...According to the Principles of Managerial Finance, in order for a privately own company to evolve into a public firm there are three alternative steps that are mandatory. When a firm goes public this means that the company offers its shares to the actual public, thereby the company would have many traits to discover through networking and other business transactions. Then, a right of offerings can take place where new shares will be sold to current shareholders. Lastly, a private placement where the firm sells its new securities straight to an investor or group of investors An IPO which stands for initial public offering is known as the first sale of a private company’s stock which is offered or sold to the public, wherein great emphasis is placed on the public offerings. In most instances the companies who make IPO are those of new investors who entail further resources in order to go public and increase the profits of the company via a contract at hand to receive VC funding (Gitman, 2009, pg. 338). First and foremost, when companies are about to make such a decision they should ensure that the entire organization is in accordance with the course of action. When the entire organization is in full agreement this can assist in preventing any confusion or any inconsistency that may occur if there are down falls. Hereby, motivating staff and shareholders to work together to solve problems (Gitman, 2009, pg. 338). Secondly, the presence of the company’s lawyer and an independent...
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...their auditing firms on a regular basis? As an accountant entering the modern business world, a case instilled in our minds is the Enron Scandal. For accountants, this was an embarrassing scenario and by effect brought numerous reforms, laws, and regulations. Many of these rulings are apparent in the present corporate setting. The division of accounting most affected by this scandal was the role and function of the external auditors. Auditors by trade serve in the public and stockholders interest. Furthermore, the independence of auditors is essential in performing their duties properly. As a result, which practices are needed to achieve total independence? Moreover, how do we weigh the cost of financial misstatements with the cost of redundancy due to rotation of audit firms? Demanding public companies to rotate their audit firms may appear reasonable on paper, however, this rotation brings more concerns than answers. Currently in the auditing of publicly held companies, lead audit partners are required to rotate of audits every five years. This ruling was enacted from the Sarbanes- Oxley Act of 2002 (SOX). Also, SOX requires a 1-year cooling off period if the Chief Executive Officer (CEO), Chief Financial Officer (CFO), controller, etc. was previously employed by and participated in the audit one year prior to the start of the audit. These laws were passed to promote auditor independence, yet some professionals argue this may not be enough. In 2012, the Public Company Accounting...
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...REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Apollo Shoes, Inc. We have audited the accompanying balance sheets of Apollo Shoes, Inc., as of December 31, 2006 and 2005, and related statements for each of the years in the two-year period ended December 31, 2005. We have also audited management’s assessment including the Management’s Report on Internal Control over Financial Reporting, maintained by Apollo over the Financial reporting as of December 31, 2006, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The management of Apollo shoes is responsible for maintaining effecting internal control over financial reporting, its assessment of internal controls and for the financial statement. The responsibility of our firm is to express an opinion on the financial statements, an opinion on management’s assessment, and an opinion on the effectiveness of Apollo Shoe’s, Inc. internal controls over financial reporting based on our audit. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether there are effective internal controls in place over financial reporting. The audit of the financial statements...
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...Analysts' Selective Coverage and Subsequent Performance of Newly Public Firms ABSTRACT This study examines the ability of analysts to forecast future firm performance, based on the selective coverage of newly public firms. We hypothesize that the decision to provide coverage contains information about an analyst’s underlying expectation of a firm’s future prospects. We extract this expectation by obtaining residual analyst coverage from a model of initial analyst following. We document that in the three subsequent years, IPOs with high residual coverage have significantly better returns and operating performance than those with low residual coverage. This evidence indicates analysts have superior predictive abilities and selectively provide coverage for firms about which their true expectations are favorable. ∗ Das and Guo are at the University of Illinois at Chicago, and Zhang is at the University of Hong Kong. We thank Eli Amir, Gilbert Bassett, Oleg Bondarenko, Konan Chan, Hsiu-lang Chen, Tim Kruse, Chao-Shin Liu, Malcolm McClelland, Roni Michaely, Tom Nohel, Ram Ramakrishnan, Cathy Schrand, Abbie Smith, Lenny Soffer, WeiLing Song, Robert Stambaugh (Editor), Steve Todd, Beverly Walther, Nan Zhou, an anonymous referee, and seminar participants at the City University of Hong Kong, Indiana University at Indianapolis, the London Business School, Nanyang Technological University, the Office of Economic Analysis at the U. S. Securities and Exchange Commission, Singapore...
