Finance flash: the TOP-10 articles of week 25


Do you want to keep up to date with the latest developments in finance, but you are short of time? Don’t worry. CFO South Africa weekly collects 10 of the most important articles from international media for your convenience.

1. 'Brexit' Aftershocks: More Rifts in Europe, and in Britain, Too
Britain's startling decision to pull out of the European Union set off a cascade of aftershocks on Friday, costing Prime Minister David Cameron his job, plunging the financial markets into turmoil and leaving the country's future in doubt. The easy win by the "Leave" campaign exposed deep divides: young versus old, urban versus rural, Scotland versus England. The recriminations flew fast, not least at Mr. Cameron, who made the decision to call the referendum on membership in the bloc to manage a rebellion in his own Conservative Party, only to have it destroy his government and tarnish his legacy.

2. How to manage a short-term currency fluctuation risk
Strategies that mitigate short-term currency fluctuations are routinely part of a multinational company's enterprise risk management plan. Events such as changes in interest rate policies in countries where the company does business usually trigger these ERM strategies. Thursday's referendum on the UK's membership in the EU, commonly known as the Brexit vote, has been a highly unusual and powerful trigger. With a majority of voters deciding to leave the EU, uncertainties abound, and foreign exchange markets hate uncertainty. Just hours after the vote, the British pound had plummeted to a 30-year low against the US dollar.

3. Beyond the Holacracy Hype
It was a Thursday afternoon in Las Vegas. Five employees were camped out in a team room at Zappos, the largest company so far to implement the self-management form holacracy. On this particular day, in May 2015, the circle charged with overseeing holacracy's adoption was questioning the method's effectiveness. A couple of months earlier, Zappos CEO Tony Hsieh had offered severance packages to all employees for whom self-management was not a good fit—or who wished to leave for any other reason. Although most decided to stay, 18% took the package, with 6% citing holacracy.

4. The Rise of FinTech in Supply Chains
A new type of services company could transform global supply chains: Financial technology companies that act as intermediaries in facilitating transactions between a company and its suppliers. They enable both the buyer and supplier to improve their working capital by making it possible for the former to extend its payables and at the same time accelerate payment to the latter. This provides both sides with benefits, including greater liquidity and less variability in the timing of payments.

5. 5 Leadership Secrets of Hillary Clinton
In June, Hillary Clinton made history as the first female presidential nominee of a major political party. As important as the historical value of this victory is, the press and other news commentary called out that gender is not Hillary's primary playing card. What will be more important is how she articulates her strong vision for this country, and how she will differentiate her leadership from other presidents for addressing the complexities and challenges our nation and the world are facing today.

6. Six Deadly Sins of M&A (Listen Up LinkedIn and Microsoft!)
By Jack and Suzy Welch | With the exciting news that LinkedIn has been acquired by Microsoft for $26 billion this week, we thought it only fitting to talk about a topic that we've received countless questions about over the years — M&A. What is the right cycle time for mergers and acquisitions? How do you prepare for integration? What would you do in the first 30 days after closing? In other words, how do you not screw up M&A?

7. CFOs Are Becoming Cloud Software Converts
I am pitched often (and I mean OFTEN) about how cloud software applications and services are transforming sales, marketing, manufacturing, pretty much any business process you can name. Up until this point, corporate finance teams—notorious Luddites when it comes to new information technology—have been far slower to jump on the bandwagon, while signing plenty of checks for their counterparts. But lately, CFOs have begun signing up for cloud financial software at a much faster pace.

8. The case for principle-based accounting
The debate over which accounting standards philosophy is better—principles or rules—has persisted for decades with no end in sight. It's a healthy debate. Principles written at too high a level result in issues with comparability and other challenges but excessive rules result in unnecessary complexity and invite structuring. Having spent 40 years in this space as a US auditor and preparer and for several years as an IASB member, I have the benefit of seeing this issue from several perspectives, and I have no doubt that a principle-based approach to establishing accounting standards is, without question, the better way to go.

9. Economic Profit: A Better Way to Measure Performance
Performance measures typically used in annual incentive plans fail to align managers with the long-term interest of investors. News headlines have abounded regarding compensation packages for executives this year. But investors' anger isn't typically about the compensation levels but rather the misalignment of pay and the underlying corporate performance behind that pay.

10. Compliance costs, complexity rising in finance
Costs associated with compliance functions have remained steady the past few years. But finance executives expect that to change in the next three years. More than two-thirds of US finance executives, and 60% of them in Canada, predict compliance costs to rise, according to an annual benchmarking report by Robert Half and the Financial Executives Research Foundation. The report examines responses of more than 1,700 finance executives at public and private companies in North America's two largest countries.

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