...William Funderburk Tyco International: A Case of Corporate Malfeasance Tyco International, having its former chief executive, Dennis Kozlowski and its former chief financial officer, Mark Swartz convicted of grand larceny, conspiracy, and fraud, had a long future of rebuilding trust ahead of them. Herein, several issues are discussed including, how the lack of corporate governance at Tyco contributed to its downfall will be discussed, how Dennis Kozlowski used organizational structure and controls to implement his strategic plan, the role of Tyco leadership in strategic implementation, and the role of strategic entrepreneurship in creating firm value at Tyco. “Corporate governance is the set of mechanisms used to manage the relationship among stakeholders that determines and controls the strategic direction and performance of organizations” (Hitt, Ireland, & Hoskisson, 2009, p. 276). Kozlowski and senior managers broke their fiduciary duty. Board member broke the duty of loyalty and senior manager broke their duty as agents of the Board of Directors. No approval of bonuses or loans was gained from the board, therefore breaching disclosure of all relevant information. The directors failed to monitor management, thereby failing to fulfill their duties of overseeing strategy and performance. Directors allowed wasteful spending of corporate funds in the form of bonuses and perquisites Kozlowski’s management plan was to turn Tyco International into a...
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......……..... 32 Financial Statement Forecasting Methodology……....….... 51 Valuations Analysis..................................................52 Method of Comparables............................................... 53 Calculation of WAAC and Cost of Equity……………………….56 Altman’s Z-score……………………………………………………….57 Discounted Dividends.............…………………………………. 58 Abnormal Growth Earnings......................................... 59 Discounted Free Cash Flow..........................................60 Residual Income Valuation Model.................................62 Long Run Average Residual Income Perpetuity…………..63 Appendices.....................…..............................…....44 -3- General Electric Investment Recommendation: HOLD GE/ NYSE Current Price…...$35.63 52 week price range $29.55-37.75 Revenue (2004)...
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...HAROLD F. HOGAN, JR. Tyco International On October 6, 1995, Tyco International, a diversified U.S. conglomerate, received some very unflattering news. A respected investor monitoring organization, the Council of Institutional Investors (CII), had included the firm in its list of the 20 worst-performing S&P 500 companies. CII generated its list annually, based on a mechanical formula that calculated total shareholder returns over a five-year period.1 One commentator described the annual rankings as “the corporate equivalent of being put on the school detention list.”2 The choice of Tyco as one of the 20 culprits was quickly challenged. Tyco’s own management described the result as an artifact arising from an abnormally high share price during a narrow window at the start of CII’s measurement period. Robert Monks, head of Lens, Inc., an activist money management firm and former member of Tyco’s board of directors, also took exception to the report. In a letter of protest to the executive director of CII, Monks asserted that based on his own experience, he believed Tyco was a responsible company fully committed to enhancing shareholder value. He wrote: “On balance we conclude that this is a first-rate company successfully adding value in the difficult mode of a conglomerate. Our criteria [for evaluating] companies ultimately is—what can we, as informed and effectively involved owners, do to enhance value? Our answer in the case of Tyco is—virtually nothing. What...
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...INTERNATIONAL BUSINESS STRATEGY SPRING 2009 Office Phone Email Chiung-Hui Tseng 61411A (Institute of International Business) (06) 275-7575 ext.53512 ctseng@mail.ncku.edu.tw Texts Ireland, Hoskisson, and Hitt (2009) The Management of Strategy: Concepts and Cases, 8th Edition, South-Western Press. Course Objectives In the past a few decades, the trend of globalization has rendered the world economies more interdependent. All businesses today (both international and domestic ones) are exposed to international competitive forces that can have serious consequences for their performance and survival. Such international competition especially brings new challenges and problems to corporations and managers directly involved in foreign markets. Among various issues arising from international operations, this course particularly focuses on the managerial challenges associated with strategy development and corporate management for those firms whose business activities transcend national boundaries. Specifically, objectives of this course are twofold: 1. to expose students to issues related to business strategy within the context of global markets and competition 2. to provide students with significant opportunities to develop oral communication and presentation skills Requirements and Grading Individual Activities: Participation 40% Exam (close-book) 20% Group Activities: Chapter Text Presentation and Discussion Leading...
