokers, landlords, and developers, including partnerships with Jamestown, a real estate company that used the platform to fill an "innovation and design" development in Boston. And last May, LiquidSpace began to accommodate bookings ranging in length from a couple of months to a couple of years (but still shorter than the typical three-year office lease). When demand for longer-term leases grew quickly, LiquidSpace CEO Mark Gilbreath began to think of real estate developers—not just hotels, coworking spaces, and startups with extra desks—as potential suppliers for LiquidSpace. Even without amenities of coworking, believes Gilbreath, there’s a market for smaller spaces and flexible leases. "A good amount of WeWork demand is environment, the community they provide," he says. "But there’s also a large portion of their clients who are simply seeking flexibility." That’s something that LiquidSpace can provide without signing commercial leases or hiring community managers. In November, the company launched its first two prototype spaces in San Francisco for altSpace, an effort that might best be described as "coworking light." Each altSpace office comes fully finished and furnished. But instead of paying an operating company like WeWork when they move into the pre-ready space on a month-by-month basis, tenants deal with the owner of the building, in this case the Swig Company. Instead of taking a fee for the whole value of a lease upfront, like a broker would, LiquidSpace takes a 10% cut of the rent every month. Developers so far have used LiquidSpace to market spaces that are too small to attract the attention of brokers or to lease to a big coworking company. LiquidSpace provides a quick, standard lease that saves them hassle and legal expenses. Boyer, of The SWIG Company, emphasizes that it’s not necessarily a choice between coworking and leasing through a platform like LiquidSpace. In addition to altSpace, The SWIG Company also leases to WeWork. Though only in its prototype phase, something like AltSpace could potentially accommodate companies that grow out of a coworking space. "So you don’t lose them as a tenant," she says, "you can accommodate them." Soma Capital Properties, another real estate company that leases to WeWork, uses LiquidSpace to rent a group of small offices it owns in Encino, Los Angeles. "It’s very management-intensive," David Smith, a partner at the firm, says of the WeWork model. "Our expertise is taking properties that need to be repositioned in the marketplace. That’s our expertise. It’s not about renting space like WeWork does." By pairing LiquidSpace and an on-site manager, Soma Capital Properties offers a lighter, less curated version of the small, flexible leases WeWork sells as memberships. "[LiquidSpace] relieves some of the administrative stuff," Smith says. Other property owners who use an "Airbnb for office space" aim to attract more progressive companies, accommodate potentially high-growth startups, and fill empty spaces before presenting them to potential long-term tenants. The trend has created a new niche for real estate that might otherwise have sat vacant. "Airbnb opened up a new category of hospitality, and the same thing is happening in office space," Gilbreath said. "Smaller spaces that real estate brokers wouldn’t have had access to before are now becoming easy to find."