Suraj Srinivasan

Associate Professor of Business Administration

Suraj Srinivasan is an Associate Professor in the Accounting and Management area at Harvard Business School. He teaches the second year MBA elective Business Analysis and Valuation Using Financial Statements and to executives, Strategic Financial Analysis for Business Evaluation. He also teaches in corporate governance programs sMaking Corporate Boards More effective, Audit Committees in a New Era of Governance and Compensation Committees: New Challenges, New Solutions. Prior to joining HBS, Professor Srinivasan was an Assistant Professor of Accounting at the University of Chicago Graduate School of Business from 2004 – 2008 where he received the Ernest R. Wish Accounting Research prize in 2007.

Professor Srinivasan’s research examines corporate governance in the U.S. and internationally. He has studied issues such as the impact of globalization on corporate disclosure practices and compensation arrangements in international companies, the effect of securities regulation on incentives of companies to cross list in the U.S., incentives of audit firms to provide high quality audits, and reputational consequences for corporate directors when companies experience financial reporting problems.

Professor Srinivasan earned a bachelor's degree with honors in electrical and electronics engineering and a master's degree in physics with honors from Birla Institute of Technology and Sciences in India prior to earning an MBA from the Indian Institute of Management Calcutta. He also received a doctorate degree in business administration from Harvard Business School in 2004 where he received the George S. Dively Award for outstanding thesis research.

Journal Articles

  1. Admitting Mistakes: Home Country Effect on the Reliability of Restatement Reporting

    We study the frequency of restatements by foreign firms listed on U.S. exchanges. We find that the restatement rate of U.S. listed foreign firms is significantly lower than that of comparable U.S. firms and that the difference depends on the firm's home country characteristics. Foreign firms from countries with a weak rule of law are less likely to restate than are firms from strong rule of law countries. While the lower rate of restatements can represent an absence of errors, it can also indicate a lack of detection and disclosure of errors and irregularities. We infer the magnitude of detection and disclosure by associating the frequency of restatements with the quality of the firm's internal reporting system. We find that only U.S. firms and foreign firms from strong rule of law countries show a positive association between restatement frequency and internal control weaknesses. Firms from weak rule of law countries show no significant association. We interpret these findings as home country enforcement affecting firms' likelihood of detecting and reporting existing accounting irregularities. This suggests that for U.S. listed foreign firms, less frequent restatements can be a signal of opportunistic reporting rather than a lack of accounting errors and irregularities.

    Keywords: Accounting restatements; earnings management; home country enforcement; Earnings Management; Globalized Firms and Management; Law; Financial Reporting; Financial Markets; Cross-Cultural and Cross-Border Issues;

    Citation:

    Srinivasan, Suraj, Aida Sijamic Wahid, and Gwen Yu. "Admitting Mistakes: Home Country Effect on the Reliability of Restatement Reporting." Accounting Review (forthcoming). View Details
  2. Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World

    We examine how cross-country differences in product, capital, and labor market competition, and earnings management affect mean reversion in accounting return on assets. Using a sample of 48,465 unique firms from 49 countries, we find that accounting returns mean revert faster in countries where there is more product and capital market competition, as predicted by economic theory. Country differences in labor market competition and earnings management are also related to mean reversion in accounting returns—but the relation varies with firm performance. Country labor competition increases mean reversion when unexpected returns are positive, but dampens it when unexpected returns are negative. Accounting returns in countries with higher earnings management mean revert more slowly for profitable firms and more rapidly for loss firms. Thus, earnings management incentives to slow or speed up mean reversion in accounting returns are accentuated in countries where there is a high propensity for earnings management. Overall, these findings suggest that country factors explain mean reversion in accounting returns and are therefore relevant for firm valuation.

    Keywords: Performance; Corporate performance; valuation; Equity Valuation; Persistence; competitive advantage; institutions; earnings management; labor market; capital markets; competition; Profit; Performance; Supply and Industry; Financial Statements; Government and Politics; Globalized Markets and Industries;

    Citation:

    Healy, Paul M., George Serafeim, Suraj Srinivasan, and Gwen Yu. "Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World." Review of Accounting Studies (forthcoming). (Vol. 20, no. 1, March 2015.) View Details
  3. SOX after Ten Years: A Multidisciplinary Review

    We review and assess research findings from 120+ papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act. We describe significant developments in how the Act was implemented and find that despite severe criticism, the Act and institutions it created have survived almost intact since enactment. We report survey findings from informed parties that suggest that the Act has produced financial reporting benefits. While the direct costs of the Act were substantial and fell disproportionately on smaller companies, costs have fallen over time and in response to changes in its implementation. Research about indirect costs such as loss of risk taking in the U.S. is inconclusive. The evidence for and social welfare implications of claimed effects such as fewer IPOs or loss of foreign listings are unclear. Financial reporting quality appears to have gone up after SOX, but research on causal attribution is weak. On balance, research on the Act's net social welfare remains inconclusive. We end by outlining challenges facing research in this area and propose an agenda for better modeling costs and benefits of financial regulation.