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...profit-making business units, carries a cost to the entire business. These costs that include corporate overheads due to mismatch in synergies among the SBUs, delays in decision processes etc., do not get strike out by any direct revenue streams of the business. Therefore, it becomes a necessity for a corporate parent to justify its existence as it looks to find reasoning to whether and how it adds value to the overall business and SBUs alike. Corporate parent gives opportunity to develop lateral synergies across interrelated business units but of late these lateral relationships between businesses are often net negative rather than positive. It is also argued that most of these lateral synergies are present between independent businesses like GE. Values creations, Diversity, Leveraging resources across SBUs – Resource Stretching, are the strategic propositions that corporate parent boasts of bringing in to the overall organization. However, like in the case of Sears, Burns Philp, and most of the multi-business, there lie implicit and pervasive tendencies that contribute to unavoidable drag to the overall profitability and efficiency of the business by inherent excess diversification of the corporate parent. This leads to the widely accepted common belief of adding value not only through resource stretch but with ‘Resource Fit’ also, maintaining the idiosyncrasies of the individual SBUs in multi-business organization. Introduction: “Corporate Parenting is a philosophy that views...
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...Personalities Involved 4 Valuation Methods 5 Early Closing of Positions 6 Situation Analysis 6 Investments Effects on Closing Positions on the 1st March 2001 7 Late Closing of Position: 8 Investments Effects on Closing Positions after the 1st July 2001 8 Arbitrage Spread 9 Conclusion 11 Executive Summary The proposed merger between General Electric (GE) and Honeywell has been praised by the Companies and up until 1st of March 2001 been called “the cleanest deal you’ll ever see” by Welch, CEO of GE. On the 1st of March the antitrust regulator, The European Commission (EC), announces that they will perform a full review over the potential merger. If GE were to acquire Honeywell, they could become a dominant player in the Aerospace industry. This fact is underlying reason for EC’s review as their main objectives are to prevent market dominance, as effects of un-proportional market shares, and by that stimulate efficient competitive markets. This announcement introduce large factors of risk that needs to be considered by Gallinelli, an arbitrageur currently holding a large short position in GE and a equivalent long position in Honeywell. Ganelli’s investment success is highly dependent on the outcome of EC’s decision. Hence, Gallinelli needs to consider...
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...Government Regulation Research Paper 1 Crystal Carrothers Introduction Government regulation is around us everywhere. The government needs to make sure that the public’s interests are maintained and preserved. Being an accounting student, I have heard and read about regulation in the accounting industry numerous times. There have been many major accounting scandals in history that have lead to many different kinds of government regulation. The government regulations in accounting are mostly enacted to protect investors. From 2000 to 2002 there was an abundant number of large corporate accounting frauds, which led to the Sarbanes-Oxley Act of 2002. Previous regulations were efficient to a certain extent, but scandals still happened and more regulation seemed to always be needed. Even though the new SOX regulation seems powerful and efficient, I believe that there will always be a need for additional regulation in order to prevent future scandals. Securities Acts of 1933 and 1934 Summary of Regulation The stock market crash of 1929 resulted in the Securities Act of 1933. This act required that before a company an offer or sell securities in a public offering, they must register the securities with the Securities and Exchange Commission (SEC). The registration statement is used to notify the SEC that a sale of securities is pending and that the information needs to be disclosed to prospective buyers. This statement includes information about the issuer and its business...
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...http://www.cnbc.com/id/44337105/US_Firms_Paid_More_to_CEOs_Than_Taxes_in_2010_Study Our country had been bombarded by political mayhem like unproductive congress, as well as a burden of national debt that keeps hanging over our head and reminds of itself on almost every national headline. While the political elite is trying to slash and reduce the debt jeopardizing ideologies of its own parties, the private sector’s elite – CEOs of large corporations are filling their pockets with bonuses and salaries, as if we were still in 2003. According to the report conducted by Institute of Policy Study: “Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax”. The report has been ordered by Committee on Oversight and Government Reform. The conducted study upon the topic stated that the average pay of a CEO that surpassed taxes was 16.7 million dollars yearly. An interesting point has been brought up in this article, comparing a higher-than-taxes pay to cases of corporate fraud, such as Enron and WorldCom. According to Collins, the congressman who ordered the report to be conducted, outsized CEO pay was often a red flag for bigger problems to come. I would like to get to the very bottom of this issue right away. This story is much deeper than this corporate fiscal year, the house elections or even the national debt. This is an issue directly connected to the de-regulation of not only our economic system, but Capitalism itself...
