Overview

This program examines business problems that arise from conflicts between shareholders, managers, and occasionally other groups such as bondholders, labor, and government regulators. Most of these conflicts lead to either a market-based or regulation-based response that creates new value for the business by significantly changing the company involved.

This five-day program will be divided in two segments of two days and three days length, with the possibility of taking each of the segments independently.

Who will benefit

The program should be valuable for investors and market analysts who are seeking to identify companies that may become targets of restructuring campaigns initiated by outside activists or by managers acting as change agents.  It should also be useful for company managers who are seeking insight into the causes and remedies for corporate under-performance.

Content

We will study a range of business problems by applying the financial concepts of market efficiency, agency costs, and free cash flow payout policy.  Readings will be drawn from textbooks and academic journals, and many classes will involve case studies of prominent companies including Australian firms such as Qantas, News Corp., and Wesfarmers.

• Days 1-2
  
  
  • Opportunities and challenges created by taking a company public
  • Activism campaigns by institutional shareholders
  • Retail shareholder intervention through voting on issues such as compensation
  • Problems and valuation effects caused by large controlling shareholders, including takeovers via “creeping” acquisitions and contentious management succession battles
    
    
    
• Days 3-4-5
  
  
  • Corporate payout and reinvestment policies in the presence of free cash flow
  • Corporate diversification, and its reversal through spinoffs and divestitures
  • Highly leveraged transactions, including buyouts and recapitalizations
  • The “common ownership problem” caused by widespread passive investing
  • “Stakeholder capitalism” policies intended to benefit labor, customers, and other constituencies

Learning Outcomes

About the Instructor

David Yermack has been a Professor of Finance at the NYU Stern School of Business since 1994 and is also an Adjunct Professor at the NYU School of Law. He is Director of the NYU Pollack Center for Law and Business and served eight years as Chair of NYU Stern’s top-ranked Finance department.

Prof. Yermack has published research on a wide variety of topics including corporate jets, fraudulent executive compensation, CEOs’ personal real estate purchases, the fashion industry, the economics of religion and non-profit enterprises, and blockchains and cryptocurrency.

He holds AB, MA, MBD, JD, and PhD degrees from Harvard University and has been a visiting professor at UWA Business School regularly since 2009.

Prof. Yermack has previously taught versions of this program at UWA Business School in the MBA and the Honours undergraduate program.  He has taught a full-semester course on these topics since the 1990s in the MBA program at the NYU Stern, where it was once named the school’s “signature elective course” by a national business publication.

Alignment with
UWA’s MBA
Flexible Program