    Keywords: Financial Reporting; Laws and Statutes; United States;

    Citation:

    Srinivasan, Suraj, and John C. Coates IV. "SOX after Ten Years: A Multidisciplinary Review." Accounting Horizons (forthcoming). View Details
  4. Do Analysts Follow Managers Who Switch Companies? An Analysis of Relationships in the Capital Markets

    We examine the importance of professional relationships developed between analysts and managers by investigating analyst coverage decisions in the context of CEO and CFO moves between publicly listed firms. We find that top executive moves from an origin firm to a destination firm trigger analysts following the origin firm to initiate coverage of the destination firm in 10% of our sample, which is significantly higher than in a matched sample. Analyst-manager "co-migration" is significantly stronger when both firms are within the same industry. Analysts who move with managers to the destination firm exhibit more intense and accurate coverage of the origin firm than they do in other firms and compared to other analysts covering the origin firm. The advantage no longer holds after the executive's departure, and most of the analysts' advantage does not carry over to the destination firm. However, the analysts do increase the overall market capitalization of firms in their coverage portfolio. Our results hold after Regulation Fair Disclosure, suggesting that these relationships are not based on selective disclosure. Overall, the evidence shows both the importance and limitations of professional relations in capital markets.

    Keywords: management turnover; analyst coverage; capital market relationships; Capital Markets; Relationships;

    Citation:

    Brochet, Francois, Gregory S. Miller, and Suraj Srinivasan. "Do Analysts Follow Managers Who Switch Companies? An Analysis of Relationships in the Capital Markets." Accounting Review 89, no. 2 (March 2014). View Details
  5. Accountability of Independent Directors—Evidence from Firms Subject to Securities Litigation

    We examine which independent directors are held accountable when investors sue firms for financial- and disclosure-related fraud. Investors can name independent directors as defendants in lawsuits, and they can vote against their re-election to express displeasure over the directors' ineffectiveness at monitoring managers. In a sample of securities class-action lawsuits from 1996 to 2010, about 11% of independent directors are named as defendants. The likelihood of being named is greater for audit committee members and directors who sell stock during the class period. Named directors receive more negative recommendations from Institutional Shareholder Services (ISS), a proxy advisory firm, and significantly more negative votes from shareholders than directors in a benchmark sample. They are also more likely than other independent directors to leave sued firms. Overall, shareholders use litigation along with director elections and director retention to hold some independent directors more accountable than others when firms experience financial fraud.

    Keywords: independent directors; Litigation Risk; class action lawsuits; director accountability; reputation; boards of directors; corporate governance; Debt Securities; Corporate Accountability; Lawsuits and Litigation;

    Citation:

    Brochet, Francois, and Suraj Srinivasan. "Accountability of Independent Directors—Evidence from Firms Subject to Securities Litigation." Journal of Financial Economics 111, no. 2 (February 2014): 430–449. View Details
  6. Which U.S. Market Interactions Affect CEO Pay? Evidence from UK Companies

    This paper examines how different types of interactions with U.S. markets by non-U.S. firms are associated with higher level of CEO pay, greater emphasis on incentive-based compensation, and smaller pay gap with U.S. firms. Using a sample of CEOs of UK firms and using both broad cross-sectional and narrow event-window tests, we find that capital market relationship in the form of an U.S. exchange listing is related to higher UK CEO pay; however, the effect is similar when UK firms have a listing in any foreign country implying a foreign listing effect not unique to the U.S. Product market relationships measured by the extent of sales in the U.S. by UK companies are associated with higher pay, greater use of U.S.-style pay arrangements, and a reduction in the U.S.-UK pay gap. The product market effect is incremental to the effect of a U.S. exchange listing, the extent of the firm's non-U.S. foreign market interactions, and the characteristics of the executive. The U.S-UK CEO pay gap reduces in UK firms that make U.S. acquisitions. Further, the firm's use of a U.S. compensation consultant increases the sensitivity of UK pay practices to U.S. product market relationships.

    Keywords: CEO compensation; international pay; globalization; corporate governance; incentives; cross-listing; United Kingdom; Motivation and Incentives; Executive Compensation; Globalization; Corporate Governance; United Kingdom; United States;

    Citation:

    Gerakos, Joseph, Joseph Piotroski, and Suraj Srinivasan. "Which U.S. Market Interactions Affect CEO Pay? Evidence from UK Companies." Management Science 59, no. 11 (November 2013). View Details
  7. Non-Audit Services and Financial Reporting Quality: Evidence from 1978–1980

    We provide evidence for the long-standing concern on auditor conflicts of interest from providing non-audit services (NAS) to audit clients by using rarely explored NAS fee data from 1978 to 1980. Using this earlier setting, we find cross-sectional evidence of improved earnings quality when auditors provide NAS, especially those related to information services. This is consistent with better audit quality from knowledge spillovers due to the joint offering of audit and consulting services. Events related to the repeal of these NAS disclosures in 1982 are associated with a small positive stock price reaction suggesting no adverse economic consequences of withdrawing NAS disclosures. Further, following the repeal of disclosure requirements we find no change in the earnings quality of client firms. In sum, data drawn from an earlier time period suggest that auditors' reputational incentives, possible synergies, and knowledge transfers imply that NAS offered by audit firms can be associated with improved audit and reporting quality in client firms.

