...ETHICS IN FINANCE Meaning of Ethics Ethics is the study of human behavior which is right or wrong. In general, ethics means doing right things to others, being honest to others, being fair and justice to others. Even ethics in finance is a compartment to general ethics. Ethics are very important to maintain constancy in social life, where people work together with one another. In the process of social development we should not be conscious of ourselves but also conscious to take care of others. WHAT IS FINANCE Finance means fund or other financial resources; it deals with matter related to money and the market. The field of finance refers to the concept of time, money and risk and how they are interrelated. Banks are the main facilitators of funding. Funding means asset in the form of money Finance is the set of activities that deals with the management of funds. It helps in making the decision like how to use the collected fund. It is also art and science of determining if the funds of an organization are being used in a right manner or not. Through financial analysis, any company or business can take decision in making financial investments, acquisition of company, selling of company, to know the financial standing of their business in present, past and future. It helps to stay competitive with others in making strategic financial decisions. Finance is the backbone of business; no business can run without finance. WHAT IS ETHICS IN FINANCE Ethics in finance...
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...bonuses, shares options, and any other company benefit. Over the past three decades, executive compensation has risen dramatically beyond the rising levels of an average worker’s wage. Executive compensation is an important part of corporate governance, and is often determined by a company’s board of directors. Executive compensation is a very important thing to consider when evaluating an investment opportunity. Executives who are improperly compensated may not have the incentive to perform in the best interest of shareholders, which can be costly for those shareholders. While new laws and regulations have made executive compensation much clearer in company filings, many investors remain clueless as to how to find and read these critical reports. This article will take a look at the different types of executive compensation and how investors can find and evaluate compensation information. WHO IS AN EXECUTIVE? A person or group having administrative or managerial authority in an organisation. The chief officer of a government, state or political division. Chief executive officer (CEO), one of the highest-ranking corporate officers (executives) or administrators . A chief executive officer (CEO) or chief executive is the highest-ranking corporate officer (executive) oradministrator in charge of total management of an organization. An individual appointed a CEO of a corporation, company, organization, oragency reports to the board of directors. Responsibilities: It is the...
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...PeopleSoft v. Oracle: Hostilities Involved in a Takeover Precious Richey OMM 640 Business Ethics and Social Responsibility (MFF1226A) Instructor – Ken Edick Submitted: 7/23/2012 Abstract The hostile takeover of PeopleSoft by Oracle was the results of a lengthy court battle that raised many issues. One issue in particular concerned anti-trust laws and their application to technology companies. The Department of Justice, in an attempt to block the takeover, argued that a merger of this nature would lessen competition and ultimately limit customer choice. An appellant court judge ruled that this case did not meet the criterion of an anti-trust breach and ruled in favor of Oracle. Never the less, many other factors concerning the role of shareholders, the board of directors and chief officers gave rise to some grey areas. It has been speculated that the outcome of this case has paved the way for similar acquisitions in the technology arenas. The hostile take-over bid by Oracle to acquire the controlling shares of PeopleSoft was a long and drawn out acquisition. The process was marked with uncertainties, government intervention, and changed trends. Some analysis considered the move to be a merger while others considered it to be a consolidate that served as a prelude to the inevitable changes in the software market. In 2003 when Oracle’s CEO announced plans to wage an unsolicited takeover of PeopleSoft’s stock (Boatright, 2009), the decision was met with...
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...Legal Aspects of BLACKBERRY Takeover by FAIRFAX Legal Aspects of BLACKBERRY Takeover by FAIRFAX by by Anubhav Gaur SMBA12045 Section B Anubhav Gaur SMBA12045 Section B TABLE OF CONTENTS Acknoledgement Summary blackberry ltd. Section 1.1 : History Section 1.2 : Strategic Changes Section 1.3 : Success in Market place Section 1.4 : Changes in Financial Fortunes Section 1.5 : Financial Fortunes FAIRFAX LTD. Section 2.1 : Corporate Governance Section 2.2 : History Section 2.3 : Credit Ratings MERGERS & ACQUISATIONS Section 3.1 : Legal Structures Section 3.2 : Documentation Section 3.3 : Business Valuation TAKEOVERS Section 4.1 : Types Of Takeover Section 4.2 : Financing a Takeover Section 4.3 : Mechanics Section 4.4 : Strategies Section 4.5 : Agency Problems Section 4.6 : Pros & Cons Laws & Codes used during takeover Section 5.1 : City Code on Takeovers & Mergers Section 5.2 : Competetion Law Section 5.3 : Takeover Directives Section 5.4 : Companies ACT 1985 BLACKBERRY TAKEOVER REGULATORY APPROVAL COMPETETION COMMISION FOR TAKE OVER FCPA Section 8.1 : Provision & Scope Section 8.2 : History Section 8.3 : Requirements Section 8.4 : Application UK BRIBERY ACT TAKEOVER MECHANICS OF BLACKBERRY TAKEOVER CONCLUSION BIBLIOGRAPHY & REFERENCES ACKNOLEGDEMENT I take this opportunity to express my profound gratitude and deep regards to my guide Prof. Deepak Dayal for his exemplary guidance,...
