Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 41 So this is what can go wrong... STOCKHOLDERS Managers put their interests above stockholders Have little con ...

Aswath Damodaran 42 Traditional corporate financial theory breaks down when ... ! The interests/objectives of the decision maker ...

Aswath Damodaran 43 When traditional corporate financial theory breaks down, the solution is: ! To choose a different mechanism ...

Aswath Damodaran 44 An Alternative Corporate Governance System ! Germany and Japan developed a different mechanism for corporate ...

Aswath Damodaran 45 Choose a Different Objective Function ! Firms can always focus on a different objective function. Examples w ...

Aswath Damodaran 46 Maximize Stock Price, subject to .. ! The strength of the stock price maximization objective function is its ...

Aswath Damodaran 47 The Stockholder Backlash ! Institutional investors such as Calpers and the Lens Funds have become much more ...

Aswath Damodaran 48 In response, boards are becoming more independent... ! Boards have become smaller over time. The median size ...

Aswath Damodaran 49 Disney’s Board in 2003 Board Members Occupation Reveta Bowers Head of school for the Center for Early Educat ...

Aswath Damodaran 50 Changes in corporate governance at Disney ! Required at least two executive sessions of the board, without t ...

Aswath Damodaran 51 The Hostile Acquisition Threat ! The typical target firm in a hostile takeover has a return on equity almos ...

Aswath Damodaran 52 Is there a payoff to better corporate governance? ! In the most comprehensive study of the effect of corpora ...

Aswath Damodaran 53 The Bondholders’ Defense Against Stockholder Excesses ! More restrictive covenants on investment, financing ...

Aswath Damodaran 54 The Financial Market Response ! While analysts are more likely still to issue buy rather than sell recommend ...

Aswath Damodaran 55 The Societal Response ! If firms consistently flout societal norms and create large social costs, the govern ...

Aswath Damodaran 56 The Counter Reaction STOCKHOLDERS Managers of poorly run firms are put on notice. 1. More activist investors ...

Aswath Damodaran 57 So what do you think? ! At this point in time, the following statement best describes where I stand in terms ...

Aswath Damodaran 58 The Modified Objective Function ! For publicly traded firms in reasonably efficient markets, where bondholde ...

Aswath Damodaran 59 Risk and Return Models: Equity and Debt The first and perhaps biggest part of corporate finance. ...

The focus of the first part of this investment analysis section is on coming up with a minimum acceptable hurdle rate. In the pr ...