    Keywords: Conflict of Interests; Financial Reporting; Accounting Audits; Knowledge Dissemination; Quality; Corporate Disclosure; Motivation and Incentives;

    Citation:

    Koh, Kevin, Shiva Rajgopal, and Suraj Srinivasan. "Non-Audit Services and Financial Reporting Quality: Evidence from 1978–1980." Review of Accounting Studies 18, no. 1 (March 2013): 1–33. View Details
  8. Audit Quality and Auditor Reputation: Evidence from Japan

    We study events surrounding ChuoAoyama's failed audit of Kanebo, a large Japanese cosmetics company whose management engaged in a massive accounting fraud. ChuoAoyama was PwC's Japanese affiliate and one of Japan's largest audit firms. In May 2006, the Japanese Financial Services Agency (FSA) suspended ChuoAoyama for two months for its role in the Kanebo fraud. This unprecedented action followed a series of events that seriously damaged ChuoAoyama's reputation. We use these events to provide evidence on the importance of auditors' reputation for quality in a setting where litigation plays essentially no role. Around one quarter of ChuoAoyama's clients defected from the firm after its suspension, consistent with the importance of reputation. Larger firms and those with greater growth options were more likely to leave, also consistent with the reputation argument.

    Keywords: audit quality; auditor reputation; Japan; Accounting Audits; Crime and Corruption; Reputation; Beauty and Cosmetics Industry; Japan;

    Citation:

    Skinner, Douglas, and Suraj Srinivasan. "Audit Quality and Auditor Reputation: Evidence from Japan." Accounting Review 87, no. 5 (September, 2012): 1737–1765. View Details
  9. Corporate Governance When Founders Are Directors

    We examine CEO compensation, CEO retention policies, and M&A decisions in firms where founders serve as a director with a non-founder CEO (founder-director firms). We find that founder-director firms offer a different mix of incentives to their CEOs than other firms. Pay for performance sensitivity for non-founder CEOs in founder-director firms is higher and the level of pay is lower than that of other CEOs. CEO turnover sensitivity to firm performance is also significantly higher in founder-director firms compared to non-founder firms. Overall, the evidence suggests that boards with founder-directors provide more high powered incentives in the form of pay and retention policies than the average U.S. board. Stock returns around M&A announcements and board attendance are also higher in founder-director firms compared to non-founder firms.

    Keywords: Corporate Governance; Executive Compensation; Retention; Policy; Motivation and Incentives; Performance; Governing and Advisory Boards; Mergers and Acquisitions; Wages; United States;

    Citation:

    Li, Feng, and Suraj Srinivasan. "Corporate Governance When Founders Are Directors." Journal of Financial Economics 102, no. 2 (November 2011): 454–469. View Details
  10. Signaling Firm Performance Through Financial Statement Presentation: An Analysis Using Special Items

    This paper investigates whether managers' presentation of special items within the financial statements reflects economic performance or opportunism. Specifically, we assess special items presented as a separate line item on the income statement (income statement presentation) to those aggregated within another line item with disclosure only in the footnotes (footnote presentation). Our study is motivated by standard-setting interest in performance reporting and financial statement presentation, as well as prior research investigating managers' presentation choices in other contexts. Empirical results reveal that special items receiving income statement presentation are less persistent relative to those receiving footnote presentation. These results are consistent across numerous alternative specifications. Overall, the findings are consistent with managers using the income statement versus footnote presentation to assist users in identifying those special items most likely to differ from other components of earnings-that is, for informational, as opposed to opportunistic, motivations.

    Keywords: Managerial Roles; Financial Statements; Economics; Performance; Research; Opportunities; Business Earnings; Motivation and Incentives;

    Citation:

    Riedl, Edward J., and Suraj Srinivasan. "Signaling Firm Performance Through Financial Statement Presentation: An Analysis Using Special Items." Contemporary Accounting Research 27, no. 1 (spring 2010): 289–332. View Details
  11. Regulation and Bonding: The Sarbanes-Oxley Act and the Flow of International Listings

    In this paper, we examine the economic impact of the Sarbanes-Oxley Act (SOX) by analyzing foreign listing behavior onto U.S. and U.K. stock exchanges before and after the enactment of the Act in 2002. Using a sample of all listing events onto U.S. and U.K. exchanges from 1995-2006, we develop an exchange choice model that captures firm-level, industry-level, exchange-level and country-level listing incentives, and test whether these listing preferences changed following the enactment of the Act. After controlling for firm characteristics and other economic determinants of these firms' exchange choice, we find that the listing preferences of large foreign firms choosing between U.S. exchanges and the LSE's Main Market did not change following the enactment of Sarbanes-Oxley. In contrast, we find that the likelihood of a U.S. listing among small foreign firms choosing between the Nasdaq and LSE's Alternative Investment Market decreased following the enactment of Sarbanes-Oxley. The negative effect among small firms is consistent with these marginal companies being less able to absorb the incremental costs associated with SOX compliance. The screening of smaller firms with weaker governance attributes from U.S. exchanges is consistent with