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...| Corporations of all types are subject to the corporate income tax. | | b. | One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., "one person, one vote." | | c. | One of the advantages of the corporate form of organization is that it avoids double taxation. | | d. | One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability. | | e. | It is easier to transfer one's ownership interest in a partnership than in a corporation. | Question 2 Relaxant Inc. operates as a partnership. Now the partners have decided to convert the business into a corporation. Which of the following statements is CORRECT? | a. | Relaxant's shareholders (the ex-partners) will now be exposed to less liability. | | b. | The firm's investors will be exposed to less liability, but they will find it more difficult to transfer their ownership. | | c. | The firm will find it more difficult to raise additional capital to support its growth. | | d. | The company will probably be subject to fewer regulations and required disclosures. | | e. | Assuming the firm is profitable, none of its income will be subject to federal income taxes. | Question 3 Which of the following statements is CORRECT? | a. | Conflicts would not exist if the Security and Exchange Commission were abolished. | | b. | The threat of takeovers reduces conflict of interest problems, but only...
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...Investment Notes -T-Bills: Treasury bills (or T-bills) mature in one year or less. Like zero-coupon bonds, they do not pay interest prior to maturity; instead they are sold at a discount of the par value to create a positive yield to maturity. -Federal Funds: overnight borrowings between banks and other entities to maintain their bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions. -Eurodollars: are time deposits denominated in U.S. dollars at banks outside the U.S. and thus are not under the jurisdiction of the Federal Reserve. -The term was originally coined for U.S. dollars in European banks. -There is no connection with the euro currency or Eurozone. -FRA: a forward rate agreement (FRA) is a forward contract, an over-the-counter contract between parties that determines the rate of interest, or the currency exchange rate, to be paid or received on an obligation beginning at a future start date. -Investing in International shares: -Carry trade: is a strategy in which an investor borrows money at a low interest rate in order to invest in an asset that is likely to provide a higher return. This strategy is very common in the foreign exchange market -Counter-trade: an umbrella term used to describe many different types of transactions, each “in which the seller provides a buyer with goods or services and promises in return to purchase goods or services from the buyer” ...
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...Definition of 'Goodwill' An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company is purchased by another company. In an acquisition, the amount paid for the company over book value usually accounts for the target firm's intangible assets. Investopedia explains 'Goodwill' Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology. Definition of 'Negative Goodwill' A gain occurring when the price paid for an acquisition is less than the fair value of its net tangible assets. Negative goodwill implies a bargain purchase. Negative goodwill may be listed as a separate line item on the acquiring company's balance sheet and may be considered income. For the purchased company, negative goodwill often indicates a distress sale, and the unfavorable sale conditions lead to a depressed sale price. Investopedia explains 'Negative Goodwill' Negative goodwill is based on the concept of goodwill, an intangible asset that represents the worth of a company's brand name, patents, customer base and other items that are difficult to price but that help to make a company valuable. Most of the time, a company will be purchased for more than the value of its tangible assets, and...
