...alleged conflict of interest. They claimed that Herr Piech and his family held significant shares in Porsche, which held a near 20% stake in Volkswagen. German’s voluntary corporate governance code states that conflict of interest should result in the termination of a supervisory board member’s mandate. Herr Piech claimed that the conflict would be managed by him leaving the room whenever any Porsche related matter was discussed. Some American institutional investors called this naïve. Herr Piech was strongly supported by the ten employee representatives on the 20 strong board. Discussion questions: 1. Many boards require directors who declare a conflict of interest to leave the room when the relevant issue is discussed. What is your opinion of this practice? Is it naive as some investors in this case claimed? 2. Given that Herr Piech was strongly supported by all ten employee representatives on the supervisory board, do the shareholder representatives on that board have grounds for complaint? Corporate Governance, Tricker P. 2012, 2nd Edition, Oxford Press, London Deadline: 12 & 14 March 2016 Interesting reading: Porsche: The Hedge Fund that also made cars http://priceonomics.com/prosche-the-hedge-fund-that-also-made-cars/ Porsche crashes into controversy in eh ultimate “short squeeze” http://www.telegraph.co.uk/finance/global/business/3362913/Porsche-crashes-into-controversy-in-the-ultimate-short-squeeze.html BLCG 511 Exercise 1: Volkswagen ...
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...International Finance Report PORSCHE RISK MANAGEMENT TOC \t "Subtitle, 1,Title, 2"\b _TOCRange Company Overview: PAGEREF _Toc \h 3 I. Foreign Exchange Exposure: PAGEREF _Toc1 \h 3 1.1 Operating Exposure PAGEREF _Toc2 \h 4 1.2 Transaction Exposure PAGEREF _Toc3 \h 5 1.3 Commodity Exposure PAGEREF _Toc4 \h 5 II. Porsche’s hedging strategies PAGEREF _Toc5 \h 8 2.1 Aggressive ‘Put options’ Hedging strategy PAGEREF _Toc6 \h 8 2.2 Diversifying Financing PAGEREF _Toc7 \h 9 2.3 Operational Hedging PAGEREF _Toc8 \h 9 References PAGEREF _Toc9 \h 11 Company Overview: Porsche is hit head-on by a crisis without precedent at the end of the 1980s, up to threaten the independence of the brand, supreme mantra established by its founders. The stock market crash of 1987, the ruin of many wealthy Americans and new competition from Japanese cars are collapsing sales of German in the United States. In the early 1990s, the bankruptcy threat, while sales dropped tremendously, from 14.000 in 1986 to 5320 units in 1992. A recovery is considered by Mercedes-Benz or Volkswagen. But in 1993, the management of the company is entrusted to Wendelin Wiedeking, working until then as a production manager. He applies at his arrival drastic changes inspired by Toyota: hierarchical reorganization, suppression of nearly 2,000 jobs, rationalization of production, number of subcontractors divided by three. These choices are obviously intended to reduce costs. Similarly, he decides...
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...1. How does Porsche differ – operating structure, financial results, etc. – from other major European-based auto manufacturers? To begin with Porsche is a privately owned company controlled by the Porsche and Piéch family. They hold all the 8.75 million voting shares while mainly large institutional investors hold the other 8.75 million non-voting shares. Despite the fact that stock exchange and analysts’ requests more frequent and more detailed financial reporting Porsche is not willing to meet these needs. Another questionable input is the management compensation that only depend on Porsches profitability from year to year and not the share prices. Porsche manufacturing is conducted in German but also in Finland which make them a global brand with a cost base mainly in euro. They want to keep it so despite the fact that 42% of its revenues come from sales in the US since they believe that the heart of the brand comes from its performance in manufacturing and engineering. Porsche is therefore, by far the most exposed company among other European-based auto manufactures to changes in exchange rates. While the other manufacturers increase their amount of natural hedging by conducting more manufacturing in their countries of large sales Porsche increase their put option hedging. According to their 2006 model year they are going to fully hedged all their sales. This is done even though Porsche has the largest US exposure among the manufactures. Their hedging strategy has been criticized...
