University of Colorado-BoulderLeeds School of Business

FNCE 4850Business Senior Seminar in Finance Office: KOBL 402G (old: KOBL S431)Spring 2020 Office Hours: Tu (3 pm – 5 pm)W 3:30 pm – 6:15 pm, KOBL 217 (old: KOBL 220) sanjai.bhagat@colorado.edu

I. Course Objective

The course develops analytical and decision making skills necessary to address real-world business finance situations. Topics include financial analysis, capital budgeting, valuation, mergers and acquisitions, capital structure policy, financial ethics, and ESG (environment/social/governance) corporate policies.

II. Course Materials

Course materials consist of two recommended textbooks: Corporate Finance , 12th Edition, 2019, By Stephen Ross,Randolph Westerfield,

Jeffrey Jaffe and Bradford Jordan, McGraw Hill, ISBN10: 1259918947. Damodaran On Valuation (Second Edition, Wiley Online, by A. Damodaran, 2015).

Scholarly journal articles and working papers.

Cases on topics noted above.

Lecture notes/overheads can be accessed from my home-page: http://leeds-faculty.colorado.edu/bhagat/

Please check your ---@colorado.edu email frequently for emails from me regarding updates to class lectures, recent relevant articles in the financial media, and class announcements.

Articles from the Wall Street Journal will be used to motivate some of the class discussion. Leeds students have free online access to the Wall Street Journal.

https://libguides.colorado.edu/wsj

III. Course Outline and Readings

A. Valuation

1. A. Damodaran, “Valuation Approaches and Metrics,” 2005, Foundations and Trends in Finance. 2. Valuation Chapter 1, Introduction to Valuation.

[http://pages.stern.nyu.edu/~adamodar/ “Books & Support” “Damodaran On Valuation (Second Edition)” “Website for book”]

3. Valuation Chapter 2, Estimating Discount Rates. http://people.stern.nyu.edu/adamodar/4. Valuation Chapter 3, Estimating Cash Flows.5. Valuation Chapter 4, Estimating Growth and Terminal Value.6. Valuation Chapter 6, Firm Value DCF Models.7. Valuation Chapter 9, Firm and Enterprise Value Multiples.8. Valuation Chapter 12, The Value of Intangibles.9. Valuation Chapter 14, The Value of Liquidity.10. Entrepreneurial Finance Chapters 8, 9, 10, New Venture Valuation.

11. Damodaran, Aswath, Valuing Young, Start-Up and Growth Companies: Estimation Issues and Valuation Challenges (June 12, 2009). Available at SSRN: https://ssrn.com/abstract=1418687 or

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http://dx.doi.org/10.2139/ssrn.1418687, NYU.12. Damodaran, A., Valuing Users, Subscribers and Customers, 2018, NYU.

13. Gornall, Will and Strebulaev, Ilya A., Squaring Venture Capital Valuations with Reality (April 2019). Journal of Financial Economics forthcoming. Available at SSRN: https://ssrn.com/abstract=2955455

B. Mergers and Takeovers

1. Background: IntroductionAgencyTheoryApplication Rule of Law

2. B. E. Eckbo and K.S. Thorburn, Corporate Restructuring, Foundations and Trends in Finance, 2013.

3. Andrade, M. Mitchell, and E. Stafford. "New Evidence and Perspectives on Mergers." Journal of Economic Perspectives (2001): 103-120. NewEvidenceMergers.ppt target-gain-goodfile.doc  

http://www.wsj.com/articles/investors-give-cold-shoulder-to-deals-1443463297

4. S. B. Moeller, F. P. Schlingemann, R. M. Stulz, “Firm Size and the Gains From Acquisitions,” Journal of Financial Economics 73, 2004, 201-228.

5. Dessaint, Olivier and Eckbo, B. Espen and Golubov, Andrey, The Anatomy of Acquirer Returns (August 15, 2019). Tuck School of Business Working Paper No. 3437865. Available at SSRN: https://ssrn.com/abstract=3437865 or http://dx.doi.org/10.2139/ssrn.3437865

Monopoly.ppt

6. Ismail, Ahmad and Khalil, Samer K. and Safieddine, Assem M. and Titman, Sheridan, Smart Investments by Smart Money: Evidence from Acquirers’ Projected Synergies (March 30, 2019). Journal of Corporate Finance, Vol. 56, 2019. Available at SSRN: https://ssrn.com/abstract=3362804

6. Olivier Dessaint, Andrey Golubov, Paolo Volpin, Employment protection and takeovers, Journal of Financial Economics 125, 2017, 369-388. https://doi.org/10.1016/j.jfineco.2017.05.005

7. Bonaime, Alice A. and Wang, Ye, Mergers, Product Prices, and Innovation: Evidence from the Pharmaceutical Industry (March 15, 2019). Available at SSRN: https://ssrn.com/abstract=3445753or http://dx.doi.org/10.2139/ssrn.3445753

8. Hosken, Daniel S. and Tenn, Steven, Horizontal Merger Analysis in Retail Markets (January 19, 2015). Available at SSRN: http://ssrn.com/abstract=2552548 or http://dx.doi.org/10.2139/ssrn.2552548

https://www.wsj.com/articles/ftc-plans-to-examine-past-acquisitions-by-big-tech-companies-11581440270?mod=searchresults&page=1&pos=1

https://www.wsj.com/articles/ftc-plans-to-examine-past-acquisitions-by-big-tech-companies-11581440270?mod=searchresults&page=1&pos=16

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https://www.wsj.com/articles/sprinting-to-faster-5g-11581466735?mod=searchresults&page=1&pos=6

9. Sheen, A., The Real Product Market Impact of Mergers, Journal of Finance 2014, https://onlinelibrary.wiley.com/doi/epdf/10.1111/jofi.12200

10. J. Harford, M. Humphery-Jenner, R. Powell. “The sources of value destruction in acquisitions by entrenched managers,” Journal of Financial Economics, Volume 106, November 2012, Pages 247–26.

