McKinsey - On Finance 2023

The introductory section of McKinsey - On Finance 2023 emphasizes the uniqueness of each period and the need to adapt to changing priorities. The issue explores the topic of inflation, discussing its current state and potential outcomes. It provides a playbook for senior leaders to navigate inflation and examines the impact of persistent inflation on value. The fallacy of using government bond yields as a reliable proxy for the risk-free rate is also explored. The publication highlights the tendency of corporations to blame external headwinds rather than acknowledging tailwinds in their external communications. It presents research on how companies attribute value creation, revealing that even successful companies tend to blame external factors. The importance of environmental, social, and governance (ESG) principles for long-term value creation is discussed. The correlation between changes in ESG scores and market performance is examined, although measurement challenges and caveats necessitate further study. Insights from private equity that can be relevant for CFOs of public companies are shared, offering best practices for CFOs to develop business-specific plans. The concluding section emphasizes the need to assess each development on its own merits and highlights that initial market reactions to a deal may not accurately predict its long-term value creation. It emphasizes the importance of sustainable value creation as a guiding principle for CFO decision making, emphasizing the enduring principles of finance and economics amidst changing circumstances.