9781587787690

Corporate Finance

by
  • ISBN13:

    9781587787690

  • ISBN10:

    1587787695

  • Format: Hardcover
  • Copyright: 2004-11-30
  • Publisher: Foundation Pr

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Supplemental Materials

What is included with this book?

Summary

This law school casebook provides a finance-oriented approach to corporate law. Students first learn financial fundamentals such as balance sheets, income, and cash flows, then proceed into increasingly more complex areas such as corporate debt and convertible securities. Along the way they are given opportunities to apply the financial principles they've learned to analyze and understand cases presented in the text. The book focuses on what students will need to know in corporate practice, with an emphasis on the contractual solutions employed to deal with the various conflicts and ambiguities that arise in the area.

Table of Contents

Preface v
Acknowledgments vii
Table of Cases
xxi
Introduction
1(3)
Measuring Firm Output
4(74)
Introduction
4(5)
Forms of Financial Reports
9(25)
The Balance Sheet
10(1)
Assets
11(1)
Liabilities
12(1)
Stockholders' Equity
13(4)
The Income Statement
17(4)
In re Software Toolworks, Inc.
21(6)
The Statement of Cash Flows
27(6)
The Statement of Changes in Stockholders' Equity
33(1)
Analysis of Financial Statements
34(44)
Accounting Options
35(6)
Ratios
41(1)
Profitability Ratios
42(2)
Financial Leverage Ratios
44(1)
Liquidity Ratios
45(1)
Activity Ratios
46(1)
Market Value Ratios
47(2)
The Analysis of Ratios
49(5)
Appendix 2--A Examples of Contingent Liability Statements
54(7)
Appendix 2--B 2001 Annual Statement Studies
61(17)
Valuing Firm Output
78(117)
Introduction
78(2)
Discounting and Present Value
80(15)
Compounding
80(3)
The Frequency of Compounding
83(1)
Present Values
84(3)
Annuities
87(3)
Valuing a Perpetuity
90(1)
Valuing Common Stock
90(2)
Valuing Investments with Different Cash Flows at Different Times
92(1)
Net Present Value
93(2)
The Cost of Capital
95(22)
The Price of Risk
95(3)
Measurement of Risk---Of Expected Values and Standard Deviations
98(5)
Risk and Diversification
103(2)
Pricing Risk in Markets---The Capital Assets Pricing Model
105(10)
Levered Betas and the Cost of Capital for Leveraged Firms
115(1)
Challenges to CAPM
116(1)
Efficient Capital Markets
117(40)
The ECMH Model
117(1)
Signalling and Causation in Insider Trading
118(3)
Challenges to ECMH
121(1)
Inefficient Markets: An Introduction to Behavioral Finance (2000), 10--16
121(5)
Are Markets Efficient?---No, Arbitrage Is Inherently Risky
126(2)
Are Markets Efficient?---Yes, Even if They Make Errors
128(3)
Takeover Defense When Financial Markets Are (Only) Relatively Efficient
131(7)
ECMH in the Courts
138(1)
West v. Prudential Securities, Incorporated
138(4)
Measuring Securities Market Efficiency in the Regulatory Setting
142(3)
In Re Time Warner Securities Litigation
145(12)
Valuation in the Courts
157(38)
CAPM in the Courts
157(1)
Cede & Co. and Cinerama, Inc. v. Technicolor, Inc.
157(12)
Piemonte v. New Boston Garden Corp.
169(10)
Minority Discounts, Control Premia and Leverage
179(3)
Rapid--American Corporation v. Harris
182(7)
Appraising The Non--Existent: The Delaware Courts' Struggle With Control Premiums
189(6)
Capital Structure
195(89)
Introduction
195(1)
The Range of Financial Choices
196(14)
Eliasen v. Itel Corporation
202(8)
Modigliani & Miller's Irrelevance Hypothesis
210(7)
The Real World
217(12)
Debt and Taxes
218(2)
Weighted Average Cost of Capital
220(4)
Debt and Agency Costs
224(1)
``Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure''
225(4)
Capital Structure in the Courts
229(14)
New England Tel. and Tel. Co. v. Department of Public Utilities
229(8)
Heckman v. Ahmanson
237(6)
The Wages of Excessive Debt
243(41)
Subordination
243(1)
In re Fett Roofing & Sheet Metal Co., Inc., Bankrupt
244(7)