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...Empirical Corporate Finance * Table of Content Table of Content i 1 The Porsche Takeover 1 2 FPL Case 3 2.1 Expected Reaction of Stock Price 3 2.1.1 The Modigliani/Miller Theorem 3 2.1.2 The Tax Theory of Dividends 4 2.1.3 The Signaling Theory of Dividends 5 2.1.4 Agency Costs 5 2.1.5 Theory of Dividends Based on Tax Clienteles 6 2.2 Chart in the Light of Previous Theories 7 3 Elton and Gruber (1970): “Marginal Stock Holders tax Rates and the Clientele effect”, Review of Economics and Statistics 52, p. 68-74 8 3.1 Investors’ Marginal Tax Rate 8 3.2 Ex-Dividend Price Decline 8 3.3 Equal Tax Rates 9 4 Reference List 9 Allen, F., Bernardo, A.E., & Welch, I. (2000). A theory of dividends based on tax 9 clienteles. The Journal of Finance, 55(6), S. 2499-2536 9 * The Porsche Takeover To answer the question it has to be distinguished between common stocks (ordinary shares) and preferred stocks: Common stock (ordinary stock) can be defined as a “security representing ownership of a corporation” (Brealey, Myers, & Allen, 2011, p. 913). In this context ownership means “the right to the cash flows and the right to take all financing, and investment decisions, and full cash flow and full control rights”. Preferred stock on the other hand can be defined as a “stock that takes priority over common stock in regard to dividends. Dividends may not be paid on common stocks unless dividend is paid on all preferred stocks. The dividend...
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...Organized by CNBC and Institutional Investor Forums for the third year in a row, the Delivering Alpha Conference did not disappoint. World hedge fund titans or more commonly known on CNBC as “Masters of the Universe” descended at the Pierre Hotel in New York City on July 17. Well-known hedge fund managers such as Carl Icahn, John Paulson, Nelson Peltz, Leon Cooperman and James Chanos, just to name a few, divulged their sought after stock picks along with solid reasoning and what lies ahead for stock and bond markets. The opening remarks by Treasury secretary Jacob J. Lew provided his views on the current situation of the U.S. economy and regulation post the 2008 crisis. Perry Partners CEO Richard Perry suggested that Europe is 2-3 years behind and will suffer in the short-term and believes Greece will stay in the Euro and is buying Greek bonds, but going short on Japanese bonds. CEO Jane Mendillo from the Harvard Management Company, which has 22% of its portfolio in Europe, believes that Harvard’s long-term vision is as an endowment fund. Mendillostressed that when investing in China due to the uncertainties it is always best to have a Chinese partner that understands the demographic changes and the local market since index investing in China is flawed. However, Mendillo as well as Bridgewater Associates Co-President David McCormick also mentioned that China has a challenge to maintain growth and how this plays over the next five years is interesting. Perry also suggested...
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...A06-04-0004 PORSCHE EXPOSED BMW says that its decisions on where it locates production are driven by market needs, not currency considerations. Yet it has created natural hedges for itself by producing cars in America and Britain. By incurring costs in these markets, it greatly reduces the currency translation problem. Rival Porsche makes most of its cars in Germany, so its costs are mostly in euros. Yet a large chunk of its revenues come from sales of its sports cars in America. Lacking BMW's natural hedge, Porsche uses financial hedging to minimise the short-term impact of currency swings. “Grappling with the Strong Euro,” The Economist, June 5, 2003, p. 53. The USA represents approximately 50 percent of our total business. There are a few other countries that also use US dollars. This situation will not change much in [the] future. That is why we are hedged against currency fluctuation for the next three to four years. In our books the dollar and the yen are above the actual rates. That allows us time to react to any currency movement. “Porsche Roars Past Sales Targets,” Automotive News Europe, September 22, 2003, p. 20. It was January 2004 and Porsche—the legendary manufacturer of performance sports cars—wished to reevaluate its exchange rate strategy. Porsche's management had always been unconcerned about the opinions of the equity markets, but its currency hedging strategy was becoming something of a lightning rod for criticism. Although the currency...