11. S. Bhagat, M. Dong, D. Hirshleifer and R. Noah, "Do Tender Offers Create Value?" Journal of Financial Economics, 2005, V76 N1, 3-60. b-hirshleifer.ppt

12. U. Malmendier and G. Tate, “Who Makes Acquisitions? CEO Overconfidence and the Market’s Reaction,” Journal of Financial Economics 89, 20-43, 2008. CEO-Overconfidence.ppt

13. M. Zhao and K. Lehn, “CEO Turnover After Acquisitions: Do Bad Bidders Get Fired?” 2006, Journal of Finance 61, 1759-1812.

C. Capital Budgeting

1. J.R. Graham and C.R. Harvey, "The Theory and Practice of Corporate Finance," Journal of Financial Economics 60, 2001, 187-244. Capital Structure

2. S. Bhagat, "Real Options in the Telecommunications Industry," in Real Options: The NewInvestment Theory and its Implications for Telecommunications Economics (1999), Kluwer Academic Publishers, Boston, MA. Options Real Options

3. Secomandi, Nicola and Seppi, Duane J., Real Options and Merchant Operations of Energy and Other Commodities (August 1, 2014). Nicola Secomandi and Duane J. Seppi, "Real Options and Merchant Operations of Energy and Other Commodities," Foundations and Trends® in Technology, Information and Operations Management 6, no. 3-4 (2014). Available at SSRN: https://ssrn.com/abstract=2493514

4. Gong, Jianxin and Young, S. Mark and Van der Stede, Wim A., Real Options in the Motion Picture Industry: Evidence from Film Marketing and Sequels (October 18, 2010). Contemporary Accounting Research, Vol. 28, No. 5, pp. 1438-1466, Winter 2011. Available at SSRN: https://ssrn.com/abstract=921364

5. A.G. Sutherland and J.R. Williams, “Valuing Real Options: Insights From Competitive Strategy,” 2008, The Valuation Handbook: Valuation Techniques from Today’s Top Practitioners.

6. G4. M. Hartmann and A. Hassan, “Applications of Real Options Analysis for Pharmaceutical R&D Project Selection,” Research Policy 35, 2006, 343-354.

D. IPO

1. Michelle Lowry, Roni Michaely and Ekaterina Volkova, “Initial Public Offerings: A synthesis of the literature and directions for future research,” March 2017.

IPO.ppt Raising Capital Alternative Sources

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2. R. Aggarwal, S. Bhagat and S. Rangan, “Impact of Fundamentals on IPO Valuation,” Financial Management, 2009, 253-284. IPO Valuation.ppt

3. IPO Valuation: The International Evidence , S. Bhagat, J. Lu, and S. Rangan, in The Oxford Handbook of IPO Valuation, Oxford University Press, 2018.

https://www.wsj.com/articles/magical-thinking-about-unicorn-ipos-11553601780?mod=searchresults&page=1&pos=1

4. M. Ewens and J. Farre-Mensa, The Deregulation of the Private Equity Markets and the Decline in IPOs, 2018, CalTech.

5. Craig Doidge, Kathleen M. Kahle, G. Andrew Karolyi, René M. Stulz, Eclipse of the Public Corporation or Eclipse of the Public Markets?, 2018, Cornell University.

E. Capital Structure

1. C. Parsons and S. Titman, “Empirical Capital Structure: A Review,” Foundations and Trends in Finance, 2009. Capital Structure

2. van Binsbergen, Jules H. and Graham, John Robert and Yang, Jie, Optimal Capital Structure (April 9, 2011). Available at SSRN: https://ssrn.com/abstract=1743203 or http://dx.doi.org/10.2139/ssrn.1743203

3. S. Bhagat, B. Bolton, and A. Subramanian, “Manager Characteristics and Capital Structure: Theory and Evidence,” 2012, Journal of Financial and Quantitative Analysis.

4. I. Strebulaev and B. Yang, “The Mystery of Zero-leverage Firms,” Journal of Financial Economics 109, 1-23, 2013.

F. Private Equity

1. S. N. Kaplan and P. Stromberg, “Leveraged Buyouts and Private Equity, NBER paper, 2008. http://www.privateequityatwork.com/

2. Gompers, Paul A. and Kaplan, Steven Neil and Mukharlyamov, Vladimir, What Do Private Equity Firms Say They Do? (June 1, 2016). Journal of Financial Economics (JFE), Vol. 121, No. 3, 2016. Available at SSRN: https://ssrn.com/abstract=2447605 or http://dx.doi.org/10.2139/ssrn.2447605

G. Corporate ESG (Environment/Social/Governance) Policy

1. Bhagat, Sanjai and Hubbard, Robert Glenn, Should the Modern Corporation Maximize Shareholder Value? (March 3, 2020). Available at SSRN: https://ssrn.com/abstract=3548293 or http://dx.doi.org/10.2139/ssrn.3548293.

