SUBJECT AREAS: Business Valuation, Financial Forecasting, Strategic Analysis.CASE SETTING: 1996, U.S.In the Spring of 1996 Berg Electronics is poised to become a publicly traded company after going through a quot;build-upquot; leveraged buyout by Hicks, Muse, Tate, and Furst (HMTF). HMTF...

We provide a clinical perspective on corporate governance, shareholder activism and corporate restructuring by studying Sears, Roebuck amp; Co. In particular we focus on Sears' diversification into financial services during the 1980's, the poor performance that followed, and the ensuing...

Partner firms to the same joint venture experience sharply different stock price reactions, controlling for differences in size and ownership share in the project. These differences are not explained by different roles in the project or differences in investor anticipation of the annoucement....

The typical payday loan is for less than $500, has a maturity of two weeks, is secured by the borrower's post-dated check or debit authorization, and carries a compound annual rate of interest that can easily exceed 10,000 percent. If you imagined the terms of illegal loan sharking you may not...

In this paper, we lay out theoretical shortcomings of the IRR criteria that have largely dropped out of the finance literature. We discuss the problem of multiple IRRs and non-existent IRR under a new light. We also discuss the financial ambiguity that can arise when interpreting the IRR. Then,...

We examine whether differences in investment opportunities and corporate ownership structure can explain the disparate findings of other researchers regarding the market's price reaction to the announcement of international joint ventures. We study a sample of 320 such ventures from the period...

The mistaken notion that the internal rate of return (IRR) and net present value (NPV) contain reinvestment rate assumptions lingers in teaching materials and corporate practice. The fact is that there are no reinvestment rate assumptions built into, or implicit to, the computation and use of...

Management controls the issuing and repurchasing of securities, but they have no direct control over leverage changes stemming from changes in stock price or from profits and losses. By separating managed from unmanaged changes in leverage ratios, we draw three basic conclusions: 1) management...

This paper reviews the theoretical foundations of residual income as a tool for evaluating a firm's interim performance for purposes of assigning incentive compensation. Although residual income can be easily linked to the discounted cash flow model of firm valuation, it bears no necessary...

Enron plummeted from the 7th largest US firm and six-time winner of Fortune's most innovative firm award to bankruptcy in less than one year. However, management used financial engineering and related-party transactions to disguise Enron's financial condition for over three years. These...