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...University of New Hampshire Honors Thesis in Accounting Kristin Kennedy ADMN 799 Professor Le (Emily) Xu Fall 2012 Table of Contents I. II. III. IV. V. VI. VII. Background……………………………………………………………........1 a. What is accounting and what role does financial reporting serve?..........1 b. History of accounting standards………………………………………..2 c. Role of auditing………………………………………………………...5 Fraud……………………………………………………………………….6 a. Two types of fraud……………………………………………………..6 i. Misappropriation of Assets…………………………………….7 ii. Misrepresentation of Financial Statements…………………….7 b. Fraud Triangle………………………………………………………….8 c. What to look for in a fraudster…………………………………………9 Past Cases of Fraud……………………………………………………….10 a. WorldCom…………………………………………………………….11 b. Tyco International Ltd………………………………………………..15 c. Adelphia Communications Corporation…………………………....…17 Sarbanes-Oxley Act of 2002………………………………………...…....20 a. Analysis of SOX: Costs vs. Benefits…………………………………34 i. Interview of...
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...w e h a v e g row n o u r ea rni ng s a t a 35% com pounded r ate for the past fi v e y ear s we lead the burgeoning global market in undersea fiber optic telecommunications W E H AV E 1 8 2 , 0 0 0 EMPLOYEES IN OVER 80 COUNTRIES AROUND THE we are a global leader in disposable health care we achieved sales of over $22 billion in fiscal 1999 we do not make toys . . . and never have 1 1. telecommunications and electronics If you knew Tyco last year, look again. The Company has evolved into a leader in the fast-paced, high-tech world of electronics. Our merger with AMP, the world’s largest maker of electrical connectors, and the acquisition of Raychem, a leading manufacturer of high-performance electrical components, created the nucleus for the formation of Tyco Electronics Corporation, the world’s largest supplier of passive electronic components. The diverse capabilities of AMP and Raychem, combined with the soaring growth of our telecommunications business, means that in fiscal 2000 Tyco will derive 40 percent of its revenue from telecommunications and electronics. The products we make are hard to see, but they are virtually everywhere — you use them every day. You’ll find AMP and Raychem connectors, as well as wireless, touch screen and fiber optic components, in cellular products,...
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...Lean manufacturing training and six sigma training are two of the most valuable skills in business today. Businesses of all types are utilizing six sigma, lean manufacturing, and lean six sigma as the primary continuous improvement methodology.Our Lean Manufacturing Certification course, delivered worldwide to individuals, colleges, and training centers, includes all of the major concepts in a single course. Definition: What does it mean to be "Six Sigma"? Six Sigma at many organizations simply means a measure of quality that strives for near perfection. But the statistical implications of a Six Sigma program go well beyond the qualitative eradication of customer-perceptible defects. It's a methodology that is well rooted in mathematics and statistics. The objective of Six Sigma Quality is to reduce process output variation so that on a long term basis, which is the customer's aggregate experience with our process over time, this will result in no more than 3.4 defect Parts per Million opportunities (DPMO). What Is Six Sigma ? Six Sigma is a meticulous methodology that make use of information management by facts and statistical analysis to define, measure and improve a company's operational performance, practices and systems. It identifies and prevents "defects" in manufacturing and service-related processes to anticipate, and achieve or exceed total customer satisfaction. What is the Six Sigma Objective? The primary objective of the Six Sigma methodology is the implementation...
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...www.smartlabelsUSA.com THE 5th The Global Resource for RFID and Beyond Smart Labels, Smart Packaging & Printed Electronics Global Conference * Free Trade Fair * Master classes * Free Vendor Seminars * Networking Dinner 27-29th March Boston www.smartlabelsusa.com Welcome to Smart Labels USA 2006, informing and delivering the many applications of RFID smart labels. For enquiries contact Nicola Bateman n.bateman@idtechex.com or call + 44 (0) 1223 813703 www.smartlabelsUSA.com Now in its 5th Year Smart Labels USA - the must-attend RFID event of the year - is back in Boston, bigger and better than ever before. The Smart Labels world-series of events by IDTechEx provides renowned, independent, global-reach RFID information and solutions through conferences, masterclasses, seminars and trade expositions. The Smart Labels series address how RFID and allied technologies are developing and being used in the U.S and around the World. Smart Labels USA is the biggest global event uniquely drawing Executive Level Representatives from the LABEL, PRINTING, PACKAGING, CONVERTING and USER market, teaching; RFID impact on businesses across a wide range of applications such as retail, manufacturing, healthcare, airlines and airports, passenger transport, archiving… RFID implementation – experience from the experts Manufacturing RFID smart labels Cutting edge RFID smart label technologies RFID Market growth – what’s in it for you? In 2006, almost three times the volume...