2. Bansal, Ravi, Wu, Di and Yaron, Amir, Is Socially Responsible Investing A Luxury Good? (February 10, 2018). Available at SSRN: https://ssrn.com/abstract=3259209 or http://dx.doi.org/10.2139/ssrn.3259209

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3. Sanjai Bhagat, Financial Crisis, Corporate Governance, and Bank Capital, Cambridge University Press, 2017. http://www.cambridge.org/9781107170643

4. S. Bhagat and R. Romano, “Empirical Studies of Corporate Law,” in Handbook of Law & Economics, 2007. CorporateLaw.ppt

5. Bouten, Lies, Cho, Charles H., Michelon, Giovanna, and Roberts, Robin W., CSR Performance Proxies in Large-Sample Studies: 'Umbrella Advocates', Construct Clarity and the 'Validity Police' (August 2017). Available at SSRN: https://ssrn.com/abstract=3107182 or http://dx.doi.org/10.2139/ssrn.3107182

6. Christensen, Hans Bonde, Hail, Luzi, and Leuz, Christian, Economic Analysis of Widespread Adoption of CSR and Sustainability Reporting Standards (November 30, 2018). Available at SSRN: https://ssrn.com/abstract=3315673 or http://dx.doi.org/10.2139/ssrn.3315673

7. Clark, Gordon L., and Viehs, Michael, The Implications of Corporate Social Responsibility for Investors: An Overview and Evaluation of the Existing CSR Literature (August 17, 2014). Available at SSRN: https://ssrn.com/abstract=2481877 or http://dx.doi.org/10.2139/ssrn.2481877

8. Kaplan, Steven N., Are U.S. Companies Too Short-Term Oriented? Some Thoughts (May 22, 2017). Available at SSRN: https://ssrn.com/abstract=2972117 or http://dx.doi.org/10.2139/ssrn.2972117

9. H. Manchiraju, and S. Rajgopal, “Does Corporate Social Responsibility (CSR) Create Shareholder Value? Evidence from the Indian Companies Act 2013,” Journal of Accounting Research 55, 2017, https://doi.org/10.1111/1475-679X.12174

10. Margolis, Joshua D., and Elfenbein, Hillary Anger and Walsh, James P., Does it Pay to Be Good...And Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and Financial Performance (March 1, 2009). Available at SSRN: https://ssrn.com/abstract=1866371 or http://dx.doi.org/10.2139/ssrn.1866371

11. Yang, Ruoke, What Do We Learn From Ratings About Corporate Social Responsibility (CSR)? (December 1, 2019). Columbia Business School Research Paper No. 18-37. Available at SSRN: https://ssrn.com/abstract=3165783 or http://dx.doi.org/10.2139/ssrn.3165783

Tech-Governance

IV. Course Schedule

January 15 Introduction, Valuation

January 22 Valuation

January 29 Valuation , Mergers & Takeovers (Proposal due: January 29)

February 5 Mergers & Takeovers

February 12 Mergers & Takeovers

February 19 Mergers & Takeovers, Capital Budgeting

February 26 Capital Budgeting

March 4 IPO (Paper first-half due: March 4)

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March 11 IPO

March 18 Midterm Exam: March 18

March 25 Capital Structure

April 1 Private Equity

April 8 Corporate ESG Policy

April 15 Corporate ESG Policy (Paper Due: April 15)

April 22 Student Pitches

April 29 Student Pitches, Final Exam Review

May 4 Final Exam 7:30 pm

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V. Course PoliciesGrading

The grade breakdown is as follows:Item Weight

A. Class quizzes 20%B. Term Paper (proposal, due: January 29) 5%C. Term Paper (first half, due: March 4) 15%D. Midterm Exam (March 18) 15%E. Term Paper (full, due: April 15) 15%F. Term Paper (pitch) 10% G. Final Exam (May 4, 7:30 pm) 20%

A. ► No screen policy. Please put your laptop/ipad/smart-phone in your backpack . This class policy has been motivated by the following research findings:

1. Faria Sana, Tina Weston, Nicholas J. Cepeda, “Laptop Multitasking Hinders Classroom Learning for Both Users and Nearby Peers,” Computers & Education, Volume 62, 2013, Pages 24-31. http://www.sciencedirect.com/science/article/pii/S0360131512002254?via%3Dihub

2. Susan Payne Carter, Kyle Greenberg, Michael S. Walker, “The Impact of Computer Usage on Academic Performance: Evidence from a Randomized Trial at the United States Military Academy,” Economics of Education Review, Volume 56, 2017, Pages 118-132, http://www.sciencedirect.com/science/article/pii/S0272775716303454. The What Works Clearinghouse has reviewed this study and given it its highest rating: https://ies.ed.gov/ncee/wwc/Docs/SingleStudyReviews/wwc_carter_022217.pdf.

3. Pam A. Mueller and Daniel M. Oppenheimer, “The Pen Is Mightier Than the Keyboard,” Psychological Science, Vol 25, Issue 6, pp. 1159 - 1168. First published date: April-23-2014. http://journals.sagepub.com/doi/abs/10.1177/0956797614524581

► You are encouraged to take notes with pen and paper. Class overheads will be made available to you before class; you can print these and take notes on them if you wish.► If you have an University approved reason for using your laptop/ipad in class, please see me.► Class quizzes will be given unannounced. Please bring your iClicker to every class.► The class will be conducted in a professional manner: Students and the instructor are expected to be prepared for each class, and behave professionally in the class.

