Does the liquidity of a particular stock – that is, the ease with which investors can buy and sell the shares – impact investors’ decisions to acquire the stock, and then their ability or desire to get involved with management to improve governance and performance? Alex Edmans of the Wharton School, Vivian Fang of Rutgers University, and Emanuel Zur of Baruch College examined this question and published their findings in a recent paper, “The Effect of Liquidity on Governance.”

As a point of comparison, Edmans notes, in an article accompanying the study, that Japan’s economic boom during the 1980s convinced many academics and others that a low-liquidity system was a good model. When it’s difficult for shareholders to buy or sell their shares, they’re more likely to nudge management to boost performance – or so the theory went. Then, Japan experienced what’s often been referred to as “the lost decade,” giving rise to some doubts about this theory. What’s more, even as Japan was languishing, stocks were booming in the U.S., even with the greater liquidity. more

Cloud computing has changed the fundamental economics of business software, bringing new capabilities within reach of large numbers of small and midsize companies for the first time. Cloud-based ERP, for example, enables many midsize companies that in the past might have continued to use an entry-level accounting package to have more capable and sophisticated systems.

The investment in software and IT capabilities to implement an ERP system on-premises is considerable enough that midsize companies often put up with a less-capable one. As well, midsize companies can now have their own call center operations because cloud-based offerings that support these operations require substantially lower up-front investments and have significantly lower operating costs than their on-premises counterparts. more

What do you need to get your business to take advantage of the cloud, business analytics, and other technology trends that have been sweeping the world? These trends are not a passing fad but a fundamental change in the way organizations will do business going forward.

Tapping the cloud or ramping up business analytics, however, isn’t cheap. Industry experts promise that cloud computing, SaaS, virtualization, and other related technologies will save the organization money, drive greater efficiency, and help it make even more money. Sure, but getting started requires considerable money.

In September IBM announced that it will provide $1 billion in financing to help credit-qualified small and medium businesses (SMBs) over the next 18 months take advantage of new advanced technologies, such as analytics and cloud. more

Corporate America’s ability to sometimes pay little or no taxes on the income it earns has captured headlines recently. Consider this story from MSN Money: GE’s Corporate Tax Bill: Zero. There’s also this one from The Daily Beast: 15 Top Corporate Tax Dodgers. ABC News weighed in with a slightly less incendiary take on the matter in its story, Big Corporate Profits, Small Tax Bill. more

I was reminded by a recent piece in InformationWeek about the need to manage the mounting cost of software more carefully that this issue never seems to become old news. I have read variations of it in IT trade publications for two decades now, reminding me of the quip attributed to Mark Twain: Everyone talks about the weather, but nobody ever seems to do anything about it. (Like many of Twain’s “quotes,” he wasn’t the author of this one either.) I believe that at the heart of this issue is a lack of oversight on software contracts, at the time of signing and especially in subsequent billings. Some companies don’t let these costs get out of hand because they have defined processes and responsibilities for managing them. The careless ones are fodder for the aforementioned articles, while the rest are somewhere in between. more