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...Porsche Agrees Sale to Qatar; Merger with VW May Complete Before 2011 17 Aug 09 http://www.ihsglobalinsight.com/SDA/SDADetail17491.htm The merger between Porsche and VW may be completed ahead of schedule, according to VW Group CFO Hans Dieter Poetsch, but questions are emerging about corporate governance over the process. IHS Global Insight Perspective Significance Qatar Holding will acquire a 10% voting stake in Porsche and 17% in eventual parent group VW Group as a result of its 7-billion-euro investment in the German giant. Implications VW and Porsche are still to enact their own capital increases, VW's will happen in the first half of 2010, whilst Porsche's plans are less concrete, but necessary to pay down the debt pile with which it is struggling. Outlook Questions over corporate governance have already been raised as the power to appoint record and reputation tarnished from the scandals of a few years ago, VW will confidence in its integrity with external investors. Porsche take a 17% voting stake in the Volkswagen (VW) Group as it acquires share options held by Porsche of the last remaining key parts of the merger, tentatively agreed last week (see Germany: 13 August 2009: VW, Porsche Tentatively Agree Merger Details; May Resurrect Auto Union Name). VW will purchase 42% of Porsche for around 3.3 billion euro by 2011, initiating a capital increase of 4 billion euro in preference shares in the first half of next year to fund the ...
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...thing is the access to capital which is the capability of the MNE to access to affordable capital in order to finance the investments. The international financial management requires an understanding of cultural, historical, the institutional differences such as those affecting corporate governance, the FX risk, the political risk, and the financial instruments. It is good to go global because it generates significant benefits for all shareholders. The theory of comparative advantage provides a basis for explaining and justifying why it is good to go global. Going global can make everybody better off. 2. A corporation has many masters to serve. Who owns the Business? Contrast the two wealth maximization models and how it played into the Porsche/VW saga? Companies are created by individuals or small set of partners. The ownership of a company can go from a 100 percent privately own to 100 percent publicly traded and in between a mixer of privately and publicly held. The Anglo-American wealth maximization model is based on the fact that firm should strive to maximize the return to shares holders as measured by the sum of gain and dividends, for a given level of risk. On the other hand, the non-Anglo-American philosophy view is also to maximize the shareholders long term return to equity. However, in this case, the firm is...
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...Kevin Huong Prof. Erickson MKTG 10300 May 4, 2012 Porsche Analysis Paper Porsche is success in the automobile sector and its involvement in VW. Porsche is by far the largest sports car maker in the world. In recent years it enjoyed the highest profit margin in the industry, thus enabled it to acquire the giant Volkswagen group. However, the global financial collapse ruined its takeover plan, eventually resulted in counter takeover by Volkswagen. Porsche Automobil Holding SE was founded on June 26, 2007 at the extraordinary general meeting of Porsche AG, with a unanimous vote of the shareholders. At the time, the objective was to spin off the operative automobil business as a wholly owned subsidiary and to create the holding company as a business unit responsible for managing equity investments. Share holders of the Dr. Ing. h.c. F. Porsche AG voted unanimously in favor of the operating activities of Porsche AG becoming the responsibility of a hundred percent subsidiary in accordance with the provisions of the Transformation Act, of adopting a controlling and profit transfer agreement between the holding company and the operating subsidiary, and also of transforming the holding company into a European Company, a so-called Societas Europaea (SE). The name “Porsche Automobil Holding” was also unanimously approved. The company’s headquarters is located in Stuttgart. Porsche is a well-known European automobil industry that has been for over 60 years, and is a holding company...