    Keywords: Decision Choices and Conditions; Stocks; Government Legislation; Market Transactions; Motivation and Incentives; United Kingdom; United States;

    Citation:

    Srinivasan, Suraj, and Joseph Piotroski. "Regulation and Bonding: The Sarbanes-Oxley Act and the Flow of International Listings." Journal of Accounting Research 46, no. 2 (May 2008). View Details
  12. Consequences of Financial Reporting Failure for Outside Directors: Evidence from Accounting Restatements and Audit Committee Members

    I use a sample of 409 companies that restated their earnings from 1997 to 2001 to examine penalties for outside directors, particularly audit committee members, when their companies experience accounting restatements. Penalties from lawsuits and Securities and Exchange Commission (SEC) actions are limited. However, directors experience significant labor market penalties. In the three years after the restatement, director turnover is 48% for firms that restate earnings downward, 33% for a performance-matched sample, 28% for firms that restate upward, and only 18% for technical restatement firms. For firms that overstate earnings, the likelihood of director departure increases in restatement severity, particularly for audit committee directors. In addition, directors of these firms are no longer present in 25% of their positions on other boards. This loss is greater for audit committee members and for more severe restatements. A matched-sample analysis confirms this result. Overall, the evidence is consistent with outside directors, especially audit committee members, bearing reputational costs for financial reporting failure.

    Keywords: Outcome or Result; Business Earnings; Financial Statements; Lawsuits and Litigation; Labor; Markets; Financial Reporting; Accounting Audits; Cost; Reputation;

  13. Disclosure Practices of Foreign Companies Interacting with U.S. Markets

    We analyze the disclosure practices of companies as a function of their interaction with the U.S. markets for a group of 794 firms from 24 countries in Asia-Pacific and Europe. Our analysis uses the Transparency and Disclosure scores developed recently by Standard & Poor's. These scores rate the disclosure of companies from around the world using U.S. disclosure practices as an implicit benchmark. Results show a positive association between these disclosure scores and a variety of market interaction measures, including US Listing, US investment flows, export to and operations in the US. Trade with US, however, has an insignificant relationship with the disclosure scores. Our empirical analysis controls for the previously documented association between disclosure and firm size, performance, and country legal origin. Our results are broadly consistent with the hypothesis that cross-border economic interactions are associated with similarities in disclosure and governance practices.

    Keywords: Management Practices and Processes; Markets; Investment; Size; Performance; Cross-Cultural and Cross-Border Issues; Corporate Governance; Corporate Disclosure; Trade; United States; Asia; Europe;

    Citation:

    Khanna, Tarun, Krishna G. Palepu, and Suraj Srinivasan. "Disclosure Practices of Foreign Companies Interacting with U.S. Markets." Journal of Accounting Research 42, no. 2 (May 2004). View Details

Working Papers

  1. Activist Directors: Determinants and Consequences

    This paper examines the determinants and consequences of hedge fund activism with a focus on activist directors, i.e., those directors appointed in response to demands by activists. Using a sample of 1,969 activism events over the period 2004–2012, we identify 824 activist directors. We find that activists are more likely to gain board seats at smaller firms and those with weaker stock price performance. Activists remain as shareholders longer when they have board seats, with holding periods consistent with conventional notions of "long-term" institutional investors. As in prior research, we find positive announcement-period returns of around 4–5% when a firm is targeted by activists, and a 2% increase in return on assets over the subsequent one to five years. We find that activist directors are associated with significant strategic and operational actions by firms. We find evidence of increased divestiture, decreased acquisition activity, higher probability of being acquired, lower cash balances, higher payout, greater leverage, higher CEO turnover, lower CEO compensation, and reduced investment. With the exception of the probability of being acquired, these estimated effects are generally greater when activists obtain board representation, consistent with board representation being an important mechanism for bringing about the kinds of changes that activists often demand.

    Keywords: Governing and Advisory Boards; Investment Activism;

    Citation:

    Gow, Ian D., Sa-Pyung Sean Shin, and Suraj Srinivasan. "Activist Directors: Determinants and Consequences." Harvard Business School Working Paper, No. 14-120, June 2014. View Details
  2. Consequences to Directors of Shareholder Activism

    We examine how shareholder activist campaigns affect the careers of directors of the targeted firms. Using a comprehensive sample of shareholder activism between 2004 and 2011, we find that directors are almost twice as likely to leave over a two-year period if the firm is the subject of a shareholder activist campaign. While it has been argued that proxy contests are an ineffective mechanism for replacing directors, as they rarely succeed in getting a majority of shareholder support, our results suggest that director turnover takes place following shareholder activism even without shareholder activists engaging in, let alone winning, proxy contests. Performance-sensitivity of director turnover is also higher in the presence of shareholder activism. We also find that director election results matter for director retention: directors are more likely to leave in the year following activism when they receive lower shareholder support. Contrary to consequences on the targeted firm's board, we find no evidence that directors lose seats on other boards, a proxy for reputational consequences, as a result of shareholder activism.