B. Proposals for the term paper are due on January 29, 2020, before the start of class. The proposal should answer the following two questions:

What will the paper be about? Why is this topic interesting and important?

You should also include a list of at least four academic papers or book chapters that you intend to read as background for your paper. References should be cited properly: author(s) name(s), title of paper, journal name and volume, journal page numbers, year of publication; for unpublished papers: the web-link, author(s) name(s), title of paper, and university affiliation of the authors should be noted. The proposal should be no more than a page.

C, E. The first half of the term paper is due on March 4, 2020, before the start of class. The term paper draft should be at least ten pages long, and include the following:

What is the paper about? Why is this interesting and important to study/read? A critical survey of the literature. Outline of the original analysis that would be of interest to somebody in the real world: a corporate CFO or

CEO, investment banker, management consultant, venture capitalist, or entrepreneur. References that includes at least four academic papers or book chapters.

The full term paper is due on April 15, 2020.

Student (elevator) pitches are scheduled for April 22 and April 29, 2020. The paper can be on any topic that will be

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covered in the course. The paper should include a critical survey of the literature and some original analysis that would be of interest to somebody in the real world: a corporate CFO or CEO, investment banker, management consultant, venture capitalist, or entrepreneur. The paper (including exhibits) should be between 20 and 25, double-spaced pages (twelve-point font, one-inch margin all-around).

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On your paper please note the following:On my honor, as a University of Colorado at Boulder student, I have neither given nor received unauthorized assistance on this paper.A Note on Academic Honesty & Plagiarism: The development of the Internet has provided students with historically unparalleled opportunities for conducting research swiftly and comprehensively. The availability of these materials does not, however, release the student from appropriately citing sources where appropriate; or applying standard rules associated with avoiding plagiarism. Please see http://www.colorado.edu/academics/honorcode

F. 4 minutes to 5 minutes elevator pitch should cover the following: Topic Why is this topic of interest to somebody in the real world: a corporate CFO or CEO, investment banker,

management consultant, venture capitalist, or entrepreneur. Your analysis (3 to 4 minutes). Your conclusions.

Please observe the following during your elevator pitch Overheads: No more than three slides. Please place your name card on the podium when you are presenting.

Guidelines for the Term Paper

Suggested order for the sections:

Cover Page

Paper Title, Student Names, Course, Date

Executive SummaryNo more than one page. The most important part of your paper! Briefly explain what the paper is about,

why this is an interesting and important topic, and your main findings/conclusions. Consider a corporate CFO or CEO, investment banker, management consultant, venture capitalist, or entrepreneur as your primary reader of this page.

Introduction

What is the paper about?

Motivation: Why is this interesting and important to study/read?

Overview of the paper.

(Main Body)

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Please consider using sub-sections to better organize your paper, and improve its readability.

Please check the transition between paragraphs.

(Footnotes on same page.)

Summary and Conclusions

Exhibits (Tables, Graphs, etc.)

Captions and legends in the exhibits should make them self-explanatory. Cite data sources.

References____________________________________________________________________

Check for grammar and spelling.

All arguments/assertions should be supported using:logical constructs, and/ortheoretical considerations (cite references), and/orprevious empirical evidence (cite references).

Paper should be revised by you at least four times over a period no less than a week.

D and G. The exams will consist of essay-type questions, and will be closed-book, closed-notes, and in-class. The exams will be based on study questions that will be handed out at least a week before the exam.

Readings

o We will not be covering all the readings in class. I will indicate in class the readings I will be covering in detail. The readings above would be relevant if you decide to write your term paper on the particular topic.

o You are advised to read the “critical portions” of the assigned readings for a particular class before that class.

o The critical portions of a reading include the abstract, introduction, summary/conclusions of the paper. o You might wish to read the main body of the paper after we have discussed it in class.

Bloomberg data

The Bloomberg terminals in Room E-370 have a wealth of financial data. Some of this can be used for the valuation part of your term paper. Having a competency with the Bloomberg terminal and related data makes you very attractive to future

employers. Please go to http://burridgecenter.colorado.edu/html/indexlab.html

Burridge.center@colorado.edu matthew.fleming@colorado.edu

Relevant Papers if You Are Writing a Term-Paper on one of the Following Topics

A. Venture Contracting

1. S. N. Kaplan and P. Stromberg, "Venture Capitalists as Principals: Contracting, Screening, and

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Monitoring," 2001, American Economic Review 91(2 May), 426-430. http://leeds-faculty.colorado.edu/bhagat/VC-Contracting.ppt

2. S.N. Kaplan and Per Stromberg. "Financial Contracting Theory Meets The Real World: An Empirical Analysis Of Venture Capital Contracts," Review of Economic Studies, 2003, v70(2,Apr), 281-315.

3. S. N. Kaplan, B. A. Sensoy, and P. Stromberg, “Should Investors Bet on the Jockey or the Horse? Evidence from the Evolution of Firms from Early Business Plans to Public Companies,” Journal of Finance 64, 2009, 75-115.

