E. Scott Mayfield

Senior Lecturer of Business Administration

Unit: Finance

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(617) 496-9646

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Scott Mayfield is Senior Lecturer of Business Administration at the Harvard Business School. Professor Mayfield joined the Finance Unit in 2011 and was previously a member of the HBS faculty from 1997 to 2001. Professor Mayfield has taught courses in the first and second year of the MBA program, including Finance 2 and Corporate Financial Management, as well as in various executive education programs, including Valuation, Creating Value through Corporate Restructuring, and Finance for Senior Executives.

His research is in the areas of corporate finance and asset pricing and investigates the dynamic nature of corporate decision making, including capital budgeting and payout policies, when capital markets are characterized by changes in the level of risk and growth opportunities. His articles have been published in the Journal of Financial Economics, the Journal of Business and Economic Statistics, the Journal of Economics and Business, The Energy Journal, Economics Letters, and the Physical Review A.

Professor Mayfield received his Ph.D. in Economics from the University of Pennsylvania and a bachelor's degree in Economics with Highest Honors from Williams College. In addition to his position on the HBS Faculty, Professor Mayfield is a Vice President and the Financial Markets Practice Leader at Charles River Associates where he consults to corporate clients on a variety of valuation issues.

 

Publications

Journal Articles

  1. Alternative Models of Uncertain Commodity Prices for Use with Modern Asset Pricing Methods

    Malcolm Baker, E. S. Mayfield and John Parsons

    This paper provides an introduction to alternative models of uncertain commodity prices. A model of commodity price movements is the engine around which any valuation methodology for commodity production projects is built, whether discounted cash flow (DCF) models or the recently developed modern asset pricing (MAP) methods. The accuracy of the valuation is in part dependent on the quality of the engine employed. This paper provides an overview of several basic commodity price models and explains the essential differences among them. We also show how futures prices can be used to discriminate among the models and to estimate better key parameters of the model chosen.

    Keywords: Asset Pricing; Goods and Commodities; Price; Risk and Uncertainty; Valuation; Production; Projects; Cash Flow;

    Citation:

    Baker, Malcolm, E. S. Mayfield, and John Parsons. "Alternative Models of Uncertain Commodity Prices for Use with Modern Asset Pricing Methods." Energy Journal 19, no. 1 (1998): 115–148. View Details

Cases and Teaching Materials

  1. Molycorp: Financing the Production of Rare Earth Minerals (A)

    Benjamin C. Esty and E. Scott Mayfield

    Molycorp, the western hemisphere's only producer of rare earth minerals, was in the middle of a $1 billion capital expenditure project in its effort to become a vertically integrated supplier of rare earth minerals, oxides, and metals. Yet it had just reported lower than expected revenues and earnings for the second quarter of 2012. In response to the announcement, its stock price fell 29% (its stock price had fallen from $77 to $11 in the past 18 months). The weakening financial performance was due in large part to falling prices for rare earth minerals. With less internally-generated cash flow available to fund the project, management had to decide: how much capital to raise, what kind to raise, and when to raise it. These decisions would determine its capital structure, at least in the short term, as well as its ability to implement its business strategy.

    Keywords: financial strategy; convertible debt; uncertainty; competition; Startup; China; Supply & demand; Growth; rare earth minerals; capital structure; valuation; discounted cash flows; Vertical Integration; mining; payoff diagrams; option pricing; Capital Budgeting; Capital Structure; Cash Flow; Financial Strategy; Market Entry and Exit; Vertical Integration; Valuation; Metals and Minerals; Mining Industry; Industrial Products Industry; Canada; California;

    Citation:

    Esty, Benjamin C., and E. Scott Mayfield. "Molycorp: Financing the Production of Rare Earth Minerals (A)." Harvard Business School Case 214-054, June 2014. View Details
  2. Molycorp: Issuing the 'Happy Meal' Securities (B)

    Benjamin C. Esty and E. Scott Mayfield

    Molycorp, the Western hemisphere's only producer of rare earth minerals, was in the middle of a $1 billion capital expansion in its effort to become a vertically integrated supplier of rare earth minerals, oxides, and metals. After reporting lower than expected revenues and earnings for the second quarter of 2012, management needed to design a new funding strategy for the firm. In August 2012, Molycorp announced it would issue $120 million of equity and $360 million of convertible debt. To facilitate the issuance of convertible debt, the firm entered a "share lending agreement" with Morgan Stanley whereby Morgan Stanley would borrow shares from Molycorp in a transaction referred to as a "Happy Meal." The goal was to help convertible debt investors "hedge their respective investments through short sales." The challenge of the case is to understand why Molycorp used this financing strategy and what impact it would likely have on the firm, its prospects, and its stock price.

    Keywords: financial strategy; convertible debt; uncertainty; Startup; Growth; rare earth minerals; capital structure; valuation; mining; hedge funds; short selling; Equity Capital; Capital Structure; Financial Strategy; Valuation; Metals and Minerals; Equity; Capital; Debt Securities; Stock Shares; Financial Management; Mining Industry; Industrial Products Industry; Canada; California;

    Citation:

    Esty, Benjamin C., and E. Scott Mayfield. "Molycorp: Issuing the 'Happy Meal' Securities (B)." Harvard Business School Case 215-014, August 2014. View Details
  3. Molycorp: Morgan Brother's Reverse Convertible Notes (C)

    Benjamin C. Esty and E. Scott Mayfield

    In August 2011, Morgan Brothers Bank was issuing a $2.5 million reverse convertible note with payoffs linked to the price of Molycorp's common stock. These financially engineered securities were just one of many kinds of structured notes available in the retail market. Investors must decide whether the notes were fairly priced and whether they offered a favorable risk-return trade-off.

