Assessing Usage And Maximizing Finance Lab Impact: A Case Exploration

This paper reports the results of a survey conducted to assess students’ usage and perceptions of a finance lab. Finance labs differ from simple computer labs as they typically contain data boards, streaming market quotes, terminals and software that allow for real-time financial analyses. Despite the fact that such labs represent significant and ongoing investments in the learning environment, the results of the survey show that students value finance labs, but fail to maximize their use. Recommendations are made to address this situation

Efficient Utilization Of InterContinental New Orleans Hotel Resources After Hurricane Katrina: A Case Study

A significant capital budgeting problem faced the InterContinental New Orleans Hotel after the wake of Hurricane Katrina in 2005. The problem was presented to students as a case study.  Students were provided firm specific and market data to perform a detailed discounted cash flow analysis, including estimation of the weighted average cost of capital and the corresponding sensitivity analysis.  The case is designed to be used in an upper level undergraduate corporate finance class

The relationship between accruals, earnings, and cash flows: evidence from latin america

The relationships between earnings, accruals, and cash flows for selected Latin American countries (Mexico, Chile, and Argentina) are investigated in this study from 1990 to 2009. We find a negative relationship between accruals and cash flow across decile portfolios. More importantly, firms reporting the highest level of accruals, have the worst level of cash flows, but not the worst level of earnings. This relationship is of economic importance given that investors are very oriented towards firms yielding high earnings and might fail to realize that earnings are not always accompanied by strong levels of cash flows. Results are disaggregated by years and countries, and compared to previous results for U.S. firms.ITESO, A.C.UPSoutheastern Louisiana UniversityUniversity of Florid

Accruals for latin american firms

The relationships among earnings, accruals, and cash flows for selected Latin American countries (Mexico, Chile, and Argentina) are investigated in this study from 1990 to 2009. We find a negative relationship between accruals and cash flow across decile portfolios. More importantly, firms in decile portfolio 10 reporting relative high level of earnings relative to assets, 6.5%, have the worst level of cash flows (negative 9.7%). Results are compared to previous results for U.S. firms. Given the level of sophistication of these capital markets, results for Latin American firms are less stable than for the U.S.Results disaggregated by years show that high-accruals portfolios consistently report relative high levels of earnings but low levels of cash flow. Further, the gap between earnings and cash flow is higher after 2000. This relationship is of economic importance given that investors are very oriented towards firms yielding high earnings and might fail to realize that earnings are not always accompanied by strong levels of cash flows.ITESO, A.C.UPSoutheastern Louisiana UniversityUniversity of Florid

Ceo Incentive-Based Compensation and Reit Performance

This research examines the relation between incentive-based compensation and subsequent Real Estate Investment Trust (REIT) performance as well as the determinants of incentive-based compensation for REITs. I propose that REITs either rely on incentive-based compensation to substitute for poor corporate governance practices or may not need to rely excessively on incentive-based compensation to align managers and shareholder interests, given their heavily regulated nature and their corporate governance practices. Using a sample of publicly traded equity, hybrid, and operating REITs for the 1999-2003 period, I find a negative relation between incentive based compensation awards and subsequent stock returns for REITs. Interestingly, this relation is not found when return on assets (ROA) is the measure of performance. These results imply that excessive incentive-based compensation negatively impact future REIT performance from a market perspective, but not an accounting perspective. With regard to the determinants of incentive based compensation, I find that CEO ownership, board of director characteristics, and institutional ownership are consistent determinants of the level of incentive based compensation awarded to REIT CEOs. Overall, the results imply that REIT corporate governance practices substitute for incentive-based compensation, but still, the level of incentive-based compensation paid to REIT CEOs is excessive up to the point that it negatively affects subsequent REIT performance

Socio Emotional Wealth Preservation in the REIT Industry: An Exploratory Study

Our study uses the Socio Emotional Wealth Perspective (SEW) to test our contention that Real Estate Investment Trust (REIT) founders are more inclined to satisfy first their non-economic goals rather than satisfying the economic goals of REIT shareholders. We test our hypotheses with an unbalanced panel dataset that includes an average of 66 publicly-traded equity REITs from 1999–2012 that produced 921 REIT-year observations. Our exploratory results provide evidence of SEW preservation as REITs led by founders’ successors tend to underperform; however, the family identification with the REIT affects performance positively. This is one of the first studies that merge the REIT and the family business streams of research. Future directions are suggested

ConAgra foods 2015 and the limits of debt: rewriting a recipe that just didn’t work

ConAgra Foods purchased Ralcorp, a generic brands packaged foods manufacturer, in January 2013. This purchase made ConAgra the largest private-brand packaged foods company in North America. The purchase was part of the firm’s acquisition strategy, its ‘recipe for growth’ launched in 2012. Instead of moving ConAgra forward, the purchase almost brought ConAgra into bankruptcy. ConAgra had difficulties integrating Ralcorp and the trend for private label (vs. brand name) products declined shortly after Ralcorp’s acquisition. This turn of events was made far worse because ConAgra had borrowed a large amount of debt to make the acquisition. Now, almost three years later in fall 2015 ConAgra had a new CEO, had faced reduced profitability and lower earnings per share and financial distress, and was under the pressure of an influential activist hedge fund advocating for the sale of the private brands segment. This case provides data to assess ConAgra’s situation financially and strategically, and to value the potential divestiture of the private brand business segment

ConAgra Foods: valuing a potential recipe for success

In the fall of 2012, ConAgra Foods had the opportunity to become the largest private-label packaged food producer in North America. ConAgra was considering the purchase of Ralcorp, a large private brands manufacturer. This could be a strategic step for ConAgra, since the potential acquisition seemed aligned to the firm’s strategy for growth. Ralcorp, with revenue and assets representing about one third of ConAgra’s, was large enough to impact ConAgra’s business strategy and financial structure. This case study provides both firm level and private brands industry data to assess the potential acquisition. Ranges of implied stock prices could be estimated by using Discounted Cash Flow Valuation, Comparable Multiples, and Comparable Merger and Acquisitions Transaction analysis. A comparison of implied stock prices and actual stock price by the time of the case leads to the topic of control premium paid during acquisitions and to potential enterprise synergies

ConAgra Foods: valuing a potential recipe for success

In the fall of 2012, ConAgra Foods had the opportunity to become the largest private-label packaged food producer in North America. ConAgra was considering the purchase of Ralcorp, a large private brands manufacturer. This could be a strategic step for ConAgra, since the potential acquisition seemed aligned to the firm’s strategy for growth. Ralcorp, with revenue and assets representing about one third of ConAgra’s, was large enough to impact ConAgra’s business strategy and financial structure. This case study provides both firm level and private brands industry data to assess the potential acquisition. Ranges of implied stock prices could be estimated by using Discounted Cash Flow Valuation, Comparable Multiples, and Comparable Merger and Acquisitions Transaction analysis. A comparison of implied stock prices and actual stock price by the time of the case leads to the topic of control premium paid during acquisitions and to potential enterprise synergies