4. O. Bengtsson and B. A. Sensoy, “Changing the Nexus: The Evolution and Renegotiation of Venture Capital Contracts,” Journal of Financial and Quantitative Analysis / Volume 50 / Issue 03 / June 2015, pp 349-375.DOI:  http://dx.doi.org/10.1017/S0022109015000137

5. O. Bengtsson and B. A. Sensoy, “Investor Abilities and Financial Contracting: Evidence from Venture Capital,” Journal of Financial Intermediation 20, 477-502, 2011.

6. Brian Broughmana and Jesse Fried, “Renegotiation of cash flow rights in the sale of VC-backed firms,” Journal of Financial Economics 95, Issue 3, March 2010, Pages 384-399.

7. Bernstein, Shai and Giroud, Xavier and Townsend, Richard R., The Impact of Venture Capital Monitoring (April 16, 2014). Journal of Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2341329 or http://dx.doi.org/10.2139/ssrn.2341329

8. P.A.Gompers,W.Gornall, and S.N.Kaplan etal., How do venture capitalists make decisions? Journal of Financial Economics, 2019. https://doi.org/10.1016/j.jfineco.2019.06.011

9. Hochberg, Yael V. and Serrano, Carlos J. and Ziedonis, Rosemarie Ham, Patent Collateral, Investor Commitment, and the Market for Venture Lending (October 7, 2014), Rice University. Available at SSRN: http://ssrn.com/abstract=2506911 or http://dx.doi.org/10.2139/ssrn.2506911

10. J. Davis, A. Morse, X. Wang, The Leveraging of Silicon Valley: Venture Debt in the Innovation Economy, April 2018.

11. E. Epstein, Why Governance Matters for Your Startup, April 2018, Stanford University.

12. Venugopal, Buvaneshwaran and Yerramilli, Vijay, Outside Directors at Early-Stage Startups (January 21, 2019). Available at SSRN: https://ssrn.com/abstract=3320010 or http://dx.doi.org/10.2139/ssrn.3320010

B. Crowdfunding

1. Rau, P. Raghavendra, Law, Trust, and the Development of Crowdfunding (December 1, 2017). Available at SSRN: https://ssrn.com/abstract=2989056, University of Cambridge.

2. Giga, Aleksandar, Firm Financing Through Equity Crowdfunding (June 2017). Available at SSRN: https://ssrn.com/abstract=2995592 or http://dx.doi.org/10.2139/ssrn.2995592, University of Southern California.

3 Armour, John and Enriques, Luca, The Promise and Perils of Crowdfunding: Between Corporate Finance and Consumer Contracts (September 11, 2017). ECGI - Law Working Paper No. 366/2017. Available at SSRN: https://ssrn.com/abstract=3035247 or http://dx.doi.org/10.2139/ssrn.3035247, University of Oxford.

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4. Knyazeva, Anzhela and Ivanov, Vladimir I., Soft and Hard Information and Signal Extraction in Securities Crowdfunding (November 17, 2017). Available at SSRN: https://ssrn.com/abstract=3051380, U.S. Securities and Exchange Commission.

5. Belleflamme, Paul and Omrani, Nessrine and Peitz, Martin, The Economics of Crowdfunding Platforms (March 20, 2015). Available at SSRN: https://ssrn.com/abstract=2585611 or http://dx.doi.org/10.2139/ssrn.2585611, Université Catholique de Louvain.

6. Agrawal, Ajay and Catalini, Christian and Goldfarb, Avi, Are Syndicates the Killer App of Equity Crowdfunding? (February 25, 2015). MIT Sloan Research Paper No. 5126-15; Rotman School of Management Working Paper No. 2569988. Available at SSRN: https://ssrn.com/abstract=2569988 or http://dx.doi.org/10.2139/ssrn.2569988.

7. Lambrecht, Anja and Goldfarb, Avi and Bonatti, Alessandro and Ghose, Anindya and Goldstein, Daniel G. and Lewis, Randall A. and Rao, Anita and Sahni, Navdeep S. and Yao, Song, How Do Firms Make Money Selling Digital Goods Online? (March 6, 2014). London Business School. Available at SSRN: http://ssrn.com/abstract=2363658 or http://dx.doi.org/10.2139/ssrn.2363658

8. Madsen, Joshua and McMullin, Jeff L., Economic Consequences of Risk and Ability Disclosures: Evidence From Crowdfunding (June 25, 2018). Available at SSRN: https://ssrn.com/abstract=3202453 or http://dx.doi.org/10.2139/ssrn.3202453

9. Cascino, Stefano and Correia, Maria M. and Tamayo, Ane, Does Consumer Protection Enhance Disclosure Credibility in Reward Crowdfunding? (July 3, 2018). Available at SSRN: https://ssrn.com/abstract=3170230 or http://dx.doi.org/10.2139/ssrn.3170230

10. J. Jagtiani and C. Lemieux, FinTech Lending, 2018, Federal Reserve Bank.

11. Berg, Tobias and Burg, Valentin and Gombović, Ana and Puri, Manju, On the Rise of FinTechs – Credit Scoring Using Digital Footprints (October 31, 2018). Michael J. Brennan Irish Finance Working Paper Series Research Paper No. 18-12. Available at SSRN: https://ssrn.com/abstract=3163781 or http://dx.doi.org/10.2139/ssrn.3163781

