What are some of the reasons so many firms have increased dividends and share repurchases? What are some long term implications of this?
Certain firms have large amounts of cash virtually trapped overseas? Why “can’t” they bring it home (to the U.S.)? How much debt can they reasonably issue in lieu of bringing the cash home? What are some of the consequences of issuing so much debt?
Do you find this plausible, namely that CPA credentialed CFOs are more risk averse with regard to investment decisions, compared to non-credentialed CFOs? What does this suggest for you in your career path?
Excellent points raised in this article. What are the implications for firms seeking relatively cheap credit? Are the days of borrowing (cheaply) to buy back stock coming to an end? Should capital use be regulated? Will it politicize credit?
What would you do as CEO if you have “large” cash holdings? What besides investment opportunities would affect the decision? What role does the tax code play?
“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?
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?
What are some of the disadvantages of debt? What is meant by being too “dependent on increasingly fickle capital markets to alleviate liquidity pressures”? If you were the CFO of one the energy companies, what would you do? How would you try to determine an “optimal capital structure” in this new economic environment?
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?
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?
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?
If you want to raise capital as an entrepreneur, this research suggests that you also need to watch your body language. Thoughts?
What are companies doing with all that cash raised from issuing bonds? Name as many ratios as you can that would be affected by the changing capital structure. Will capital structure changes affect the value of the firm?
Why would banks use net debt-to-EBITDA as a constraint on borrowing? What is a common characteristic of those firms that are already highly levered (with a ratio above 5)?
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?
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?
UBS is shutting down much of its investment banking services because it isn’t covering its cost of capital. How do you think it measures its cost of capital? Why do you think UBS’s stakeholders appear to be less patient than those at other banks?
What are some implications of federal tax policy and the allocation of capital? What suggestions would you have for politicians?