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...POSITIVE ACCOUNTING THEORY, POLITICAL COSTS AND SOCIAL DISCLOSURE ANALYSES: A CRITICAL LOOK Markus J. Milne Accountancy and Business Law University of Otago Dunedin New Zealand Ph: 64-3-479-8120 Fax: 64-3-479-8450 Email: mmilne@commerce.otago.ac.nz POSITIVE ACCOUNTING THEORY, POLITICAL COSTS AND SOCIAL DISCLOSURE ANALYSES: A CRITICAL LOOK* ABSTRACT This paper critically reviews the literature seeking to establish evidence for a positive accounting theory of corporate social disclosures. It carefully traces through the original work of Watts and Zimmerman (1978) showing their concern with the lobbying behaviour of large US oil companies during the 1970s. Such companies were argued to be abusing monopolists and likely targets of selfinterested politicians pursuing wealth transfers in the form of taxes, regulations and other ‘political costs’. Watts and Zimmerman’s reference to “social responsibility” is shown to be a passing remark, and most likely refers to “advocacy advertising”, a widespread practice amongst large US oil companies at that time. Subsequent literature that relies on Watts and Zimmerman to present a case for social disclosures is shown to extend their original arguments. In the process, concern over the “high profits” of companies is shown to diminish, and the notion of political costs is so broadened that it blurs with other social theories of disclosure. Consequently, the positive accounting based social disclosures literature fails to provide distinct...
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...Study Questions 1. For supply chain leaders to focus more on maximizing firm sustainability rather than minimizing total cost the leaders must evaluate the entire firm as a whole and pick apart every aspect that could re veal flaws. The leaders must evaluate their financial status and their security and protection as a whole. However, those three categories fall only into the economic dimension. The three dimensions that supply chain leaders are supposed to consider when trying to improve overall sustainability are environmental, ethical, and economic. 2. The marketing and supply chain risks related to high product complexity consist of a higher total cost, lost sales, lowered ability to change or innovate, higher quality and reliability problems, less ability for adequate forecasting, and more extensive training for customer support. The benefits of high product complexity consist of increased revenue which may improve profitability and asset utilization. 3. Firms should always be adhering to public policy changes related to environmental initiatives because essentially one of the largest contributors to company sustainability is environmental compatibility. However, a company that is trying to minimalize cost could only follow the minimal requirement of certain environmental aspects such as recycling in certain places in the world. This factor alone could save companies expenses. 4. The roles that logistics and supply chain management should take to ensure the...
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...Customers * Still others are Suppliers &/or Creditors * Market Stakeholders Stakeholders that engage in economic transactions with the firm. * They include: * Employees * Stockholders * Creditors * Suppliers * Customers * Distributors, wholesalers, and retailers * Each relationship is a two-way exchange i.e. employees produce output and firm pays them wages * Are manager’s stakeholders? some would argue that as employees they are while others would argue that they are representatives of the firm who act in the best interest of stakeholders * Non-market Stakeholders people and groups who are affected or can be affected by the actions of the firm even though there is no economic transaction involved * They include: * Community * Government * Non-governmental organizations (i.e. charities, professional associations, environmental organizations) * Media * Business support groups * General public * Direct Impact on Operations - - Internal * Employees * Suppliers * Customers – middlemen and end-users * Indirect Impact on Operations - - External * Shareholders/Investors * General Public/Community * Government * Creditors * Media Topic 2: Know how to conduct a stakeholder analysis and understand the basis of...
