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Abstract:
There is need for changed rules protecting shareholders from arbitrary decisions that require that they sell when they would rather hold in a MBO (managerial buyout). A conflict of interests occurs when a private equity firm and the top management of a firm decide that the firm's stock equity would be more valuable if the firm were taken private, rather than continuing as a public entity, and they take the firm private.

It is well understood that all the shareholders of the common stock of a firm think the stock's value is equal to or larger than the market price. Shareholders who think the value is less than the market price have sold or shortly will sell. There may be tax effects that affect the marginal values that are required for sale, but the basic fact is that most shareholders of a firm expect the stock's future value to exceed the current market price. If a majority of a firm's shareholders vote to accept a buyout offer from management, then the minority shareholders are sold out at a price that might be less than they think the shares are worth.

It is far from clear that the present procedure for a MBO is fair to the reluctant to sell shareholders. The situation is in need for change of some type to prevent the exploitation of the minority shareholders (those not wanting to sell) at the hands of private equity and top management of a firm going private.

Managerial buyout, private equity, MBOs, Mergers and Acquisitions

Abstract:
On November 1, 2004, Judge S.R. Underhill ruled in favor of a subsidiary of General Electric Corporation in a tax case involving events that took place from 1993-1998 when Jack Welch was Chairman of GE's Board. The important issue is whether a corporation can ethically exploit features of the tax law (the actions were legal). In this case, GE shifted 98% of the taxable income to two non-taxable Dutch Banks, but did not shift 98% of the benefits. Also, the GE tax process resulted in fully depreciated airplanes being depreciated a second time. There are two remaining questions. Should GE have implemented this tax strategy (when Jack Welch was Chairman)? Secondly, should GE's current CEO authorize the payment (in lieu of taxes) to the U.S. Government of $62,000,000 even though Judge Underhill ruled in GE's favor?

Abstract:
In August of 2005, Carl C. Icahn announced to the press that he wanted Time Warner to spinoff (or more accurately to sell) its cable unit and then to repurchase $20 billion of its stock. The Icahn group owned less than 3 percent of Time Warner's outstanding stock (about 122,000,000 shares).

Earlier in August, Time Warner had announced a $5 billion stock buyback. It also planned to sell at least 15 percent of its cable unit.

During 2004, Time Warner issued debt with maturities ranging from 3 to 40 years and interest rates ranging from 5.625% to 10.15%.

On the day of Icahn's announcement, the Time Warner stock went up by $.26.

The August 21, 2005 issue of The New York Times had the following quotation (p. 2, BU): "Instead of being called a corporate raider, I'm an activist." He claimed that he was involved in a shareholder-rights campaign. Earlier in the year (April-May) he successfully forced Kerr-McGee to sell oil reserves (in August 2005, they sold) and to repurchase shares by threatening a proxy fight for a board seat. He made the same threat to Time Warner.

In this paper, we want to investigate the likely effect of Icahn's demands on the other shareholders and how Icahn can hope to reap economic rewards from his activities. The third issue is whether or not Icahn's activities of this nature are socially desirable.

Abstract:
There is a great deal of confusion regarding the factors that led to Enron’s collapse. This important book addresses this problem by providing a coherent explanation of the accounting and finance problems associated with the collapse. The Skilling-Lay trial, as it is related to accounting or finance issues, is critically described as well. Through its well-balanced take on events surrounding the trial, the book therefore enables readers to analyze the validity of the arguments offered by the U.S. attorneys.

Contents: The Enron Success and Failure; Enron as of 31 December 2000; First Six Months of 2001: Before the Storm; Sherron Watkins’ Letter to Kenneth L. Lay; The Clouds Burst; The 100-Year Flood; JEDI and Chewco: Not the Movie; LJM1 and Rhythms; LJM2 and Raptors I and III; LJM2 and Raptors II and IV; Other Transactions; The Collapse; The Indictment of Lay and Skilling; The Trial; A Slice of the Skilling-Lay Trial; The Skilling-Lay Trial: Fair or Foul?; Mark to Market Accounting: Feeding the Growth Requirement; Concluding Observations.

Readership: Students and academics in accounting, finance, law and banking; accountants, lawyers, board members and finance people, and general public.

Enron, Skilling-Lay Trial, Mark to Market Accounting, Collapse of Enron, Fastow, Jeff Skilling’s Conviction, Special Purpose Entities (SPEs)

Abstract:
The objective of this book is to help an individual (or a family) design a personal investment strategy. It explains how stock markets can be used to make a large fortune from a small investment. It also recommends an approach to increase a reasonable return on investment and explains the importance of investment alternatives.

The book is based on the premise that the US stock market is not too high compared to the long-term value of its securities. It further assumes that readers are interested both in return likely to be earned on investment and the risk of not earning the return target.

The focus on this book is on “personal” investing. It begins with three basic rules of investing and concludes with ten subordinate rules and other suggestions for investing.

Investments, Common Stock, Bonds, Financial Securities, Taxes, Fair Security, Random Walk, Tax Deferral, Dividends