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...Dissertation REPORT ON IMAGINATION AT WORK For PARTIAL FULFILLMENT FOR THE AWARD OF THE DIPLOMA OF POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM) SUBMITTED TO SUBMITTED BY Prof. (Dr.) Neeran Gautam Director, UIMS Mr. Amit Sinha Enrollment No. UIMS-PGDM-10-005 Batch: 2010-2012 [Type text] [Type text] PREFACE As a part of my syllabus of PGDM programme in Final year, I was assigned some Practical and theoretical project work. Study of management will be immaterial if it is not coupled with study of financial aspect of the business. It gives the student an opportunity to learn the connection between comparison & execution to test & verify application of theories & help in the comparison of management theories and practice. The study gives a chance to know about the profitability and financial position of the firm. I have chosen General Electrics which is a $14.2 Billion Global company in Information Technology Services, R&D Services, and Business Process Outsourcing. This report contains the analysis of the 8 years data of the company. In the Scenario Analysis of the company we have included the company’s industrial GDP, its Market Share, Market Capitalization, Market Growth, HR policy etc. some other reason of choosing this segment are; Highly versatile & innovation oriented sector Large number of employees are working Highly challenging job opportunities High growth opportunities Work on international project Platform to show the difference dimension...
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...General Electric General Electric Company | | Type | Public | Traded as | NYSE: GE [1]Dow Jones Industrial Average Component S&P 500 Component | Industry | Conglomerate | Founded | Schenectady, New York, U.S. (1892) | Founder(s) | Thomas Edison, Elihu Thomson, Charles Coffin, Edwin Houston | Headquarters | Fairfield, Connecticut, [2]U.S. | Area served | Worldwide | Key people | Jeffrey Immelt (Chairman & CEO) | Products | Appliances, aviation, consumer electronics, electrical distribution, electric motors, energy, entertainment, finance, gas, healthcare, lighting, locomotives, oil, software, water, weapons, wind turbines | Revenue | US$ 147.359 billion [3] (2012) | Operating income | US$ 17.406 billion [3] (2012) | Net income | US$ 13.641 billion [3] (2012) | Total assets | US$ 685.300 billion [3] (2012) | Total equity | US$ 123.000 billion [3] (2012) | Employees | 301,000 [3](2012) | Subsidiaries | GE Capital, GE Energy,GE Home & Business Solutions, GE Technology Infrastructure, GE Aviation NBCUniversal [4](49%) | Website | GE.com [5] | General Electric Company, or GE (NYSE: GE [1]), is an American multinational conglomerate corporation incorporated in Schenectady, New York and headquartered in Fairfield, Connecticut, United States.[2][6] The company operates through four segments: Energy...
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...International Journal of Business and Social Science Vol. 4 No. 13; October 2013 Cooking the Books: The Case of Malaysian Listed Companies Fathilatul Zakimi Abdul Hamid Rohami Shafie Zaleha Othman Wan Nordin Wan Hussin Faudziah Hanim Fadzil School of Accountancy Universiti Utara Malaysia Sintok, 06010 Kedah Malaysia. Abstract Cooking the books refers to fraudulent accounting activities undertaken by a business to falsify its financial statements. Thus, the objectives of this study are to investigate what the cooking-the-books activities carried out by businesses consist of, how they conduct them, and what the impact is on the business and its shareholders. The case study sample companies are two Malaysian companies that had received various awards from reputable third-party organizations. On the other hand, the activities undertaken in both companies have caused them to be labelled as Malaysian mini Enrons. We employ a qualitative research methodology as most prior research employs a quantitative methodology to investigate the determinant factors in businesses’ cooking-the-book activities. The result of the study shows that the managers have used their positions, prior experience, and regulatory loopholes in their activities. Furthermore, the financial report restatement and higher reported earnings are the early warning signals of their activities. As a result of this, the Malaysian Securities Commission has revised the corporate governance code, and among others incorporated...
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