CFA Refresher Readings

 

Corporate Finance: Study Session 9
Learning Outcome Statements

 

"Corporate Governance"
The practitioner should be able to:

• Explain corporate governance, discuss the objectives and the core attributes of an effective corporate governance system, and evaluate whether a company’s corporate governance has those attributes
• Compare and contrast the major business forms and describe the conflicts of interest associated with each
• Discuss the conflicts that arise in agency relationships, including manager-shareholder conflicts and director–shareholder conflicts
• Describe the responsibilities of the board of directors, and explain the qualifications and core competencies that an investment analyst should look for in the board of directors
• Illustrate effective corporate governance practice as it relates to the board of directors, and evaluate the strengths and weaknesses of a company’s corporate governance practice
• Describe the elements of a company’s statement of corporate governance policies that investment analysts should assess
• Discuss the valuation implications of corporate governance

 

"Mergers and Acquisitions"
The practitioner should be able to:

• Categorize merger and acquisition (M&A) activities based on forms of integration and types of mergers
• Explain the common motivations behind M&A activity
• Illustrate how earnings per share (EPS) bootstrapping works and calculate a company’s post-merger EPS
• Discuss the relation between merger motivations and types of mergers based on industry lifecycles
• Contrast merger transaction characteristics by form of acquisition, method of payment, and attitude of target management
• Distinguish and describe pre-offer and post-offer takeover defense mechanisms
• Summarize U.S. antitrust legislation
• Calculate the Herfendahl-Hirschman Index (HHI) and evaluate the likelihood of an antitrust challenge for a given business combination
• Compare and contrast the three major methods for valuing a target company including the advantages and disadvantages of each
• Calculate free cash flows for a target company and estimate the company’s intrinsic value based upon discounted cash flow analysis
• Estimate the intrinsic value of a company using comparable company analysis
• Estimate the intrinsic value of a company using comparable transaction analysis
• Evaluate a merger bid, calculate the estimated post-merger value of an acquirer, and calculate the gains accrued to the target shareholders versus the acquirer shareholders
• Explain the effects of price and payment method on the distribution of risks and benefits in a merger transaction
• Describe the empirical evidence related to the distribution of benefits in a merger
• Define, compare, and contrast divestitures, equity carve-outs, spin-offs, split-offs, and liquidation
• Discuss the major reasons for divestitures