Assignments must be typed and submitted
before the start of class on the due date.
Pick a US company that belongs to one
of the following sectors. You should stay with this company for
the assignments that follow as well. You must confirm
your company selection with me before you start your analysis.
|
| Materials |
| Industrials |
| Consumer Discretionary |
| Consumer Staples |
| Transportation |
You can find companies in these sectors
by using StockVal or a similar program. The company that you choose
should satisfy the following conditions:
- Make sure that the market value
of your chosen firm is at least 0.75 billion dollars.
- It should have public debt, preferably
publicly traded.
Write a report on Corporate Governance
at your company. Start your report by providing an executive summary.
Then, a brief description of the company (about half a page), taken
from Yahoo or another source. Use another two to three pages to
present a well-organized report on "Who own/runs your firm."
Make sure to put the important analyses up front; all detailed information,
including tables, particularly if they are long, should go at the end
as an appendix. If the table or the graph is small, then you can
include it up front, particularly if you're going to refer to the contents
of the table in detail. In any case, you should not include any
information in Appendices that you don't refer to at all in the text.
Keep in mind that you are analyzing
the company. Providing a lot of data is not valuable, in and of itself.
Also, using information and "analysis" indiscriminately from
the company's website is also not of much use. Ask yourself regarding
anything that you include in the report -- what is this telling me about
the company's corporate governance, viz. the structure of the company,
broadly defined, and how it affects the optimal working of the company.
And don't forget to use spell check
and grammar check!
Some of the questions that you should
think about in writing up your report:
- Who are the institutions holding
the stock? (Such information can also be found on Yahoo at
http://biz.yahoo.com/hd/m/msft.html for
Microsoft -- msft; replace msft with the symbol for your stock.)
What conclusions would you draw from the quality and number of these
institutions, as well as the proportion of the firm's stock
that they hold?
- How many analysts follow the stock?
What implications would you draw from the quality and number of analysts?
- Who are the mutual funds that hold
the stock? (Check http://biz.yahoo.com/hd/mf/m/msft.html;
replace msft with the symbol for your stock.) What conclusions
would you draw from this information?
- Are there major conflicts of interest
in the running of the company that have not been addressed by compensation
contracts, etc.?
- Have there been major events in
the life of the company recently that are indications of conflicts
of interest?
- Get information on the covenants/bond
indentures of the company. Can you conclude that the bondholders
are well protected from stockholder aggression?
- How does the company see its role
as a corporate citizen? For example, is it respectful of its
social obligations?
You can use the following analysis
of Disney, Inc. done by Aswath Damodaran, in 1997. Focus on
the first two sections, Corporate Governance Analysis and Stockholder
Composition. This is a very good model to use.
You can use the following general sources:
For company specific information,
- You can search the Wall Street Archive.
- You can use the Lexis-Nexis database
from the Pace Library homepage (go to http://library.pace.edu,
click on Databases, then choose Lexis-Nexis Universe from Complete
Alphabetical Listings) to search for information regarding your company.
You can select Business News, then search using your company name,
as well as other useful keywords, such as executive compensation or
shareholder rights, or other terms that you can come up with based
on your reading of Chapter 2 and my webnotes/slides.
- Search Lexis/Nexis, focusing on
publications such as the Economist, Forbes, Fortune, etc. using appropriate
keywords.
- You can also look at the Annual
Report of the company, which you can find at the company website (you
can find the company website by searching on Google, or by going to
http://biz.yahoo.com).
- Search on Google using the company
name and relevant keywords.
- Use the information on analysts
at http://www.zacks.com
- Use information that you may be
able to find at http://biz.yahoo.com
or at http://www.marketguide.com.
- You can get information from MoneyLine; for example,
you can get bond ratings by doing the following:
- log onto Moneyline
- click on US Markets from left menu
- click on Corporates
- click on Bond Ratings
- enter the information in the dialog boxes
Explain the capital structure of a
company satisfying the conditions specified in the Corporate Governance
Project (see above.)
Here are some kinds of information
that you may want to gather in accomplishing this project.
- Use information from Prof.
Damodaran's website (Go to http://pages.stern.nyu.edu/~adamodar/;
click on Corporate Finance on the left-hand-side menu; choose Corporate
Finance (second edition); then pick Chapter 7) and information from
the text
- For how to compute a debt-equity
ratio, you can look at these problems and their accompanying solutions:
Among other sources, you can also use:
Make sure your report is well researched,
well analyzed, based on theory, and written up in a form easy to understand. You
may submit an Excel spreadsheet to accompany your work, but the main
results of the report should be written up in a Word document.
You may use Damodaran's spreadsheets.
However, it will be your responsibility to explain each of the assumptions
that he explicitly or implicitly makes.
