How did it “appear” that Spain’s banks weathered the financial crisis of 2008 and 2009 (at least better than most) but are faltering now and in need of a bailout? Does the accounting treatment used in Spain bolster (or undermine) the case for IFRS being adopted in the U.S.? Or, is there no relationship between this accounting treatment and whether IFRS should be adopted in the U.S.?
Try describing in your own words this dichotomy of the “inside view” and “outside view.” Apply the dichotomy to the decision of whether or not to buy another firm. Can you personalize the dichotomy to a career decision you are making? Is the dichotomy useful, and if so, why? If not, why not?
Where is Nokia in its life cycle? What do you expect to see in this phase with respect to operating cash flows? Investing cash flows? Financing cash flows? Will you buy a Nokia phone in the next 6 months? Will you sell to Nokia over the next 6 months?
So, Nokia is cutting 10,000 jobs. What will be some of the effects on Nokia’s current and future financial statements? Per the article, Microsoft is closely tied to Nokia. Would Microsoft have the same effects on its financial statements?
So, if you wanted to go public after the Facebook debacle, what is your strategy? How long do you “have to” wait? What would be the downside of not waiting and proceeding now?
What did South Carolina’s pension fund managers do to increase returns on the pension fund? Compare the politics involved in public pension fund management to private pension fund management.
How much did P&G spend on advertising for the most recent fiscal year? On R&D? Why are these amounts not shown as line items on the income statement? Should they be? Does it matter?
E&Y states: “The inconsistent application of IFRS undermines its value as a single set of global standards.” Why are IFRS inconsistently applied? Will they ever be consistently applied? Why or why not? Who is going to monitor their application?
If you worked at a Big 4 firm and were the lead partner on an audit, how would you work with a smaller audit firm in a so-called “joint audit”? If you were on the audit committee for a company (in charge of hiring an audit firm), would you want to have joint audits? Who wins and who loses in joint audits?
Why would a company stop buying its own stock when the market price goes “too low”? If you were a CFO, what factors would you consider in the timing of share repurchases? Why do you suppose such a large percentage of share repurchase authorizations go unused?
Blackberry (Research in Motion) has lost almost $33 billion in market capitalization in just over one year. What are some of the ramifications of a decline of this magnitude? What are some of its causes? What would you do if you were CEO?
Municipal unions are fighting the reduction of assumed rate of returns on pension plan assets. Why? Is “using 7 percent in a 3 percent world” equivalent to hiding debt from the balance sheet? What are solutions to the problem?
Can you map out a plan using accruals that will fool the markets? If you think you can, are the markets “efficient”? And, if you implement the plan, would you have committed fraud?
Operating leases are already disclosed in the notes. So, how will capitalizing leases affect a firm’s credit rating when the credit rating agencies already consider operating leases in their credit ratings?
What factors did Morgan Stanley consider to set the Facebook IPO price of $38? Why were they concerned about the opening day’s price closing “too HIGH” (an opening day pop of not more that 20 percent)?
Why do you suppose that it is “news” that CEO pay is more closely aligned with firm performance? Haven’t pay packages always been designed to do precisely that? What factors have prevented this alignment of pay with performance up until now?
Describe the various points of view expressed on auditor rotation, private company accounting standards, international accounting standards, and integrated reporting. Who are the persons taking the various points of view, and what constituencies do they represent?
FIN 48 requires firms to accrue a liability for tax positions (such as deductions, timing of tax payments, etc.) that stand a “50/50 chance” of not being upheld on an audit. Why do firms “revile” the rule? Why did the FAF get involved in the review? How would you challenge the FAF’s conclusion that the information is useful for investors?
What is the Volcker Rule? Why is there no “schadenfreude” over the JP Morgan loss? Take one side of the argument and defend it: banks should (should not) be allowed to invest their own money.