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...Name: Aparna Gopalaswamy PG ID: 61610392 Session No.: 5 Word Count of Text: 500 Overall Word Count: 515 REACTION PAPER GENZYME: ENGINEERING THE MARKET FOR ORPHAN DRUGS & BDSS CHP 11 & 12 The Case Study is centered about Genzyme Corporation, a biotechnological firm which successfully leverages the exclusivity and policy regulatory benefits offered by the R&D and subsequent commercialization of Orphan Drugs in the pharmaceutical market. These drugs are not usually developed by the firms as the small volumes of sales in specialized markets are not economically lucrative, but are essential to promote public health. In recent years, the entry of competition, in these small niche markets, is threatening the company’s pricing strategy based on its Benefit Advantage and path-breaking early mover advantage for its more effective product with lower side effects, while other manufacturers focus on Cost Advantage is traded off against product efficacy. The company must retain its focus on the Orphan Drugs market and renew its efforts in sustaining its capabilities. The important factors affecting research productivity – research portfolio composition, firm’s scientific know-how & distinctive capabilities – were all strongly in Genzyme’s favor. The strategic logic behind sustaining Genzyme’s Benefit leadership would be to maintain their price levels and concentrate their marketing and communication efforts towards emphasizing their product’s superior efficacy and lower...
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...to work for a large accounting firm referred to as “The Firm.” The story is loosely based upon the real world experiences of the author, and is written to give students a look into the world of public accounting that goes beyond a textbook. The Auditor not only gives students a chance to follow Jack Butler’s journey up the company ladder at The Firm, but also reiterates the relative importance of conventional lessons learned in school. The story begins with a nerve filled morning for Jack Butler. He is one of three managers who are being considered for partnership, and today is “the big day.” The fact that Jack, an experienced auditor at this time, is filled with anxiety on this day shows how special it is to be considered as a candidate for partnership in a firm. It also depicts the level of competition a student can expect to experience at a firm in the future. In the story, Jack states that the other two managers up for the partnership are very close friends, and he worries that their relationships might be affected if he gets the position. Jack receives the promotion, along with one of the other two managers, Barbara Gillespsie. Jack is excited for the promotion, but quickly realizes the additional responsibility that comes with being a partner in the firm. This first experience for Jack shows students that while more money does come with promotions, there is also a greater level of responsibility associated with higher positions in firms. Jack also describes his boss in...
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...informality in firms and their tendency to underreport their output, a regression is utilized. A sample of 690 firms is chosen for this purpose. We choose the variable “% of Firms expressing that a typical Firm reports less than 100 % of sales” that may act as a proxy for this inclination as the dependent variable. Several other variables are chosen to explain this dependent variable. These explanatory variables are: the firm’s age, ownership (domestic/private), exporter (whether it exports its product or not), % of firms using the web to communicate with clients/suppliers, % of firms using email to communicate with clients/suppliers, average number of unskilled production workers, average number of temporary workers, % of firms using technology licensed from foreign companies, % of firms expected to give gifts to secure a government contract, and the size of the firm. In addition, a constant is considered in the regression. After regressing the dependent variable on the above independent variables the following results have been attained: (will insert equation and table of coefficients) When the firms’ age is considered, a negative relationship can be deducted between it and the dependent variable illustrated by the negative coefficient -0.070. As the firm ages, it is expected to report its sales more accurately. The ages of the firms selected ranged from 2 years to 146 while the average age of these firms was 27.61. This may seem unsurprising as firms with a long history...
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...productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . Blackwell Publishing and Financial Management Association International are collaborating with JSTOR to digitize, preserve and extend access to Financial Management. http://www.jstor.org Does Voluntary Stock Price Disclosure Improve Informativeness? K. Stephen Haggard, Xiumin Martin, and Raynolde Pereira* According to theory, comovement in stock prices reflects comovement in thefundamentalfactors underlying the values ofstocks. Recent theory contends that stockprice comovement can be driven by information markets or the informational opacity of the firm. To the extent that voluntary disclosure reduces information acquisition cost and enhances firm transparency, we predict that enhanced voluntary disclosure reduces stockprice comovement. Weprovide evidence in support of thisprediction using analyst evaluation offirm disclosure policy. Overall, our evidence supports the effectiveness offirm disclosure policy in increasing the amount...
