<P>23 cox.smu.edugo to FACULTY RESEARCH orporate America is awash in record levels of cash. Theories abound as to why: ?rms themselves are riskier, volatile, pessimistic, have record pro?ts and so on. One overlooked reason, according to SMU Cox Finance Professor William Maxwell, is that ?rms are holding more cash on their balance sheets because of re?nancing risk. In Re?nancing Risk and Cash Holdings, forthcoming in the Journal of Finance, Maxwell and co-authors Jarrad Harford of University of Washington and Sandy Klasa of University of Arizona show that firms are changing their policies on cash to manage this risk. U.S. firms long-term debt maturities have shortened. Firms need to roll over their debt sooner than in the past, which presents the risk that they cannot access capital markets to ?nance their activities. Numerous firms experienced that phenomenon post- financial crisis. Today bank loans and notes have shorter maturities, which offer more potential for refinancing risk. To manage, firms are stashing cash. If a firm gets caught in a bad cycle or shock, it is not the face amounts or percentage of debt they have outstanding that matters; it is a function of when the repayment is coming due, explains Maxwell. According to the research, the market rewards the ?rm holding ample cash with shorter maturity debt through higher valuation, particularly when credit markets are tight. The ?rm that invests wisely also gets market approval. Firms have to hold cash for the right reasons, though. According to Standard & Poors Capital IQ, 202 ?rms of the S&P 500-stock index have $1 billion or more in cash. There are record levels of ?rms in this billionaires club and record amounts amassed compared to previous decades. We all think differently than we did before the ?nancial crisis, says Maxwell. Everyone is putting more cash away. Given that firms are more flush these days, how and when should they spend it? According to Maxwell, Cash should be used as a hedge on a rainy day. Liquidity helps pay the bills and allows firms to take advantage of opportunities. If some calamity hits — and in general they do every 5-7 years — the firm can weather the headwinds. Maxwell describes current credit conditions as looser than ever before. If you can raise money now, do it, he concludes. It is ridiculously cheap money. The QE (quantitative easing) programs are like a huge binge, with ?rms drinking shot after shot of cheap money. And its not like a glass of wine with dinner; these are tequila shots. It may feel great when you are doing it, he warns, but tomorrow always comes. Q Corporate Americas Cash Pile-Up a Reaction to Re?nancing Risk William Maxwell, Rauscher Chair in Financial Investment C he car is increasingly regarded as a technology platform just like Google and Facebook. SMU Cox Information Technology Professor Ulrike Schultze notes, Digital innovation is not just a matter of developing a layered product architecture in terms of protocols and application programming interfaces (APIs), but it is also a matter of the organizational infrastructure evolving to match the material one. New research by Schultze and Ph.D. student Lena Hylving at Viktoria Swedish ICT in Gothenburg, Sweden, offers insight into some of the challenges faced and overcome by an auto industry innovator searching for a competitive advantage. Their research paper, Increasing Digitalization in Product Innovation: Material and Organizational Implications, focuses on the evolution of the instrument cluster in the cars dashboard, also referred to as the Human-Machine Interface, or HMI. The HMI is the connection point between car and driver. Why focus on the HMI? According to Schultze, This is how you as a consumer know the product has changed. HMI is the face of the product; it is where digital innovation becomes manifest. Its how you become aware you have additional functionality available to you. By implication, the HMI is key to communicating digital innovations. It encompasses material components such as touch screens or volume buttons, as well as the information content that it displays. The authors compared three different HMI projects over roughly a 10-year period. Each project represented an increase in digitalization. The research traced the implications of digital innovation on the architecture of the ?rms products, as well as on the ?rms organizational infrastructure. Each iteration of the CarCorp HMI produced clearly defined boundaries between the layers of the products stack. The research determined that changes in the products material architecture need to be accompanied by changes in the organizations infrastructure. Sometimes an organization leads change, but says Schultze, the material changes or the technology desired by consumers drove the organizational change in this case. This research paper will be submitted to the International Conference on Information Systems held in Milan, Italy, in December. Digital Innovation Shakes Up Auto Industry Ulrike Schultze, Associate Professor of Information Technology and Operations Management T</p> <UL><LI><a href="http://www.mzines.net/publication/279/rszbsppbj/1/1/">Front-Cover</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/2/2/">Inside-Front-Cover</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/3/3/">Page-1</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/4/4/">Page-2</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/5/5/">Page-3</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/6/6/">Page-4</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/7/7/">Page-5</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/8/8/">Page-6</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/9/9/">Page-7</a></LI> <LI><a href="http://www.mzines.net/publication/279/rszbsppbj/10/10/">Page-8</a></LI> <LI><a 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