Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 21 A Case Study: Kodak - Sterling Drugs ! Eastman Kodak’s Great Victory Note the difference in stock price beha ...

Aswath Damodaran 22 Earnings and Revenues at Sterling Drugs Sterling Drug under Eastman Kodak: Where is the synergy? 0 500 1,000 ...

Aswath Damodaran 23 Kodak Says Drug Unit Is Not for Sale (NY Times, 8 / 93 ) ! An article in the NY Times in August of 1993 sugg ...

Aswath Damodaran 24 !Application Test: Who owns/runs your firm? Look at: Bloomberg printout HDS for your firm ! Looking at the t ...

Aswath Damodaran 25 Disney’s top stockholders in 2003 Not a single individual investor in the list other than Roy Disney who was ...

Aswath Damodaran 26 A confounding factor: Voting versus Non-voting Shares - Aracruz ! Aracruz Cellulose, like most Brazilian com ...

Aswath Damodaran 27 Another confounding factor... Cross Holdings ! In a cross holding structure, the largest stockholder in a co ...

Aswath Damodaran 28 II. Stockholders' objectives vs. Bondholders' objectives ! In theory: there is no conflict of interests betw ...

Aswath Damodaran 29 Examples of the conflict.. ! Increasing dividends significantly: When firms pay cash out as dividends, lende ...

Aswath Damodaran 30 An Extreme Example: Unprotected Lenders? Nabisco’s bond price plummeted on the day of the LBO, while the sto ...

Aswath Damodaran 31 III. Firms and Financial Markets ! In theory: Financial markets are efficient. Managers convey information h ...

Aswath Damodaran 32 Managers control the release of information to the general public ! Information (especially negative) is som ...

Aswath Damodaran 33 Evidence that managers delay bad news.. DO MANAGERS DELAY BAD NEWS?: EPS and DPS Changes- by Weekday 00 % ...

Aswath Damodaran 34 Some critiques of market efficiency.. ! Prices are much more volatile than justified by the underlying funda ...

Aswath Damodaran 35 Are Markets Short term? ! Focusing on market prices will lead companies towards short term decisions at the ...

Aswath Damodaran 36 Are Markets short term? Some evidence that they are not.. ! There are hundreds of start-up and small firms, ...

Aswath Damodaran 37 Market Reaction to Investment Announcements Note that the price increases tend to be small, since these anno ...

Aswath Damodaran 38 IV. Firms and Society ! In theory: There are no costs associated with the firm that cannot be traced to the ...

Aswath Damodaran 39 Social Costs and Benefits are difficult to quantify because .. ! They might not be known at the time of the ...

Aswath Damodaran 40 A Hypothetical Example Assume that you work for Disney and that you have an opportunity to open a store in a ...