Many firms have the cash but CFOs are reluctant to spend it on maintaining or upgrading infrastructure. Why? If they don’t spend it, what pressures will they get from competing interests? If you were CFO of one of these companies, what would you do?
Bed Bath and Beyond’s results show the strain of competing with on-line platforms, such as Amazon. Does this surprise you? If you were the CFO of BBBY, would you “warn” via a press release if you anticipate that the results would “disappoint”? Why or why not?
Under what circumstances would VW accrue a liability for the emissions issue? How would the firm measure the amount of the contingent liability, if it were to accrue one?
Shell has lowered its planned capex by $2 billion to $33 billion. Is this a material amount? Do you think the stock market reacts to such disclosures when they are made?
If you were a the lead audit partner in charge of a corporate audit, would you mind being named as such in a new disclosure form from the PCAOB? Why or why not? Does is make any difference that this disclosure is not made part of a regulatory filing with the SEC?
Would you want to serve on a board of directors? Why or why not? Do you know how much board members are paid? Do you know how you could find out? (Hint: Def 14A)
Why do you think the FASB issued a new standard to do away with all current classifications of deferred taxes?
Why do firms try to keep dividend policies stable? If you were on the board of Goodrich, what concerns would you have about cutting the dividend?
“Should” companies be investing more in capex and R&D, rather than buying back stock? Is it really a problem? How would you determine whether it is a problem, and for whom is it one?
Do you agree with the SEC commissioner that certain new disclosure rules do not provide information useful to a reasonable investor, but rather are being required as part of political or social activism? Should the SEC require such rules?
If you were on the board of an oil firm, what factors do you consider in your dividend decision? Would you keep the dividend at the same level, or cut it?
What are some potential negative consequences of demanding that firms report some of the mentioned ESG and sustainability-type measures? Who is requiring these disclosures? Why do you think they are?
Is materiality best defined and “operationalized’ by the accounting profession or by the legal profession? If you had to write a definition of materiality, how would you proceed? What data would you need? What would your definition be?
If you were an employee at a firm who offered you stock options or additional cash as compensation, which would you choose? Why? Would the stock option compensation be, as suggested, getting paid in lottery tickets?
Is there any reason to be surprised that the debt of some major coal companies is in default? What leading accounting-based indicators might there be to have predicted this situation with the debt? Are accounting-based indicators (ratios) all lagging indicators?
If you can buy back stock to save the dividend yield, are you better off if you had to borrow the money to do the buyback? How does the deductibility of interest affect your analysis?
If you were CEO, what options do you now have to improve margins? How long can cost cutting do the trick? How would you determine the point at which cutting costs does more harm than good to grow the firm and improve margins?
If you were in charge of setting the audit fee for a client, what are all the factors you would want to consider? How would you assess the risk of a client, other than considering a weakness in internal controls?
