My brother keeps sending me links to funny videos (like the M5 video). This one is well filmed and has the “play” theme over it, which every Christmas should have. The guys who made the film are really talented, and I keep wondering how on earth they got the time to do it and how many times they redid it. I won’t reveal too much — but let me know what you think in the comments.

From left to right: Kenneth, Danny, Johanne, Louise, Peter, Morten, Sara, Jakob, Mathilde, Uffe, Lars, Esben, Nete, Søren, Jens, Mads T, Anne, Marthe, Henrik, Thomas Bo, Thomas, Marie, Charlotte (my sister!), and me. (Mari and Mads B could not make it to the photo session).

Merry Christmas from me to all of my family, friends, colleagues and school mates! This is the CBS Case Competition Christmas Card, and I look the look and feel to it very much–maybe because I like the people in it and spend so much (too much?) of my time with them :-).

Hopefully, I’ll have the time for another Merry Christmas post before we actually get to Christmas.

Marie and I are deep into our thesis, which I have promised to tell you about on several occasions. I am working on it right now, actually, but I just needed a break from it (which I then use to write about the thesis on this blog — what a break!).

We write about business strategy and how this can be coupled with the firm’s capital structure. Capital structure (also called financial structure) refers to the way the firm finances itself — very simplified you can either use your own money (equity) or the bank’s money (debt). Coupling strategy and capital structure theory is rather new, and hasn’t been done much before the very end of the 80’s — and there is still a lot of ground to be covered.

Within strategy, we look at innovation and to which degree the firm focuses its strategy on innovation and how it affects its financing decision. Our main hypothesis is that the more the firm focuses on innovation, the more it will use equity financing, other things equal. The immediate rationale for this is that equity capital is more risk-willing than debt capital — and when you have an innovation strategy, you take more risk than firms that do not have an innovation strategy. That is the basic notion, although there are plenty more arguments and details — but then I could go on forever :-).

Marie and I have been able to prove such a relationship between the degree to which the firm’s strategy is focused on innovation and its capital structure. We have looked at more than 2,000 companies, and our findings are quite significant. Below, I have quickly made a graph, that illustrates our findings (albeit simplified). Another interesting feature of our findings, which you can see from the graph, is the polynomial relationship (the famous s-curve).

That was the short story. I don’t think I’ll write much more about it on the blog, because it is somewhat different from the topics I normally write about. Still, if you want to know more about this and our findings, let me know.

Today, my wonderful little sister, Charlotte has her 21st birthday. Happy Birthday Charlotte!

(The picture is a test shot from when we had to shoot the photo for the CBS Case Competition Christmas card — but I think this one turned out quite fine, I think. And for those of you who did not know, it is Charlotte in the photo.)