On March 20, 2013, all of Hewlett Packard’s board members were reelected. How did you vote, if you did, or would have voted, if you could have? Why?
Suntech (a Chinese manufacturer of solar panels) is going into bankruptcy. Who will have first claims on any remaining assets? Why are the creditors not treated equally? What are the implications for foreign investors?
Lululemon’s pants are “too” see-through due to a quality control issue. What is the entry that the firm will have to make to write-off the inventory? What is the effect of the entry on current and future profits? How have or will investors respond? Who should be held responsible for the quality problems?
What do you think is the link between having women on boards of directors and superior stock returns? Do you think that this is a factor that you will consider before investing in a company? Are there other characteristics of board members that should be considered?
Why do US firms have so much cash “stashed”? Why is so much of it overseas? Why do you think firms favor capex and dividends over acquisitions and share repurchases? If you were the CFO, what are some of the factors that you would consider in deciding what to do with the cash?
What do cuts in dividends suggest about a firm’s future? Why do you think AT&T may be considering selling “non core” assets? In your opinion, is this a good idea? What are the potential legal consequences for firms who divulge potential market-moving information at nonpublic “dinner meetings”?
Taxes affect individuals’ behavior, as well as corporate behavior. If you were a politician, what would you do, if anything, to change the corporate tax policy in the U.S.? If you were the CFO for one of the firms in the article, what would you advise the government to do to change the corporate tax policy in the U.S.?
Do you agree that the “expected loss” model is better than the “incurred loss” model? Why or why not? Can using an expected loss model become a self-fulfilling prophecy and exacerbate pro-cyclicality, which many claim worsened the financial crisis?
Shareholders in Switzerland now have the authority to approve or block proposed compensation for executives. Do you believe this is appropriate? Why or why not? What are some potential consequences of blocking compensation plans for executives? Should such authority be given to shareholders for U.S. firms? Why or why not?
Do you believe that the measures used to identify the “25 best companies” are appropriate? Why or why not? How were the measures developed? Who developed them? Are these stakeholders appropriate for deciding the “best companies”?
In a critical reading of this announcement, why do you really think the IASB offered the FASB a seat at the table on its new 12 member forum?
$1 trillion has been added to defined benefit pension plan assets since 2009 (for the Russell 3000) yet the underfunded status still worsened over this time. What are the main reasons?
HP’s net income fell 16% (and revenue fell 6%) for the most recent year. So, why did its stock rise? What do you think Ms. Lesjak (the CFO) said in her 45 minute speech to managers about the importance of cash flow?
Apple has $137 billion in cash (or cash equivalents and short term investments). A major shareholder sued to try to force Apple to pay a bigger dividend. Why do you think Cook (the CEO) won’t return more cash to shareholders willingly? If you were the CEO of Apple, what would you do with so much cash? What is a sign that Apple is no longer a growth stock?
Are the the information needs for private company stakeholders different from those of public companies, such that the accounting standards should be different?
Google’s Schmidt is selling 42% of his shares. Do you think it matters for investors whether he sells or not? Why do you think it might matter more if the current CEO or CFO were to sell such a large stake?
What is the purpose of the P/E ratio? Critique the ratio. When would you use trailing earnings in the ratio? Forecasted earnings? Normalized earnings?
The Financial Accounting Foundation (FAF) is the parent to the FASB. FAF has decided to conduct a post-implementation review of a few standards that were implemented many years ago. How do you think they decide which standards to review? How do you think they determine whether the standards need to be changed?
Can you describe briefly the goodwill impairment test? Can you describe the economic reasons for a goodwill impairment? Why would a firm’s stock price be affected by a goodwill impairment?
Why are firms having to pour cash into their defined benefit (DB) pension funds? Why are firms switching new employees to defined contribution (DC) pension funds? What are the possible incentive effects on employees if some are under DC plans, whereas others are under DB plans?
