E36 - A Unified Theory of Finance: The Corporate Life Cycle

We are all born, become toddlers, teenagers, adults, mid-aged, late middle aged, and eventually die. Do company’s follow this same pattern? If so, can we use that pattern to better predict what they will do and compare that to what they should do at different stages of their life cycles?My guest for this episode is Aswath Damodaran. Aswath is a Professor of Finance at the Stern School of Business at New York University (Kerschner Family Chair in Finance Education).  Aswath is a super star professor, considered both in and out of academia as the ‘Dean of Valuation’, and one of the best teachers I have ever had the privilege of working with together.  We have been lucky to have him teaching on the TRIUM EMBA for the last 23 years!In this episode we discuss his latest book, The Corporate Life Cycle: Business, investment, and Management Implications.The work is an attempt to provide a unified theory of all of finance (with a bit of strategy, management and leadership). With clear, compelling and concise writing, Aswath views all of corporate finance, valuation, investment philosophy and management/leadership through the construct of the birth, aging and dying of firms. The scope and scale is vast, and in a less gifted writer, it would risk being reductionist and overly simplistic – the opposite of what we have here. I wish I would have read this book 20 years ago because it would have saved me a lot of time and effort! In this conversation we cover the basics of the corporate life cycle and some of its implications. We get into a lively discussion about whether companies should strive to be ‘sustainable’, explore the leadership characteristic needed at different stages of a company’s life cycle, and outline the reasons why renewal and rebirth for company’s near the end of their life cycle is so difficult.  It is conversations with the likes of Aswath which make me feel so lucky to do what I do! Citations·      Damodaran, Aswath (2024) The Corporate Life Cycle: Business, Investment, and Management Implications. Penguin Random House. Hosted on Acast. See acast.com/privacy for more information.