12. Burtch, Gordon and Gupta, Diwakar and Martin, Paola, Referral Timing and Fundraising Success in Crowdfunding (June 8, 2019). Available at SSRN: https://ssrn.com/abstract=3401272 or http://dx.doi.org/10.2139/ssrn.3401272

13. Soublière, Jean-François and Gehman, Joel, The Legitimacy Threshold Revisited: How Prior Successes and Failures Spill Over to Other Endeavors on Kickstarter (March 22, 2019). Academy of Management Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3358704

14. Dalla Chiesa, Carolina and Dekker, Erwin, Crowdfunding in the Arts: Beyond Match-Making on Platforms (March 18, 2019). Available at SSRN: https://ssrn.com/abstract=3354551 or http://dx.doi.org/10.2139/ssrn.3354551

15. Correia, Sandra Isabel and Sousa, Miguel and Brandão, Elísio Fernando Moreira, Drivers of Fundraising Success in Equity Crowdfunding (March 17, 2019). Available at SSRN: https://ssrn.com/abstract=3354210 or http://dx.doi.org/10.2139/ssrn.3354210

C. Blockchain

1. Catalini, Christian and Gans, Joshua S., Some Simple Economics of the Blockchain (September 21, 2017). Rotman School of Management Working Paper No. 2874598; MIT Sloan Research

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Paper No. 5191-16. Available at SSRN: https://ssrn.com/abstract=2874598 or http://dx.doi.org/10.2139/ssrn.2874598.

2. Rohr, Jonathan and Wright, Aaron, Blockchain-Based Token Sales, Initial Coin Offerings, and the Democratization of Public Capital Markets (October 4, 2017). Cardozo Legal Studies Research Paper No. 527; University of Tennessee Legal Studies Research Paper No. 338. Available at SSRN: https://ssrn.com/abstract=3048104 or http://dx.doi.org/10.2139/ssrn.3048104

3. Boreiko, Dmitri and Sahdev, Navroop K., To ICO or not to ICO – Empirical Analysis of Initial Coin Offerings and Token Sales (July 6, 2018). Available at SSRN: https://ssrn.com/abstract=3209180 or http://dx.doi.org/10.2139/ssrn.3209180

4. Howell, Sabrina and Niessner, Marina and Yermack, David, Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales (June 2018). NBER Working Paper No. w24774. Available at SSRN: https://ssrn.com/abstract=3206449

5. Harvey, Campbell R., Cryptofinance (January 14, 2016). Available at SSRN: https://ssrn.com/abstract=2438299 or http://dx.doi.org/10.2139/ssrn.2438299, Duke University.

6. Werbach, Kevin D., Trust, But Verify: Why the Blockchain Needs the Law (August 1, 2017). Berkeley Technology Law Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2844409

7. Momtaz, Paul P. and Rennertseder, Kathrin and Schröder, Henning, Token Offerings: A Revolution in Corporate Finance? (March 5, 2019). Available at SSRN: https://ssrn.com/abstract=3346964 or http://dx.doi.org/10.2139/ssrn.3346964

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Leeds Grading GuidelinesIn March 2019, the Leeds faculty adopted the grading guidelines listed below effective fall 2019. These guidelines are a community norm at Leeds, not a forced curve or mandated distribution. They embody the faculty’s consensus about fairness, level of difficulty, and consistency in the classroom experience across course sections and levels at Leeds.Average course grades should not exceed:3.0 (1000‐2000 level courses)3.0 (3000 level courses)3.2 (4000 level courses)

Accommodation for DisabilitiesIf you qualify for accommodations because of a disability, please submit your accommodation letter from Disability Services to your faculty member in a timely manner so that your needs can be addressed. Disability Services determines accommodations based on documented disabilities in the academic environment. Information on requesting accommodations is located on the Disability Services website. Contact Disability Services at 303-492-8671 or dsinfo@colorado.edu for further assistance. If you have a temporary medical condition or injury, see Temporary Medical Conditions under the Students tab on the Disability Services website.

Classroom BehaviorStudents and faculty each have responsibility for maintaining an appropriate learning environment. Those who fail to adhere to such behavioral standards may be subject to discipline. Professional courtesy and sensitivity are especially important with respect to individuals and topics dealing with race, color, national origin, sex, pregnancy, age, disability, creed, religion, sexual orientation, gender identity, gender expression, veteran status, political affiliation or political philosophy. Class rosters are provided to the instructor with the student's legal name. I will gladly honor your request to address you by an alternate name or gender pronoun. Please advise me of this preference early in the semester so that I may make appropriate changes to my records. For more information, see the policies on classroom behavior and the Student Code of Conduct.

Honor CodeAll students enrolled in a University of Colorado Boulder course are responsible for knowing and adhering to the Honor Code. Violations of the policy may include: plagiarism, cheating, fabrication, lying, bribery, threat, unauthorized access to academic materials, clicker fraud, submitting the same or similar work in more than one course without permission from all course instructors involved, and aiding academic dishonesty. All incidents of academic misconduct will be reported to the Honor Code (honor@colorado.edu ) ; 303-492-5550). Students who are found responsible for violating the academic integrity policy will be subject to nonacademic sanctions from the Honor Code as well as academic sanctions from the faculty member. Additional information regarding the Honor Code academic integrity policy can be found at the Honor Code Office website.