    Keywords: shareholder activism; hedge funds; independent directors; Director reputation; accountability; Shareholder voting; Voting; Retention; Investment Funds; Management Teams; Investment Activism;

    Citation:

    Gow, Ian D., Sa-Pyung Sean Shin, and Suraj Srinivasan. "Consequences to Directors of Shareholder Activism." Harvard Business School Working Paper, No. 14-071, February 2014. View Details
  3. Can Analysts Assess Fundamental Risk and Valuation Uncertainty? An Empirical Analysis of Scenario-Based Value Estimates

    We use a dataset of sell-side analysts' scenario-based valuation estimates to examine whether analysts reliably assess the risk surrounding a firm's fundamenatal value. We find that the spread in analysts' state-side contingent valuations captures the riskiness of operations and predicts the absolute magnitude of future long-run valuation errors and changes in fundamentals. Similarly, asymmetry embedded in the analysts' scenario-based valuations conveys information about asymmetric risk-reward exposure and predicts skewness in future long-run valuation errors; however, embedded asymmetry is not correlated with changes in fundamentals. The results confirm that analysts' valuations reflect both state-contingent risk assessments and non-fundamental factors.

    Keywords: valuation; analyst forecasts; scenarios; uncertainty; Risk and Uncertainty; Valuation;

    Citation:

    Joos, Peter R., Joseph D. Piotroski, and Suraj Srinivasan. "Can Analysts Assess Fundamental Risk and Valuation Uncertainty? An Empirical Analysis of Scenario-Based Value Estimates." Working Paper, September 2012. View Details
  4. Securities Litigation Risk for Foreign Companies Listed in the U.S.

    We study securities litigation risk faced by foreign firms listed on U.S. exchanges. We take into account not only the propensity for foreign firms to commit violations of U.S. securities laws but also the costs that investors face when suing foreign firms. We find that U.S. listed foreign companies experience securities class action lawsuits at about half the rate as do U.S. firms with similar levels of ex-ante litigation risk. The lower rate appears to be attributable to higher transaction costs in uncovering and pursuing litigation against foreign firms. Once a lawsuit triggering event like an accounting restatement, missing management guidance, or a sharp stock price decline occurs, there is no difference in the litigation rates between a foreign and comparable U.S. firm. This evidence suggests that litigation risk of foreign firms is constrained by transaction costs, but the effect of transaction cost can be significantly reduced in the presence of quality information triggers that reveal potential misconduct of the firm.

    Keywords: Litigation Risk; Cross Listing; bonding; 10b-5; Securities Litigation; U.S.Listing; Class Action; Risk and Uncertainty; Debt Securities; Globalized Firms and Management; Ethics; Lawsuits and Litigation; United States;

    Citation:

    Cheng, Beiting, Suraj Srinivasan, and Gwen Yu. "Securities Litigation Risk for Foreign Companies Listed in the U.S." Harvard Business School Working Paper, No. 13-036, October 2012. (Revised March 2014.) View Details

Cases and Teaching Materials

  1. Southeastern Asset Management Challenges Buyout at Dell

    In late 2012, Michael Dell wants to take Dell Inc., the company he founded, private. Mr. Dell believes that the successful company's transformation from a personal computer (PC) manufacturer to an enterprise solutions and services provider (ESS) is dependent on going private without the short-term results scrutiny public companies face. He and a private equity firm, Silver Lake Partners, have made an offer for the company, which Dell Inc.'s board has accepted. The deal requires the vote of a majority of shareholders. Southeastern Asset Management, an investment firm, and Dell Inc.'s second largest shareholder behind Mr. Dell strongly oppose the deal because the offer is well below what Southeastern believes is Dell Inc.'s intrinsic value. Southeastern, along with activist investor Carl Icahn, wage a campaign to defeat the go-private deal and propose a leveraged recapitalization as an alternative. On several occasions it appears that the deal will be voted down by shareholders, but rule changes made by Dell Inc.'s Board eventually pave the way for Mr. Dell to take the eponymous company private—for a price only slightly higher than the original bid. The case describes the reasons why Mr. Dell wants to take Dell Inc. private, why Southeastern and Icahn oppose the deal, the specifics of both the Dell/Silver Lake bid and of Southeastern's/Icahn's leveraged recapitalization proposals, and the events that took place.