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...Volkswagen Group Business Strategy & International Management Content 1 2 Introduction Volkswagen Group 2.1 2.2 Figures, Data, Facts History 2 2 2 4 5 5 6 8 8 10 12 12 15 16 17 18 3 Strategy Planning 3.1 3.2 Overall Strategy Strategy 2018 4 Business Risk Analysis 4.1 4.2 Porter’s Five Forces Resources and Capabilities 5 Financial Risk Analysis 5.1 5.2 Key Financial Figures Risks 6 7 8 SWOT-Analysis Conclusion References 1 Business Strategy & International Management 1. Introduction Whenever you visit another country and you say that you come from Germany on of the first things you ever hear is “Germany, oh I like German cars” and then they say e.g. BMW, Mercedes or Audi. That shows that German cars are not really German cars, instead they are world cars, produced and sold in countries all over the world. In my case I choose the Volkswagen Group because it is the biggest German car manufacturer and the second largest in the world. Moreover the strategy of Volkswagen is to be the largest car manufacturer until 2018. To reach this goal it is very important to understand the globalized world to compete with their competitors in a more and more competitive environment. Furthermore it is very important to show attention to emerging markets to increase the company’s sales especially when some markets like America and Europe are satisfied. In this report I want to analyze the Volkswagen...
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...point, the writing is on the wall: nothing can be taken for granted. No assurances or promises or proclamations will hold. MiSSioN ACCoMPLiCe... Posted by: williambanzai7 Post date: 01/15/2015 - 16:06 Je Suis _________ User login Username: * Home "It's Carnage" - Swiss Franc Soars Most Ever After SNB Abandons EURCHF Floor; Macro Hedge Funds Crushed Submitted by Tyler Durden on 01/15/2015 06:07 -0500 Search Password: * C reate new account Request new password Log in Bank of England Soros LIBOR National Bank Bond Crude Equity Markets None Reuters Twitter Fail France George Swiss Monetary Policy Switzerland Swiss Franc Twitter Volatility Tw eet 489 Like 382 Share 143 31 "As if millions of macro hedge funds suddenly cried out in terror and were suddenly silenced" Over two decades ago, George Soros took on the Bank of England, and won. Just before lunch local time, the Swiss National Audio Commentary From RanSquawk: open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Bank took on virtually every single macro hedge fund, the vast majority of which were short the Swiss Franc and crushed them, when it announced, first, that it would go further into NIRP, pushing its interest rate on deposit balances even more negative from -0.25% to -0.75%, a move which in itself would have been unprecedented and, second, announcing that the 1.20 EURCHF floor it had instituted...
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...point, the writing is on the wall: nothing can be taken for granted. No assurances or promises or proclamations will hold. MiSSioN ACCoMPLiCe... Posted by: williambanzai7 Post date: 01/15/2015 - 16:06 Je Suis _________ User login Username: * Home "It's Carnage" - Swiss Franc Soars Most Ever After SNB Abandons EURCHF Floor; Macro Hedge Funds Crushed Submitted by Tyler Durden on 01/15/2015 06:07 -0500 Search Password: * C reate new account Request new password Log in Bank of England Soros LIBOR National Bank Bond Crude Equity Markets None Reuters Twitter Fail France George Swiss Monetary Policy Switzerland Swiss Franc Twitter Volatility Tw eet 489 Like 382 Share 143 31 "As if millions of macro hedge funds suddenly cried out in terror and were suddenly silenced" Over two decades ago, George Soros took on the Bank of England, and won. Just before lunch local time, the Swiss National Audio Commentary From RanSquawk: open in browser PRO version Are you a developer? Try out the HTML to PDF API pdfcrowd.com Bank took on virtually every single macro hedge fund, the vast majority of which were short the Swiss Franc and crushed them, when it announced, first, that it would go further into NIRP, pushing its interest rate on deposit balances even more negative from -0.25% to -0.75%, a move which in itself would have been unprecedented and, second, announcing that the 1.20 EURCHF floor it had instituted...