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...report the alternatives would be discussed for the issues and causes faced by the firm, as various alternatives and conduct that helps to assess the issues and causes, as comparing of these alternatives against the decision criteria would help us in undoubtedly in classifying and choosing the good and lower desirable alternatives which includes employing well diversified people, retraining of the current staff, providing bonuses, improving customer relationship and creating a plan for board of directors. In the next stage we would get the solutions to the issues and causes from the suggested alternatives with the justification for the issue and causes, which consists of:- • Retaining employees • Having employee owned private organisation Then will look at how these solutions would be implementing the organisation. The report we have assessed the causes and issues that’s affecting the firm but the limitation is that we actually don’t know when the next financial crisis are going to occur because we can really forecast sales, revenues and costs. Issues The company is under pressure from the expected financial crisis. This is an issue to worry to acquire technology solutions as they haven’t yet come up with a restructure plan which would help in to ease the side effects of the expected financial crises, as we aren’t really sure when the crisis would be happening, this is a reason of worry for the firm because it could...
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...Case Study 06.1- Leigh Ann Walker, Staff Accountant 1. In my opinion, Vaughn did overreact to Walker’s admission. While I don’t condone the use of white lies to protect oneself, Walker’s omission is of a personal nature and as such, not necessary to the firms wellbeing. In opposition to this view, an auditor’s livelihood relies heavy on the notion that they are pure and worthy of trust. In that regard, the situation definitely requires a deeper conversation. I believe that I would have allowed her to give an explanation, as to where her lines drawn and what information she believes to be trivial. In my opinion, not everyone in this great country thinks or perceives every day, common place, events the same. What is typical in certain geographical areas may not be so mundane in others. The most important question that I would ask is, “Do you believe that what you have done is wrong”? Her interpretation of her actions may indeed be that it was her personal decision and her right to share whether she had taken and passed the test. She may have in her mind, decided that until she had passed the test; it was not the firm’s business as to her personal affairs. I am of the opinion that all are innocent until proven guilty. With that said, she would have had a chance to defend herself before all that were questioning her. I would have to take into account the other merits of her work, as well as, track record on other issues. The process should not have been isolated...
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...Controls Inc. (FVC) is located in Southern California. The firm manufactured specialty valves & heat exchangers. About 40% of volume & 50% of profit come from special application for the defense & aerospace industries. RSE International Corp was founded by Tom Eliot in 1970. In the year 2008, it manufactured a broad range of products including advanced industrial components as chains, cables, nuts & bolts, castings & forgings etc. The firm is considered a low-cost producer that possessed unusual production knowledge. The main issue discussed in this case study was the idea of merger between FVC and RSE could bring profit to both of the firms. First FVC become a subsidiary of RSE with the deal of preserving FVC identity. Then the two sides have explored some of the governance and compensation issues in the merger. The price of the deal was less clear as FVC traded on the NASDAQ and RSE traded on the American Stock Exchanges. The benefits of merger and acquisition between FVC and RSE were the new firm will have an increased market share which reduces competition. This reduction in competition can be damaging to the public interest, but help the firm to gain more profits. However both FVC and RSE will have no control power. However the question that has been discussed here was does FVC and RSE ready for merger and acquisition. The answered here is no as both firm didn’t analyze their current situation. Next both firm neither don’t have the proper discussion on the share holding...
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...it comes to financial wealth and goals. To increase company wealth a firm must balance their scorecard which consists of four key perspectives: financial, internal, customers, and future. I chose this article for my paper because one of my goals in life is to be at the top of the pyramid at a for-profit company. Some of the tools that are mentioned in this article will help me build my foundation on to achieve my goals of reaching top management at a for-profit company. Brief Overview The article discusses how for-profit companies can build and increase their wealth from an internal and external standpoint. The article also addresses how resources are accessed, developed, combined and/or deployed which leads to wealth creation. Taking a balance scorecard approach is one way a company can determine how capabilities can lead to wealth creation. The balance scorecard approach consists of the following perspectives: financial, internal, customers, and the future. The article also proposed a modified balance scorecard which consists of shareholders, customers, employee, and future positioning perspective. The financial perspective is concerned with risk and profit from a shareholder point of view. Public firms are in business to create and increase shareholders wealth. If a firm is not profitable, shareholders will invest in other firms. Since increasing shareholders’ wealth is very important to firms, they began to compensate senior management based on shareholder performance...
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