Sexual Misconduct, Discrimination, Harassment and/or Related RetaliationThe University of Colorado Boulder (CU Boulder) is committed to fostering a positive and welcoming learning, working, and living environment. CU Boulder will not tolerate acts of sexual misconduct intimate partner abuse (including dating or domestic violence), stalking, protected-class discrimination or harassment by members of our community. Individuals who believe they have been subject to misconduct or retaliatory actions for reporting a concern should contact the Office of Institutional Equity and Compliance (OIEC) at 303-492-2127 or cureport@colorado.edu. Information about the OIEC, university policies, anonymous reporting, and the campus resources can be found on the OIEC website. Please know that faculty and instructors have a responsibility to inform OIEC when made aware of incidents of sexual misconduct, discrimination, harassment and/or related retaliation, to ensure that individuals impacted receive information about options for reporting and support resources.

Religious HolidaysCampus policy regarding religious observances requires that faculty make every effort to deal reasonably and fairly with all students who, because of religious obligations, have conflicts with scheduled exams, assignments or required attendance.

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https://www.wsj.com/articles/why-wework-is-struggling-to-sell-its-story-to-new-investors-11568206801?mod=searchresults&page=1&pos=2

https://www.wsj.com/articles/wework-parent-weighs-slashing-its-valuation-roughly-in-half-11567689174?mod=hp_lead_pos2

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TECH

FTC Expands Antitrust Investigation Into Big Tech

Agency is demanding information from Alphabet, Amazon, Apple, Facebook and Microsoft

By 

John D. McKinnon in Washington and Deepa Seetharaman in San FranciscoUpdated Feb. 11, 2020 5:18 pm ET

o SAVEo PRINTo TEXTo

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Federal regulators opened a new front in their investigation of big tech companies, seeking to determine whether the industry’s giants acquired smaller rivals in ways that harmed competition, hurt consumers and evaded regulatory scrutiny.

The Federal Trade Commission on Tuesday ordered Amazon.com Inc., Apple Inc., Facebook Inc., Microsoft Corp. and Google owner Alphabet Inc. to provide detailed information about their acquisitions of fledgling firms over the past 10 years.

The new probe likely will involve hundreds of transactions that never drew federal scrutiny because they were under the dollar-value threshold for antitrust review, which is edging up to $94 million this year.

“This initiative will enable the commission to take a closer look at acquisitions in this important sector, and also to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition,” FTC Chairman Joe Simons said.

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The FTC said it isn’t conducting the probes for any specific enforcement purpose, though Mr. Simons indicated they could lead regulators to seek to unwind improper acquisitions. The investigation also could prompt the commission to consider rule changes or other action to broaden the scope of acquisitions subject to review, he said.

“We look forward to working with the FTC to answer their questions,” a Microsoft spokesperson said. Representatives for Apple, Facebook, Alphabet and Amazon didn’t reply to requests for comment.

The move marks a significant expansion of the government’s already extensive examination of possible antitrust concerns in digital markets. Both the FTC and the Justice Department have been conducting antitrust investigations of tech giants including business practices at Google and Facebook.Critics contend acquisitions by big tech firms show a pattern of establishing “kill zones” around themselves to prevent upstart rivals from posing a competitive threat, and say this can discourage innovation and investment.

Defenders of the tech giants say a small startup’s prospect of being taken over by a major company—and the big payoff that can result—is a spur to investment and innovation. Many tech entrepreneurs start companies with the specific goal of being bought by one of the giants.

Mr. Simons said the FTC’s initiative was prompted by the large number of acquisitions that have escaped federal review and “whether there’s something we need to change going forward.”

The top five tech firms have made more than 400 acquisitions over the last decade, a blue-ribbon antitrust panel in the U.K. said in March.

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Doug Melamed, a Stanford law professor, said the study announced Tuesday “might be more about building a consensus or road map at the commission” on how to proceed in such a complex area.

Small acquisitions put “a real burden on antitrust enforcers” to prove that they are anticompetitive, Mr. Melamed said. Moreover, certain deals that meet the value threshold—which has varied over the past decade—can still escape review under current rules, FTC officials said.

The FTC also is looking at deals that don’t involve full-fledged takeovers. That will involve examining potential competitive impacts of minority investments, as well as data acquisitions and licensing arrangements.

The agency’s action reflects growing concern in Washington and around the world that some U.S. tech companies have grown so large and powerful that they are squelching competition in various ways and harm consumers. For example, the Justice Department and state attorneys general have been looking at Google’s dominance of ad tech markets.Related Video

How the Microsoft Antitrust Case Paved the Way for Big TechYOU MAY ALSO LIKEUP NEXTHow the Microsoft Antitrust Case Paved the Way for Big

TechSen. Richard Blumenthal (D., Conn.), a critic of big tech companies, said he welcomed the FTC study, but warned that “it’s no substitute for action.”

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“It has been clear for a decade that Big Tech is stifling innovation through its catch-and-kill tactics and unfettered market dominance,” he said in a statement. “Every time that Google, Amazon, Apple, and Facebook acquire the latest cutting-edge artificial intelligence startup, innovative wearable device or emerging social network, they irreversibly squash another generation of novel competitors that could benefit consumers and bolster our nation’s technological advancement.”

Sandy Kory, co-founder and managing director of Horizon Partners, a boutique technology mergers-and-acquisitions firm, said many deals clinched by the five technology companies likely fell below the FTC’s threshold for review, and that in many cases the aim was to buy technology or engineering staff, rather than a stand-alone business that could flourish like YouTube or WhatsApp.