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...Sixth Edition INTERNATIONAL FINANCIAL MANAGEMENT Cheol S. Eun Bruce G. Resnick International Financial Management Sixth Edition The McGraw-Hill/Irwin Series in Finance, Insurance, and Real Estate Stephen A. Ross Franco Modigliani Professor of Finance and Economics Sloan School of Management Massachusetts Institute of Technology Consulting Editor FINANCIAL MANAGEMENT Adair Excel Applications for Corporate Finance First Edition Block, Hirt, and Danielsen Foundations of Financial Management Fourteenth Edition Brealey, Myers, and Allen Principles of Corporate Finance Tenth Edition Brealey, Myers, and Allen Principles of Corporate Finance, Concise Second Edition Brealey, Myers, and Marcus Fundamentals of Corporate Finance Sixth Edition Brooks FinGame Online 5.0 Bruner Case Studies in Finance: Managing for Corporate Value Creation Sixth Edition Chew The New Corporate Finance: Where Theory Meets Practice Third Edition Cornett, Adair, and Nofsinger Finance: Applications and Theory First Edition Cornett, Adair, and Nofsinger Finance: M Book First Edition DeMello Cases in Finance Second Edition Grinblatt (editor) Stephen A. Ross, Mentor: Influence through Generations Grinblatt and Titman Financial Markets and Corporate Strategy Second Edition Higgins Analysis for Financial Management Ninth Edition Kellison Theory of Interest Third Edition Kester, Ruback, and Tufano Case Problems in Finance Twelfth Edition Ross, Westerfield, and Jaffe Corporate Finance Ninth Edition...
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...PART 2 The Global Marketing Environment CHAPTER 2 The Global Economic Environment Case 2-1 The Global Economic Crisis I n his 1997 book One World, Ready or Not, William Greider described the United States as “the buyer of last resort.” Greider explained that, for many years, the United States was the only nation that was willing to absorb production surpluses exported by companies in Europe, Asia, and Latin America. Greider asked: “Who will buy the surpluses when the United States cannot?” The conventional wisdom has long held that strong spending by consumers in other nations would keep the world economy humming. However, by 2008, Greider’s question was taking on a new urgency and the conventional wisdom was being tested. An economic crisis that had its roots in lax subprime mortgage lending practices began to spread around the globe. In the United States, where the crisis began, economic misery was widespread: The housing market collapsed, real estate values plummeted, credit tightened, and job growth slowed (see Exhibit 2-1). As the price of oil passed the $100 per barrel benchmark, the average price of a gallon of gasoline rose to $4. American consumers were, indeed, less willing and less able to buy. However, the crisis was not confined to the United States alone. Consumer-goods exporters in Asia, which Exhibit 2-1: The bursting of the global real estate bubble was only one aspect of the worst recession in decades. The ripple effects from the economic...
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...ANNUAL REPORT 2003 T R U ST I S A Q U E ST I O N O F Q U A L I TY, M O R E S O TO DAY T H A N EV E R B E F O R E . T H E S U C C E S S O F O U R B R A N D S S P E A K S F O R T H E T R U ST P LAC E D I N O U R P RO D U CT S , P RO D U CT S W H I C H A R E B A S E D O N A S I M P L E P R I N C I P L E T H AT I S T H E F O U N DAT I O N O F O U R E N T I R E C R E AT IV E P RO C E S S – A PA S S I O N F O R CA R S . A PA S S I O N W E WO U L D L I K E TO S H A R E W I T H YO U . > > > E AC H B R A N D I S A WO R L D O F I T S OW N . 4 06 10 12 14 Board of Management/Supervisory Board Report of the Supervisory Board The Board of Management Letter to our Shareholders Group values Financial Communication 18 Volkswagen share 24 Value-based management 26 Corporate Governance 30 40 46 50 53 58 60 66 Management Report Business development Net assets, financial position and earnings performance Volkswagen AG (condensed, according to German Commercial Code) Research and development Business processes Legal matters Risk report Outlook contents 40 ▼ net assets, financial position and earnings performance Sales revenue at prior year level Despite the negative effect of exchange rate movements, the Volkswagen Group generated sales revenue at the level of the previous year. However, earnings reflected unfavourable underlying conditions and special items. 12 ▼ letter to our shareholders Change and progress Our efforts are targeted at the goal of continuously...
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