    Keywords: structured products; reverse convertible notes; replication; option pricing; bond pricing; debt securities; financial engineering; Valuation; Metals and Minerals; Debt Securities; Finance; Investment; Mining Industry; Financial Services Industry; Canada; California;

    Citation:

    Esty, Benjamin C., and E. Scott Mayfield. "Molycorp: Morgan Brother's Reverse Convertible Notes (C)." Harvard Business School Case 215-002, August 2014. View Details
  4. Creating the First Public Law Firm: The IPO of Slater & Gordon Limited

    Benjamin C. Esty and E. Scott Mayfield

    Slater & Gordon (S&G), a midsized Australian law firm with a high-growth consolidation strategy, had an initial public offering (IPO) scheduled for May 2007. Due to a series of regulatory changes in Australia in recent years, the IPO provided an opportunity for S&G to become the first publicly-traded law firm in the world. The firm and its underwriters had just issued a prospectus and were now in the process of lining up investors for the offering. Gloria Rosen, a portfolio manager at Freemantle Securities, was trying to decide whether to buy the stock for her small-cap growth fund. With only a few days left to place an order for the offering, she had to decide whether to invest and, if so, how much to invest. To make her investment decision, Rosen had to understand the value implications of the firm's business model and its growth strategy, as well as the relevant risks.

    Keywords: IPO; Mergers & Acquisitions; law firm; valuation; value drivers; growth strategy; revenue recognition; corporate governance; roll-up; consolidator; Initial Public Offering; Valuation; Consolidation; Mergers and Acquisitions; Financial Strategy; Growth Management; Corporate Governance; Business Strategy; Legal Services Industry; Financial Services Industry; Australia;

    Citation:

    Esty, Benjamin C., and E. Scott Mayfield. "Creating the First Public Law Firm: The IPO of Slater & Gordon Limited." Harvard Business School Case 213-019, October 2012. (Revised September 2013.) View Details
  5. Underwater Engineer at Intel Corporation

    E. Scott Mayfield

    Molly Miller, an Intel employee and shareholder, must decide whether to vote FOR or AGAINST Intel's proposed 2009 option exchange program. Given recent declines in Intel's stock price, more than 99% of Intel's outstanding employee stock options are "underwater," and employee motivation and retention are serious concerns. If the program is approved by shareholders, Molly must decide whether to participate in the program and tender her underwater employee stock options. As a shareholder and an employee, Molly must assess the pros and cons of Intel's proposed exchange program from both perspectives. In addition, she must consider Intel's proposal in light of the alternative approaches pursued by other corporations that have recently confronted the problem of underwater employee stock options.

    Keywords: Semiconductor Industry;

    Citation:

    Mayfield, E. Scott. "Underwater Engineer at Intel Corporation." Harvard Business School Case 212-047, November 2011. (Revised September 2012.) View Details
  6. L'Occitane en Provence

    Bo Becker, Daniela Beyersdorfer, Scott Mayfield and Mayuka Yamazaki

    Cosmetics company L'Occitane en Provence must decide if it is the right time to go public, and, if so, where to list. The firm could list on Euronext in Paris, close to the firm's headquarters in southern France, on one of the large exchanges in the U.S., or perhaps in Asia, where much of the firm's future growth is expected. The case provides opportunities to discuss the benefits and costs of going public, including valuation implications, and illustrates the choices faced by a prospective IPO firm that operates in a global setting.

    Keywords: Initial Public Offering; France;

    Citation:

    Becker, Bo, Daniela Beyersdorfer, Scott Mayfield, and Mayuka Yamazaki. "L'Occitane en Provence." Harvard Business School Case 212-051, November 2011. (Revised November 2012.) View Details
  7. Provident Life and Accident Insurance: The Acquisition of Paul Revere TN

    Mihir A. Desai, E. Scott Mayfield and Mark Veblen

    Teaching Note for (9-202-044).

    Keywords: Insurance Industry; Service Industry;

    Citation:

    Desai, Mihir A., E. Scott Mayfield, and Mark Veblen. "Provident Life and Accident Insurance: The Acquisition of Paul Revere TN." Harvard Business School Teaching Note 202-046, November 2001. View Details
  8. NetFlix.com, Inc.

    E. Scott Mayfield

    The CEO of a successful Internet start-up must decide whether to delay the company's initial public offering following a significant decline in the NASDAQ market during the spring of 2000. The company's CFO is asked to reevaluate the company's projected cash flow needs in light of the new requirement that in order to go public, Internet companies must show positive cash flows within a 12-month horizon. While examining ways to extend the company's working capital, the CFO considers various changes to the company's existing business model, including changes in the company's contractual relationships with both its suppliers and its customers.

    Keywords: Business Model; Contracts; Initial Public Offering; Cash Flow; Service Delivery; Financial Strategy; Web Services Industry;

    Citation:

    Mayfield, E. Scott. "NetFlix.com, Inc." Harvard Business School Case 201-037, September 2000. (Revised October 2006.) View Details