Strategic Time Out

Sometimes I really wonder how marketing guru's change the face of the game in such a amazing fashion .. Look at the new feature of the IPL - Strategic Time out . A move which adds another 10 minutes to the game , how it has changed the entire game . Now the media has extra time to put in more advertisements and earn extra revenue . It also provides  time to teams to realign the strategy in the middle of the game and makes it really interesting . So many games in IPL have been influenced by this time out.

The best part of it is the flexibility it provides to the viewer who can also use this time to do some work , sitting and watching the entire 2 hour game can be tough for few of us .

 In all a win win situation and no one is complaining . 

Filthy Rich

What will you do when you have tons of money, Mr Raju is reported to have 1000 designers suit just for himself, which can make even the likes of Amitabh Bachhan feel jealous, but the big question is - Why do people like Raju spend millions on designer suits and accessories when it will take him atleast 3 years to repeat the usage of the earlier used one. Some of the reasons might be:-

1         Exhausted with other options of burning money

2         Marginal utility of saving money gets reduced drastically

3         Safety from detection of excess Black money

4          Have to fill up the expensive and fancy Wardrobes

5         To attract attention of fairer sex

6         Improving the demand and state of economy

7         Use it as a sign of immaculate taste

Want to know the real reason, get Rich.

Corporate Governance ..

Satyam scandal has unnerved lot of market participants about the chances of corrupt practices being undergoing in lot of other companies, people who use to believe in fundamental analysis of the securities are now suspicious of the real intrinsic value of their stock holdings. Clearly discounted cash flow analysis , relative valuation or even DDM cannot account for the risk of marked up employees or fudged balanced sheets. In such a scenario what method of valuation can actually discount for the risk of abysmal corporate governance is a real issue for modern day finance practitioners and there is a need to add this qualitative measure in quantifying the intrinsic value of any stock. This risk can be called risk of asymmetric information .One of the way of quantifying such risks is increasing the discount rate for company with less transparency or lesser number of independent directors. The high discount rate will reduce the value of the stock but quantifying the value of this premium is a very difficult process.

SEBI is coming out with a new formula to add another check in the auditing process by introducing peer review. In a peer review internal auditors from some randomly selected company will check the books of some other company and vice verse.  There may be lot of operational intricacies in actually adopting this process but it can act like a good deterrent for the company to take up innovative accounting practices . What is interesting is that the industry is not supporting this new check. Let’s hope we have it implemented and it can identify most of the Satyam’s in the process.