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...ISBN: 0-226-03209-4 Volume URL: http://www.nber.org/books/auer87-1 Publication Date: 1987 Chapter Title: The Growth of the "Junk" Bond Market and Its Role in Financing Takeovers Chapter Author: Robert A. Taggart, Jr. Chapter URL: http://www.nber.org/chapters/c5819 Chapter pages in book: (p. 5 - 24) 1 The Growth of the “Junk” Bond Market and Its Role in Financing Takeovers Robert A. Taggart, Jr. 1.1 Introduction “Junk” bonds, as they are popularly called, or “high-yield’’ bonds, as they are termed by those wishing to avoid pejorative connotations, are simply bonds that are either rated below investment grade or unrated altogether.’ Fueled by the introduction of newly issued junk bonds in 1977, this segment of the bond market has grown rapidly in recent years and now accounts for more than 15 percent of public corporate bonds outstanding. However, the growth of junk bond financing, particularly in hostile takeover situations, has been bitterly denounced. For example, Martin Lipton, a merger specialist with the firm of Wachtell, Lipton, Rosen, and Katz, has argued that junk bond financing threatens “the destruction of the fabric of American industry” (Williams 1984). In a similar vein, twelve U.S. senators signed a letter in support of Federal Reserve restrictions on junk bond-financed takeovers, that stated, “By substituting debt for equity on the balance sheets of the nation’s corporations, junk bond financing drains financial resources from productive uses such...
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...is true? a. One of the benefits of incorporating your business is that you become entitled to receive unlimited liability. b. Sole proprietorships are subject to more regulations than corporations. c. Sole proprietorships do not have to pay corporate tax. d. All of the statements above are correct. e. None of the statements above is correct. Firm organization Answer: c Diff: E [ii]. Which of the following statements is most correct? a. One of the advantages of the corporate form of organization is that there is no double taxation. b. The partnership form of organization has easy transferability of ownership. c. One of the disadvantages of the sole proprietorship form of organi-zation is that there is unlimited liability. d. Statements b and c are correct. e. None of the statements above is correct. Firm organization Answer: a Diff: E [iii]. Which of the following statements is most correct? a. One advantage of forming a corporation is that you have limited liability. b. Corporations face fewer regulations than sole proprietorships. c. One disadvantage of being a sole proprietor is that you have to pay corporate taxes, even though you don’t realize the benefits of being a corporation. d. Statements b and c are correct. e. None of the statements above is correct. Firm organization Answer: a Diff: E [iv]. Until this year, Cheers Inc. was organized as...
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...of mergers and acquisitions has gained substantial importance in today's corporate world. This process is extensively used for restructuring the business organizations. In India, the concept of mergers and acquisitions was initiated by the government bodies. Some well known financial organizations also took the necessary initiatives to restructure the corporate sector of India by adopting the mergers and acquisitions policies. The Indian economic reform since 1991 has opened up a whole lot of challenges both in the domestic and international spheres. The increased competition in the global market has prompted the Indian companies to go for mergers and acquisitions as an important strategic choice. The trends of mergers and acquisitions in India have changed over the years. The immediate effects of the mergers and acquisitions have also been diverse across the various sectors of the Indian economy. Till recent past, the incidence of Indian entrepreneurs acquiring foreign enterprises was not so common. The situation has undergone a sea change in the last couple of years. Acquisition of foreign companies by the Indian businesses has been the latest trend in the Indian corporate sector. The Indian IT and ITES sectors have already proved their potential in the global market. The other Indian sectors are also following the same trend. The increased participation of the Indian companies in the global corporate sector has further facilitated the merger and acquisition activities in India...
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...This paper examines the association of corporate governance variables and IPO pricing. Results show that managerial ownership is positively related to both offer price and market price premium, which is consistent with a high level of managerial ownership reducing agency costs leading to a closer alignment of interests between managers and shareholders. High blockholder ownership is positively related to offer price premium but not market price premium which implies that underwriters, but not investors, perceive that the quality of the IPO is associated with blockholder ownership. Board size is negatively associated with both measures of IPO pricing, suggesting that smaller boards are better. The other conventional corporate governance variables are not significant. Family ownership and family management are negatively related to both offer price and market price premium, which is consistent with the suggestion that the lack of separation of ownership and management causes family-controlled firms to suffer from cloudy financial vision, resulting in a negative relationship with pricing. However, family chairman is positively associated with offer price premium which implies that underwriters view family leadership on the board as beneficial. The other family governance variables are not significant. None of the board expertise variables examined are significantly related to IPO pricing. I. Introduction The launching of an initial public offering (IPO) is a pivotal event...