Fiduciary Duties to Creditors
251(1)
Credit Lyonnais Bank Nederland, N.V. v. Pathe Communications Co.
252(8)
Creditor Liability
260(1)
Krivo Industrial Supply Company v. National Distillers and Chemical Corporation
260(11)
The Close Corporation and Disallowance of Interest Deductions
271(1)
Fin Hay Realty Co. v. United States
271(6)
Liability of Affiliated Parties under the ``Deepening Insolvency'' Doctrine
277(1)
Official Committee of Unsecured Creditors v. R. F. Lafferty & Co.
277(5)
Structural Response to the Threat of Insolvency
282(2)
Common Stock
284(55)
Limited Liability of Stockholders
284(4)
Limited Liability
284(4)
The Problem of Dilution
288(51)
Preemptive Rights to Purchase a Portion of Any New Issue
291(1)
Stokes v. Continental Trust Company
292(6)
Equitable Doctrines Governing Dilutive Stock Issues
298(1)
Katzowitz v. Sidler et al.
298(5)
Dilution as a Takeover Defense---The Poison Pill
303(1)
The Illusory Protections of the Poison Pill
303(7)
Moran v. Household International, Inc.
310(11)
Creditor Protection: Legal Capital
321(5)
Public Securities Markets and Regulation
326(1)
The Federal Securities Laws in a Nutshell
326(4)
The New Issues Market
330(4)
Trading Markets
334(1)
Market Making in the Electronic Age
334(5)
Corporate Debt
339(110)
Introduction
339(7)
Credit Report: Suddenly, Banks Are Acting a Lot Like Bond Markets
340(6)
Contract Interpretation
346(11)
Sharon Steel Corporation v. The Chase Manhattan Bank, N.A.
347(10)
Contract Terms
357(63)
On Financial Contracting: An Analysis of Bond Covenants
357(2)
Capital Structure: Restricting New Debt
359(1)
On Financial Contracting: An Analysis of Bond Covenants
359(5)
Metropolitan Life Insurance Company v. RJR Nabisco, Inc.
364(20)
Alteration of Risks
384(1)
On Financial Contracting: An Analysis of Bond Covenants
384(6)
Distributions
390(1)
On Financial Contracting: An Analysis of Bond Covenants
390(5)
Underinvestment---Asset Maintenance
395(1)
On Financial Contracting: An Analysis of Bond Covenants
395(3)
Conversion Rights as Substitutes for Covenants
398(1)
On Financial Contracting: An Analysis of Bond Covenants
398(1)
Sinking Funds
399(1)
On Financial Contracting: An Analysis of Bond Covenants
399(1)
Principles of Corporate Finance, 6th Ed. (2000)
400(1)
Call Protection
401(1)
Morgan Stanley & Co., Incorporated v. Archer Daniels Midland Company
401(7)
Monitoring Compliance
408(1)
On Financial Contracting: An Analysis of Bond Covenants
408(1)
Amendments
409(1)
On Financial Contracting: An Analysis of Bond Covenants
409(3)
Katz v. Oak Industries, Inc.
412(8)
The Indenture Trustee and the Trust Indenture Act
420(17)
The Nature of the Trustee and its Duties
420(1)
On Financial Contracting: An Analysis of Bond Covenants
420(2)
Elliott Associates v. J. Henry Schroder Bank & Trust Co.
422(8)
The Trustee's Duties in Default
430(3)
LNC Investments, Inc. v. First Fidelity Bank, National Association
433(4)
Capital Leasing
437(2)
Asset Backed Financing
439(10)
Appendix 6--A Moody's Investor Services
444(1)
Standard & Poors
445(1)
Appendix 6--B Revised Model Simplified Indenture
446(3)
Preferred Stock
449(88)
Introduction
449(4)
Defining Preferred Stock
449(3)
The Uses of Preferred Stock
452(1)
Dividends
453(27)
The Varieties of Dividends
453(2)
Arizona Western Insurance Company v. L. L. Constantin & Co.
455(2)
L.L. Constantin & Co. v. R. P. Holding Corp.
457(3)
Straight and Cumulative Dividends
460(1)
Guttmann v. Illinois Central R. Co.
460(6)
Property Rights in Dividends
466(1)
Hay v. Hay
466(9)
Smith v. Nu--West Industries, Inc.
475(5)
Altering the Preferred Contract
480(22)
Voting Rules and Voting Rights
480(2)
Elliott Associates, L.P. v. Avatex Corporation
482(10)
Dealing with the Class Veto Power
492(2)
Schreiber v. Carney
494(8)
Board Duties
502(26)
Board Duties to Preferred Shareholders
502(1)
Mary G. Dalton v. American Investment Company
502(8)
