If you were a CEO, should “maximizing ESG measures” be part of your firm’s stated objectives? Who wins? Who loses? How would you compensate your employees?
If you were CFO of a firm with a DB pension plan, why would you switch to mark-to-market pension accounting from the deferred-recognition/smoothing model? What is the benefit? What are the costs?
Do you think it is a good idea for publicly traded firms to stop quarterly reporting and move to a less frequent reporting cycle, such as semi-annual? Why or why not? What are the costs? The benefits?
Are CEOs worth their pay? How would you devise a test to determine an answer to the question? Who will be helped by the new SEC disclosure rule on executive pay? How will they be helped?
Fiat Chrysler was fined around $100 million. How would you determine if the firm accrued the penalty? By looking at the note pertaining to income taxes, how would you determine if any of the amount is tax deductible?
Do you agree with the author that capitalism cannot (or struggles to) create a just society? Do you think accounting measurement and reporting systems play any part in this contention, if true? If so, how?
So the FASB has postponed the effective date by which firms must adopt the new revenue recognition rule. What might this say to you about the cost of the new standard? How would you measure the cost? How would you measure the benefit of the standard?
Apparently a large portion of BP’s settlement for the Gulf Oil spill is tax deductible. In your opinion, should it be tax deductible? Why or why not? Assuming the deduction will be taken in the future, what is the entry to recognize tax expense and the deferred tax asset? What is the effect on the effective tax rate on the nondeductible portion?
Netflix is splitting its stock 7 for 1. What might a hoped for increase in market cap as a result of the split say about the efficiency of the stock market in setting stock prices?
Tech start-ups are using many non-GAAP measures to attract capital. If GAAP measures don’t very well portray new firms’ (and new types of firms’) results and prospects, is the use of non-GAAP measures a “bad thing”? Why or why not?
Why do certain U.S. firms have so much cash on their balance sheets? Do you think this is a “good thing” or not? Why?
Do you think the stock market is smart enough to figure out the results of a firm’s operations (such as earnings) even though the earnings announcements are obfuscated? How would you design a test to see if the markets are smart (efficient) and can figure it out?
Should employees be forced to give back bonuses if their firm’s financial reporting had errors, which allowed the bonuses to be paid? Why or why not? If so, which employees?
Michael Kors shares dropped 24% upon announcing a drop in sales. Do you agree with the CEO that the market has undervalued the firm’s stock? Do you believe the share-buyback plan is a reasonable course of action? Why or why not?
What are the advantages of raising capital by selling shares to banks, who in turn resell the shares, rather than selling shares to “typical” investors directly? If you were a CFO, how would you create a decision rule for determining which method to raise capital is optimal?
HP is splitting into two publicly traded companies. What is the journal entry for the restructuring charge? HP expects $1 billion in savings from the restructuring. Do you think the accounting standards should allow recognition of the savings at the same time firms are required to recognize the restructuring charge? Why or why not?
How would you respond to the statement that bringing the leases on balance sheet with the new accounting standards would be a “hit to . . . bottom line profits”?
What do you think is the purpose of requiring firms to disclose how their executive pay packages relate to firm performance? Do you think that these disclosures will produce the desired outcome? Should these disclosures be part of the audit?
How would you propose that sellers of gift cards, which are ultimately not redeemed, account for unwinding the liability (unearned revenue)? Do you think your proposed solution would matter to investors? Which firms would be most affected by your proposal?
If analysts and users of financial information largely disregard GAAP earnings, what purpose does GAAP serve?
