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?
Can you explain how the dollar’s strength affects earnings? What type of disclosures will firms be required to make to discuss the exchange rate’s effect on earnings? How do you think the exchange rate will affect U.S. firms’ stock prices?
Is there concern that pensioners at Sears will not receive pension payments in amounts they had anticipated? What are the various combinations of options that Sears has to fund the underfunded portion of the pension obligation?
Why should governments adopt accrual accounting, instead of continuing to use cash accounting? Should governments be forced to adopt accrual accounting? How could that be done?
In what way is this a “bad thing”, namely that EPS increases are “denominator driven”? Would you propose an alternative to EPS? If so, for what purpose? What would the alternative measure be?
Should standard setters incorporate direct input by “front line” practitioners in setting new standards? Should the new standard on revenue recognition be further delayed? Should it be changed? If so, what recommendations would you make? Explain the quote, “unless it is allowed, it is forbidden,” and, “unless it is forbidden, it is allowed.”
Are accounting standards and the required financial disclosures meaningful to stock pickers who use computerized (quantitative) investing? Is it necessary for quants to understand accounting? If you are interested in a career in equity trading, should you study accounting, or math?
What are the benefits of zero based budgeting? Costs? When might the costs outweigh the benefits? Should governments use zero-based? Why or why not? If they should, why don’t they?
How would you write a new pension standard that accommodates a hybrid, “risk sharing” pension plan, one that incorporates elements of both DB and DC plans?
If you want to raise capital as an entrepreneur, this research suggests that you also need to watch your body language. Thoughts?
In your opinion, should standards covering concerns related to environment, society, and governance (ESG) be based upon the information desires and needs of market participants (investors) or what the SASB thinks investors “should be” interested in? What conclusion would you draw if the standards that are developed by the SASB do not affect investment decisions?
What are some of the benefits of going public? Costs? Do you think that the Container Store should have gone public? Does “conscious capitalism” work for a public company? Why or why not?