    Keywords: Leveraged Buyout Transaction; leveraged buyouts; leveraged recapitalization; management buyout; Dell, Inc.; hedge fund; corporate accountability; corporate governance; corporate governance theory; valuation; valuation ratios; valuation methodologies; board of directors; boards of directors; Carl Icahn; computer industry; computer services industries; proxy contest; proxy battles; proxy fight; proxy advisor; Financial Accounting; financial analysis; Financial ratios; corporate finance; finance; Corporate Accountability; Corporate Governance; Corporate Finance; Computer Industry; United States;

    Citation:

    Healy, Paul, Suraj Srinivasan, and Aldo Sesia. "Southeastern Asset Management Challenges Buyout at Dell." Harvard Business School Case 114-015, June 2014. (Revised August 2014.) View Details
  2. Say on Pay: Qualcomm, Inc. Shareholders Vote 'Maybe' in 2012

    This case centers around Qualcomm shareholders' 2012 Say-on-Pay vote and the dispute between the Institutional Shareholder Services and management regarding the appropriateness of the CEO's compensation plan. Was ISS right that Qualcomm CEO's pay was inflated and justified by benchmarking to aspirational peers? Or was management correct that its CEO's pay is warranted by Qualcomm's recent firm performance?

    Keywords: Executive Compensation; ISS; proxy advisor; investor communication; investor relations; peers; Say-on-Pay; benchmarking; peer group; corporate governance; compensation committees; board of directors; Governing and Advisory Boards; Executive Compensation; Corporate Governance; Business and Shareholder Relations; Telecommunications Industry;

    Citation:

    Srinivasan, Suraj, Charles C.Y. Wang, and Kelly Baker. "Say on Pay: Qualcomm, Inc. Shareholders Vote 'Maybe' in 2012." Harvard Business School Case 114-005, July 2013. (Revised January 2014.) View Details
  3. Say on Pay: Qualcomm, Inc. Shareholders Vote 'Maybe' in 2012

    This case centers around Qualcomm shareholders' 2012 Say-on-Pay vote and the dispute between the Institutional Shareholder Services and management regarding the appropriateness of the CEO's compensation plan. Was ISS right that Qualcomm CEO's pay was inflated and justified by benchmarking to aspirational peers? Or was management correct that its CEO's pay is warranted by Qualcomm's recent firm performance?

    Citation:

    Srinivasan, Suraj, and Charles C.Y. Wang. "Say on Pay: Qualcomm, Inc. Shareholders Vote 'Maybe' in 2012." Harvard Business School Teaching Note 114-065, March 2014. View Details
  4. Showdown at Cracker Barrel

    In the fall of 2011, activist investor, Sardar Biglari, has acquired nearly 10% ownership in the Cracker Barrel restaurant chain. He believes that the board and senior management have failed and the company has underperformed relative to its peers. When he is denied a seat on the board, Biglari initiates a proxy fight in an attempt to win a board position and change the direction of Cracker Barrel's strategy. Two leading proxy advisory firms, ISS and Glass Lewis, disagree on supporting Biglari. One advises shareholders to vote Biglari to the board, while the other advises against it. Shareholders must decide.

    Keywords: corporate governance; boards; Activist Investors; proxy battles; shareholder activism; peer firm; valuation; ratio analysis; Financial Accounting; financial analysis; board of directors; boards of directors; financial intermediaries; financial analysts; CEO Turnover; new CEO; peer groups; hedge fund; hedge funds; proxy contest; proxy fight; proxy advisor; proxy battle; financial statement analysis; financial strategy; Corporate Governance; Corporate Disclosure; Governing and Advisory Boards; Competition; Valuation; Business Strategy; Value Creation; Business and Shareholder Relations; Financial Reporting; Financial Statements; Retail Industry; Food and Beverage Industry; United States;

    Citation:

    Srinivasan, Suraj, and Tim Gray. "Showdown at Cracker Barrel." Harvard Business School Case 114-026, January 2014. (Revised January 2014.) View Details
  5. Ken Traub at American Bank Note Holographics

    Ken Traub is hired as CFO for American Bank Note Holographics, the market-leading security holograph company in January 1999, but discovers on his first day that the company has misstated its financials and resigns. After consulting with the company for the next several weeks as it announces its misstatements to the public, he is asked to become president of the company. Should he take the job or is the company a sinking ship?

    Keywords: Technology; Moral Sensibility; Earnings Management; Crime and Corruption; Personal Development and Career; Management Teams; Technology Industry; Service Industry; United States;

    Citation:

    Srinivasan, Suraj, and Michael Norris. "Ken Traub at American Bank Note Holographics." Harvard Business School Case 113-073, June 2013. View Details
  6. NovaStar Financial: A Short Seller's Battle

    The NovaStar case describes the challenges faced by short seller Marc Cohodes of hedge fund Rocker Partners as he tried to expose what he thought was widespread fraud in mortgage lender NovaStar Financial. The case is set in the time period from 2001 to 2007 and tracks the growth of the subprime industry and its collapse leading to the financial crisis. The case describes the business model of NovaStar, a leading subprime mortgage lending company, and its accounting practices with a focus on the key risks and opportunities facing the company. The case requires students to put themselves in the shoes of Marc Cohodes and understand the business model and accounting numbers and to identify if the financial performance is a good representation of the true economic performance. In particular, students learn accounting concepts related to securitization, gain on sale accounting, valuation of available for sale securities, and analyzing the statement of cash flows. The case also allows students to understand the role and incentives of various capital market participants like sell-side analysts, the media, auditors, and the Securities and Exchange Commission (SEC).