Duties of a Preferred-Controlled Board
510(1)
Baron v. Allied Artists Pictures Corporation
511(7)
Burton v. Exxon Corporation
518(10)
Share Redemptions and Repurchases
528(9)
Eisenberg v. Chicago Milwaukee Corporation
528(9)
Options and Convertible Securities
537(124)
Introduction
537(5)
The Uses of Options and Option Theory
537(2)
Real Options
539(1)
Long and Short Positions and Position Diagrams
540(2)
How Options Operate
542(14)
Call Options
542(1)
Long Positions in Call Options
543(2)
Short Positions in Call Options
545(1)
Put Options
546(2)
Combining Options, Stocks and Bonds; Put--Call Parity
548(3)
Uses of Options
551(1)
Brane v. Roth
551(2)
Who Says You Can't Make Money Off Stalled Stocks? More Investors Use Options, Trading Upside for Steady Gains
553(3)
Valuation of Options
556(7)
Disclosure Issues With Options
563(12)
Securities and Exchange Commission, Regulation S--K, Item 402(c) 17 C.F.R. 229.402(c) (Executive Compensation)
563(2)
Five Ways of Valuing Options Of these possible methods, only one results in reliable, tamperproof, financial results
565(4)
Herbert Resnik v. Jerome Swartz
569(6)
Convertible Securities, Deal Protection, and Venture Capital
575(68)
Destruction of the Option
575(1)
John Parkinson v. West End Street Railway Company
575(2)
Simons v. Cogan
577(7)
Andaloro v. PFPC Worldwide, Inc.
584(3)
Dilution of Option Rights
587(2)
HB Korenvaes Investments, L.P. v. Marriott Corporation
589(19)
Stephenson v. Plastics Corporation of America, Inc.
608(9)
Wood v. Coastal States Gas Corporation
617(10)
Cofman v. Acton Corporation
627(4)
CL Investments, L.P. v. Advanced Radio Telecom Corp.
631(12)
Last Period Financing: Death Spirals
643(18)
Internet Law Library, Inc. v. Southridge Capital Management, LLC
645(3)
GFL Advantage Fund, Ltd. v. Colkitt
648(13)
Dividends and Distributions
661(138)
Distributions and Investor Wealth
661(26)
Dividend Practices
661(1)
Distribution of Incomes of Corporations Among Dividends, Retained Earnings, and Taxes
661(4)
Disappearing Dividends: Changing Firm Characteristics or Lower Propensity to Pay?
665(4)
How Do Dividends Relate to Firm Value?
669(5)
Explaining Dividend Practices
674(1)
Clientele Effects and Expectations
674(1)
Transaction Costs of Selling Shares
675(1)
Taxes
676(3)
Imperfect Capital Markets and the Signaling Value of Dividends
679(1)
Alternative Explanations of Dividends
680(1)
Two Agency--Cost Explanations of Dividends
680(7)
Restrictions on Dividends and Other Distributions to Shareholders
687(20)
Klang v. Smith's Food & Drug Centers, Inc.
693(8)
Hullender v. Acts II
701(1)
Stock Repurchase Agreements in Bankruptcy: A Tale of State Law Rights Discarded
702(5)
Board Discretion and Duties in Declaring Dividends
707(15)
Caleb & Co. v. E. I. DuPont de Nemours & Company
708(3)
Berwald v. Mission Development Company
711(7)
Smith v. Atlantic Properties, Inc.
718(4)
Stock Dividends and Stock Splits
722(20)
The Economics of Stock Dividends and Stock Splits
722(2)
Accounting for Dividends and Splits
724(6)
Reverse Stock Splits
730(1)
Applebaum v. Avaya
731(11)
Stock Repurchases
742(37)
The Economics of Share Repurchases
742(3)
Legal Authority for Share Repurchases
745(1)
Regulation of Share Repurchases
745(1)
Market Repurchases
745(1)
Securities and Exchange Commission v. Georgia--Pacific Corporation
746(3)
Going Private Transactions
749(1)
Howing Co. v. Nationwide Corporation
750(8)
Repurchases During Hostile Tender Offers
758(1)
AC Acquisitions Corp. v. Anderson, Clayton & Co.
759(6)
Targeted Repurchases
765(1)
Grobow v. Perot
766(6)
Duties in Share Repurchases
772(1)
Nixon v. Blackwell
772(7)
Leveraged Buyouts
779(16)
United States of America v. Tabor Court Realty Corp.
780(11)
Matter of Munford, Inc., d.b.a. Majik Market, Debtor
791(4)
Spin--Offs and Tracking Stock
795(4)
Spin--Offs
795(2)
Tracking Stock
797(2)
Index 799

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