532 Week 14 Objectives
FBE 532 - Class Objectives and Problem Assignments
J. K. Dietrich
Week 14 – April 20, 2006
Goals and Objectives
(1)Be able to define and interpret economic value added and market value added as measures of management performance
(2)Compare and interpret both market performance measures (share price returns) and accounting performance measures (return on equity or ROE and its determinants) in assessing the performance of managers of corporations
Suggested Review Reading for Final Examination
Review case readings, your case write-ups, and textbook references in those areas where you are uncomfortable with the theory or context relevant for the case discussions.
Final Examination – May 4, 2006, 6:00pm to 8:00pm
The examination rules are like the midterm: open book, open note, calculators allowed.
Important Vocabulary List from Class
ECONOMIC VALUE ADDED, MARKET VALUE ADDED, VALUE CREATION
DUPONT ANALYSIS
MARKET RETURN, ACCOUNTING RETURN MEASURES
Suggested Wall Street Journal (WSJ) or other Articles
April 10, 2006
“U.K.’s Compass to Sell Travel Arm for $3.14 Billion” (A14) – Another example of role of corporate valuation in implementing strategic restructuring
“Higher Bond Yields May Not Skewer Stocks” (C1) – Increased discount rates for stocks, that are keyed off default-risk free Treasuries, may not increase as much as feared (reducing present values of risky cash flows and hence stock prices)
April 11, 2006
“Chrysler Gains Edge by Giving New Flexibility to Its Factories” (A1) – Insights into different approaches to manufacturing and fixed-plant turnover and cost-of-goods differences across firms
“Serono Takes Itself Off the Block” (A10) – Based on expected sale price (value), pharmaceutical firm that acquired Genset decides to raise capital and acquire other firms, an interesting change in corporate strategy depending on valuation of assets in place and synergies with possible acquisitions
“Skilling Defends Enron, Himself” (C1) – A “trial of the century” centered on corporate governance issues we discuss will be a topic of discussion in your classes over the course of the MBA program
“Will Acaltel-Lucent Deal Put Juniper in Play” (C1) – Complex restructuring changes relative values of potential merger and acquisition targets, possibly to due strategic or synergistic importance
April 12, 2006
“Corporate Governance Concerns Are Spreading, and Companies Should Take Heed” (A2) – Great overview article raises many of the issues in corporate governance we have discussed and places them into context
“Nasdaq Resumes Pursuit of LSE, Buying 15% Stake” (C1) – Restructuring of global equity markets illustrated in various attempts to acquire London Stock Exchange by various buyers
“Inside Mix: Goldman, Business Week, Croatia” (C1) – Good example of insider-trading case prosecuted by the SEC, illustrating some issues discussed last week in class
April 13, 2006
“Make SOX Fit” (A12) – Op ed piece by former SEC Chairman Harvey Pitts discusses revision to costly review of accounting systems required by Sarbanes-Oxley
“Danaher to Acquire Sybron Dental” (B8) – Acquisition provides another example of central role of valuation of the same type your are doing this semester
“Eurotunnel Urges New Deadline for Debt Pact” (B8) – Distressed borrowers requests for leniency provides a good example of financial distress we discuss this semester
April 14, 2006
“Map Quest: How Genetic Tools May Reveal Roots Of Everyday Ills” (A1) – Good story allows you to apply knowledge gained in Genset Case last week and explains some things better than Harvard case writer
“Medicare Reimbursement Cuts Are Proposed for Heart Devices” (A4) – Example of risks of selling products in a government-dominated industry, the issue raised in the Avon case
“NYSE Considers Its Next Move” (C1) – Another story illustrating changes in the global equity markets, considering the impact of a possible alliance between the London Stock Exchange and the NASDAQ on the NYSE
“Adelphia Proposed Deal To End Creditor Fight” (C5) – Another example of the problems caused by “financial distress” as we discuss this semester