Introduction to Corporate Finance (CFA Level I Suggested Reading)
The differences between proprietorships, partnerships and companies
The low-down on UK annual reports
How companies raise money in the financial markets
The role of investors and lenders in the financial markets
How companies can enrich their shareholders
The differences between shareholder value and firm value
The importance of mergers and acquisitions in relation to a companies growth
Corporate Governance (CFA Level III Suggested Reading)
Financial shenanigans of corporates going bust even while rewarded their managements handsomely
Internal controls and good practices that a firm puts into place to align the interests of its managers with those of its shareholders
Independence and effectiveness of the board of directors
Mergers (CFA Level lII Suggested Reading)
There are three types of mergers: horizontal, vertical, and conglomerate
Some of the reasons given for mergers are: economies of scale, vertical integration, complementary resources, use of surplus cash, possibility of improving the target's efficiency, and lower financing costs
Merging companies to achieve diversification is a fundamentally flawed idea, since investors themselves can pursue diversification more easily and cheaply
Bootstrapping is the illusion of EPS growth created by the merger of a high P/E firm with a low P/E firm
NPV of a merger = Gain from merger - Cost of merger
The two methods for bidders to directly approach the stockholders' of the target firm are proxy fights versus tender offers
Managements of target firms can launch a variety of pre-offer and post-offer defences to ward off potential acquirers
Empirical evidence suggests that the stockholders' of the target firms generally earn a higher percentage return due to mergers than stockholders' of the bidding firms