Many recent deals by Facebook and other tech giants have been in artificial intelligence, an area where tech companies are increasing their investment.

THE WHAT’S NEWS BRIEFING IN YOUR INBOX

Get What’s News, a daily digest of the day’s most important news to watch, delivered to your inbox. Sign up.Mr. Kory said it was hard to see an antitrust case against major tech companies snapping up small, unproven businesses so they can hire engineers well-versed in cutting-edge technology. “It’s uncharted territory to say, ‘You have too many smart people at your company.’”

Scrutiny from Washington already is forcing changes in how Silicon Valley does business.

At Facebook, CEO Mark Zuckerberg has formed a sizable team within the company to develop dozens of new apps because he isn’t confident

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the social-media giant could get significant acquisitions approved by regulators in the near term, according to a person familiar with the matter.

The company has previously had great success in turbocharging its growth through timely acquisitions of competitors, including Instagram for about $1 billion and WhatsApp for $22 billion.

In Alphabet’s earnings report last week, CEO Sundar Pichai nodded toward divestitures of some of the conglomerate’s outlying arms, saying he expected them to take on outside investors.

In addition to scrutinizing possible antitrust concerns involving certain major firms, the FTC said in early 2019 that it was creating a task force to examine potential antitrust violations across the tech industry.

The FTC has been particularly focused on mergers that already have been approved by the government. That re-examination could eventually lead the FTC to try to unwind deals that it finds having anticompetitive effects now, officials have said.

—Rob Copeland contributed to this article.

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The Midterm Exam (March 18, 2020) will consist of two questions drawn from these. It is

expected that the answer to each question would take about 30 minutes.

CU has the following policy: Beginning Monday, March 16, the campus will transition to remote learning for the remainder of the semester. Faculty will determine how best to use technology, such as Canvas and Zoom, to enable students to complete their educational requirements.

I will email you the exam at 3:30 pm (Mountain time) on March 18, 2020. You will answer the two questions and email me your answers in a Word.doc document by 4:30 pm on March 18. The exam is intended to be closed book and closed notes; hence when typing your answers, please do not refer to any material or person.

May I ask you to review the CU Honor Code:All students enrolled in a University of Colorado Boulder course are responsible for knowing and adhering to the Honor Code. Violations of the policy may include: plagiarism, cheating, fabrication, lying, bribery, threat, unauthorized access to academic materials, clicker fraud, submitting the same or similar work in more than one course without permission from all course instructors involved, and aiding academic dishonesty. All incidents of academic misconduct will be reported to the Honor Code (honor@colorado.edu ) ; 303-492-5550). Students who are found responsible for violating the academic integrity policy will be subject to nonacademic sanctions from the Honor Code as well as academic sanctions from the faculty member. Additional information regarding the Honor Code academic integrity policy can be found at the Honor Code Office website.

1. Describe the various methods of estimating the cost of equity. Discuss the advantages and disadvantages of the various methods of estimating the cost of equity. [value-1.ppt; slides 45-48, slides 6-7]

2. Describe the stable growth, 2-stage growth, and 3-stage growth models. Discuss when each model is appropriate to use. [value-1.ppt; slides 77-80]

3. Describe and discuss how you would value a company that currently has negative earnings. [value-2.ppt; slides 185-186; example in ValuingNegativeEarnings]

4. What are the advantages and disadvantages of the following valuation techniques? Discounted Cashflow Valuation, Relative Valuation, Real Option Valuation. (Valuation.ppt)

5. a) Discuss the advantages and disadvantages of common stock residual claims. [IntroductionAgencyTheoryApplication]b) Why are some countries economically more prosperous? [RuleofLaw.ppt]

6. (a) What does it mean to say that a market is efficient? (b) A certain investment advisor claims that the clients she has advised in the past have done “better than the market” because in the past five years the portfolio she had recommended beat the market by the following annual returns: 1.5%, 2.5%, 0.5%, -0.5%, -1.25%. Evaluate her claim. [CAPM-EMH.ppt]

7. Target shareholders generally receive substantial positive abnormal returns during takeovers.

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What are the hypothesized sources of these abnormal returns? Explain. [target-gain-goodfile.doc] [NewEvidenceMergers.ppt]

8. Target shareholder wealth could increase due to value creation or wealth transfer (from employees, customers, etc.). In either case, stock-market performance or accounting earningsof the combined firm should show improvement.

a) How do we distinguish whether target shareholder wealth increase is due to value creation or wealth transfer? Explain. [monopoly.ppt]

b) Why is this an important issue, or, who would care about the question in (a) above? Explain. [monopoly.ppt]

9. (a) What is Roll’s Hubris Hypothesis of corporate acquisitions? Explain. Discuss Malmendier-Tate’s (2008) evidence on this. How do they identify hubristic CEOs? (b) Do bad bidders get fired? Explain. [CEO-Overconfidence.ppt]

10. a) With the help of a figure explain when the NPV and IRR rules would lead to different and similar project investment decisions for a CFO. [Capital Structure.ppt]b) Some CEOs/CFOs are concerned that issuing shares will have a negative impact on their share price because of the dilution in the earnings per share. (i) Explain what is meant by dilution in the earnings per share. (ii) Will issuing shares always lead to dilution in earnings per share? Explain. [Capital Structure.ppt]

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