Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
businesses into one entity. In some cases, firms can exacerbateproblemsbycreatingsubsidiariesforeachoftheir businesses and holdi ...
complexity. For instance, the pyramid structure (described more fully in Chapter 13) favored by many Asian and European firms ca ...
allocation to existing assets, there is enough discretionintheprocessthatdifferentappraiserscan arrive atdifferent estimatesfor ...
Consideroneexample.Intheearly1990s,investmentbankers createdasecuritycalledtrustpreferredstock.Thesesecurities allowedfirmsto ge ...
REASONS FOR COMPLEXITY Firms with complicated financial statements have to bear muchoftheresponsibilityforthecomplexity,nomatter ...
whereas firms with weak corporate governance often have opaque financial statements. As we noted in the prior section, family-ru ...
Operating and Business Concerns Forsome firms, at least,there arereal costs to disclosing moreinformationtofinancialmarkets.Comp ...
Wehavesavedthemostodiousofthereasonsforcomplexity forlast.Firmssometimes createcomplex structurestofool investorsintobelievingth ...
andExchangeCommission(SEC)rangeinsizefromlessthan 200 pages toin excess of 1,000 pages.In Table 16.1, we summarizethelengthofthe ...
thanitistoanyotherpartofGE.Consequently,firms havetogotogreatlengthstoseparatethefinancial obligations and dealings ofthese subs ...
Pfizer 171 460 Citigroup 252 1,026 Intel 69 215 AIG 164 720 Johnson & Johnson 63 218 IBM 85 353 Opacity Index In the late 19 ...
Rreferstotheimpactofregulatoryopacityanduncertainty/ arbitrariness PriceWaterhousebasedthecountryscoresforeachfactoron a survey ...
Inconsistentrulesonconsolidationandtreatment of goodwill(UnitedStates,UnitedKingdom,Singapore, and South Africa). Dualbookkeepi ...
In recent years, the Kurtzman Group, a global consulting firm, has refined and extended the opacity index to incorporate 65 vari ...
Note that there are two scores reported for the U.S. companies,onebasedonjusttheannualreport(whichisnot veryinformativeonacompos ...
4.Theforminwhichdirectors’salariesarepaid(cash,shares, etc.). 5.The date on which each director joined the board. 6.The names of ...
incomplete)tolistthesefactors.Thecontributionsmadeby each of thefactors to complexity vary, with some factors (suchasvolatileeff ...
Different tax and reporting books Headquarters in tax havens Volatile effective tax rate Effective tax rate is meaningless Maneu ...
capital is difficult Makes forecasting returns more difficult Cost of capital Multiple businesses Operationsinemerging markets N ...
Oncewehaveidentifiedthefactorsthatdeterminecomplexity andhavecategorizedthembasedontheirimportance,wecan construct complexity sc ...
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