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... Contents Definitions: 1 OECD Definition of Corporate Governance: 1 Financial Times Definition of Corporate Governance: 1 Cadbury Report Definition of Corporate Governance: 1 BusinessDictionary.com Definition of Corporate Governance: 1 Why is it important? 3 Why was it in the news recently? 3 Literature Review: 4 Agency Theory: 5 STAKEHOLDER THEORY 7 Stewardship theory: 10 Motivation: 10 Identification: 10 Policies: 10 Consequences: 11 Theory- Resource Dependence: 11 Principles: 12 Benefits of Corporate Governance: 13 Definition of 'Agency Problem': 14 Investopedia explains 'Agency Problem': 14 Agency Relationship and Agency Costs: 14 Conclusion: 23 Agency Problems Are Mitigated by Good Systems of Corporate Governance 23 Legal and Regulatory Requirements: 23 Compensation Plans: 24 Board of Directors: 24 Monitoring: 25 Takeovers: 25 Shareholder Pressure: 25 OECD Definition of Corporate Governance: "OECD defines corporate governance as follows: “Procedures and processes according to which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation – such as the board, managers, shareholders and other stakeholders – and lays down the rules and procedures for decision-making." Financial Times Definition of Corporate Governance: "How a company is managed in terms...
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...Corporate governance: Ireland must learn the lessons of recent corporate governance failures in Ireland and Irish-listed companies must meet evolving international market expectations if they are to attract international investment, the Chief Executive of the Irish Stock Exchange, Deirdre Somers has said. Somers (pictured) made her comments at a special conference on corporate governance hosted by the Irish Stock Exchange in Dublin today. “Companies must consider whether their historical practices, although accepted in the past, will meet market expectations in the future,” she said. Somers also said that investors had a particular responsibility in respect of publicly quoted companies. She said they must “demand better standards and require better disclosure and then differentiate and penalise those companies that do not provide them.” ISE companies not solely responsible Also speaking at the conference was the Chairman of the Irish Stock Exchange, Padraic O’Connor, who said that while most Irish-listed companies complied closely with the Combined Code – a key guide for corporate governance issues for public companies – problems had arisen where some companies deviated from the principles of the code. He cited in particular instances when the Chairman of a company was also Chief Executive or a former Chief Executive as an example. O’Connor also warned against devolving responsibility for corporate governance issues solely to publicly listed companies: “Responsibly...
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...that regulation is designed to control or govern conduct Hence, when we are discussing regulations relating to financial accounting, we are discussing rules that have been developed by an independent authoritative body that has been given the power to govern how we are to prepare financial statements, and the actions of the authoritative body will have the effect of restricting the accounting options that would otherwise be to an organisation. ‘Free Market’ perspective Accounting information should be treated like other goods, with demand and supply forces allowed to operate to generate an optimal supply. Arguments supporting ‘free – market’ perspective Private economic – based incentives ‘Market for managers’ ‘Market for corporate takeovers’ ‘Market for lemons’ Private economic – based incentives Assumed that managers will operate business for own benefit and this is expected by shareholders and debt holders Therefore in interests of management to enter contracts with shareholders and debt holders to constrain managers’ actions Contracts often based on accounting information Organisations not producing information will be penalised by higher costs of capital....
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...1. Discuss the signaling effects for a firm associated with increasing leverage or implementing a stock repurchase. Increasing leverage is increasing debt of the firm. Leverage is associated with net income/EBIT. In general the higher this ratio the higher the risk because in good times higher leverage gives better results but on the the other hand in bad times high leverage causes problems, because increase in leverage will cause an increase of the beta of the firm. Moreover leverage increases Earnings per share, but still creates risk. Modigliani and Miller says that no capital structure is better than the other because this doesn’t change the total value of the outstanding shares by changing the capital structure. But the required return will be higher since leverage increases risk. As for stock repurchase, instead of paying dividend company may choose stock repurchase. There are 3 ways. First one is , companies may simply purchase their own stock, just like an investor buying in the market. In these open market purchases , the firm’s name is not given as the buyer. So , the one who sells the stock does not know whether the shares were sold back to the firm or to another investor. Secondly , tender offer is another way in which the firm makes a call to its stockholders that it has an intention of buying a fixed number of shares at a pre-determined price. As the last one firm may prefer to buy from specific investor and this process is known as targeted purchase. It...
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