    Keywords: short selling; Financial Accounting; financial analysis; financial analysts; valuation; Business analysis; financial statement analysis; financial statements; securitization; Securities analysis; fraud; accounting quality; accounting red flags; Accounting restatements; hedge fund; hedge funds; accounting scandal; accounting fraud; financial crisis; financial intermediaries; financial firms; corporate governance; corporate accountability; subprime lending; mortgage lending; fair value accounting; Accounting; Accrual Accounting; Fair Value Accounting; Governance; Governance Compliance; Corporate Governance; Governance Controls; Financial Services Industry; United States; California;

    Citation:

    Srinivasan, Suraj, and Amy Kaser. "NovaStar Financial: A Short Seller's Battle." Harvard Business School Case 113-120, March 2013. View Details
  7. Diamond Foods, Inc.

    The Diamonds Foods, Inc. case describes the major accounting blow up at the company in late 2011 that was triggered by a report by Off Wall Street, a prominent short selling research firm. Diamond Foods, a high flying growth company in 2011, grew from a walnut farmers' cooperative in 2005 into a branded snack foods manufacturer on the strength of a series of acquisitions. The accounting scandal that involved improper accounting for walnut purchases led to Diamond dropping its high profile acquisition of Pringles, an SEC and DOJ investigation, departure of the CEO and CFO, and the grounding of a high flying growth company. The case describes the history and growth of the company, the investigative and analytical work conducted by OWS and allows students to understand implications of the growth strategy for financial performance and valuation. Additionally, the case highlights the role of corporate boards and audit committees in managing strategic and financial reporting risks.

    Keywords: Accounting restatements; accounting scandal; accounting; financial analysis; financial statement analysis; financial statements; valuation; short selling; revenue recognition; board of directors; audit committees; auditing; Financial Reporting; Financial Statements; Agribusiness; Accrual Accounting; Earnings Management; Corporate Accountability; Corporate Disclosure; Corporate Governance; Valuation; Revenue; Agriculture and Agribusiness Industry; California; Cambridge;

    Citation:

    Srinivasan, Suraj, and Tim Gray. "Diamond Foods, Inc." Harvard Business School Case 113-055, February 2013. View Details
  8. Coca-Cola: Residual Income Valuation

    This note accompanies the case of the same title that introduces students to the residual income valuation model, using Coca-Cola as the example.

    Keywords: Business Earnings; Valuation; Financial Statements; Equity; Food and Beverage Industry;

    Citation:

    Srinivasan, Suraj, Beiting Cheng, and Edward J. Riedl. "Coca-Cola: Residual Income Valuation." Harvard Business School Case 113-056, December 2012. View Details
  9. Coca-Cola: Residual Income Valuation

    Teaching note for a case of the same title that introduces students to the residual income (also known as the abnormal earnings) valuation model using the firm Coca-Cola. Students are provided with the primary financial statements (through fiscal 2010) and forecast data/assumptions. These data are used as input into a simple spreadsheet model to derive pro-forma summary financial statements (balance sheet and income statement), as well as Coca-Cola's firm and per share equity valuation at the beginning of 2011.

    Keywords: valuation; Valuation; United States;

    Citation:

    Srinivasan, Suraj, and Edward J. Riedl. "Coca-Cola: Residual Income Valuation." Harvard Business School Teaching Note 113-065, May 2013. View Details
  10. First Solar: CFRA's Accounting Quality Concerns

    The case relates to accounting quality analysis conducted by the leading research firm Center for Financial Research and Analysis (CFRA) on companies in the solar industry with a focus on First Solar Inc. In 2009, CFRA was concerned that First Solar, like much of the solar industry, was facing deterioration in business prospects and exposed to risks arising from revenue recognition, high inventory levels, lack of customer and geographic diversification, aggressive warranty policies, excessive production capacity growth, and supply chain risks. The case places students in the shoes of CFRA analysts who need to assess First Solar's accounting quality and business prospects after the company releases its second quarter financial numbers in 2009. The case provides students with background information on the solar power industry, First Solar, data from CFRA research, and First Solar's quarterly reports and the earnings conference call to analyze and draw conclusions about First Solar's accounting practices and strength as a company. Students have to decide whether CFRA should flag First Solar as a concern and add it to CFRA's "Biggest Concerns" list. Order: http://hbr.org/search/113044-PDF-ENG

    Keywords: accounting; accounting quality; earnings management; Financial Accounting; financial statement analysis; financial statements; accounting fraud; accounting red flags; accounting scandal; valuation; Risk and Uncertainty; Quality; Earnings Management; Valuation; Crime and Corruption; Financial Statements; Energy Sources; Green Technology Industry; Accounting Industry; Energy Industry;

    Citation:

    Srinivasan, Suraj, and Ian McKown Cornell. "First Solar: CFRA's Accounting Quality Concerns." Harvard Business School Case 113-044, January 2013. (Revised August 2013.) View Details
  11. Trouble Brewing for Green Mountain Coffee Roasters

    In October 2011, noted hedge fund manager David Einhorn of Greenlight Capital delivered a presentation at an investors' conference analyzing the business and accounting quality weaknesses of Green Mountain Coffee Roasters. Until then Green Mountain had exhibited rapid business and stock price growth. He questioned Green Mountain, the maker of Keurig single-serve coffee machines and their famous K-Cups about their growth prospects, their handling of acquisitions, their plan for the expiration of an important patent, accounting practices and other issues. Following Einhorn's presentation Green Mountain's stock experienced a significant decline despite claims by many analysts that Einhorn had not presented any new information. The case presents Einhorn's argument and the counter claims by the analysts. Students are charged with assessing the merits of Einhorn's arguments and the counter claims. The case exposes students to a detailed strategic, financial and accounting analysis of a business and provides an example of how a thorough business and accounting analysis using primarily public information can change market's perception of valuation of a company.

    Keywords: earnings management; accounting; accounting fraud; accounting quality; accounting red flags; Accounting restatements; accounting scandal; accounting information; Financial Accounting; financial analysts; financial analysis; financial intermediaries; hedge funds; Financial ratios; financial statement analysis; financial statements; Mergers & Acquisitions; financial reporting; valuation; valuation methodologies; earnings quality; Quality; Earnings Management; Valuation; Crime and Corruption; Mergers and Acquisitions; Financial Reporting; Investment Funds; Financial Statements; Food and Beverage Industry;

    Citation:

    Srinivasan, Suraj, and Michael Norris. "Trouble Brewing for Green Mountain Coffee Roasters." Harvard Business School Case 113-035, December 2012. View Details
  12. Jim Johnson's Re-election to the Goldman Sachs Board

    The case presents the opposition by a leading institutional investor in Goldman Sachs to the re-election of Jim Johnson to the board of directors of the company. The investor, Sequoia Fund, opposes the re-election citing Jim Johnson's prior track record as the CEO of Fannie Mae, which has been criticized for its role in the financial crisis and for serving on the compensation committees of two companies that experienced option backdating scandals. The case allows students to discuss issues surrounding director performance assessment, director elections, investor engagement with companies, and director reputation.

    Keywords: board of directors; corporate governance; director elections; Goldman Sachs; reputation; institutional investing; Governing and Advisory Boards; Corporate Accountability; Banking Industry; New York (city, NY);

    Citation:

    Srinivasan, Suraj, and Kelly Baker. "Jim Johnson's Re-election to the Goldman Sachs Board." Harvard Business School Case 113-050, October 2012. (Revised February 2013.) View Details
  13. Olympus (A)

    As 2012 approached, the woes of the financial crisis seemed to be fading, companies were resuming business as usual, and some of the scrutiny on corporate governance practices began to recede as well. That is until another major financial scandal emerged in Japan in the fall of 2011. It was slowly revealed that the 92-year-old camera and medical photo-imaging company, Olympus, had been hiding its losses for more than a decade—to the tune of $1.7 billion—long before the current economic pressures, slow job growth, and poor investor confidence plagued the global economy. The fraud renewed the focus on corporate governance policies worldwide, but especially in Japan, where the lack of board independence and a deep-rooted corporate culture entrenched in personal loyalties fostered an environment that made it difficult for scandals such as this to be unveiled, let alone for whistleblowers to come forward about them.

    Keywords: accounting; corporate governance; Accounting; Corporate Governance; Electronics Industry; Health Industry; Japan;

    Citation:

    Lorsch, Jay W., Suraj Srinivasan, and Kathleen Durante. "Olympus (A) ." Harvard Business School Case 413-040, October 2012. (Revised July 2013.) View Details
  14. Olympus (B)

    This case outlines Michael Woodford's awards and honors, after having been fired from Olympus in October 2011. It discusses the repercussions following an investigation into the fraud and the report that was released thereafter. It also discusses the lawsuit that followed (filed by Woodford against Olympus), its settlement, and the new Olympus board and the fate of the Olympus executives who were at Olympus while the scandal occurred.

    Keywords: accounting; corporate governance; Accounting; Corporate Governance; Health Industry; Electronics Industry; Japan;

    Citation:

    Lorsch, Jay W., Suraj Srinivasan, and Kathleen Durante. "Olympus (B) ." Harvard Business School Supplement 413-075, October 2012. View Details
  15. Olympus (A)

    As 2012 approached the woes of the financial crisis seemed to be fading, companies were resuming business as usual and some of the scrutiny on corporate governance practices began to recede as well. That is until another major financial scandal emerged in Japan in the fall of 2011. It was slowly revealed that the 92-year-old camera and medical photo-imaging company, Olympus, had been hiding its losses for more than a decade—to the tune of $1.7 billion—long before the current economic pressures, slow job growth, and poor investor confidence plagued the global economy. The fraud renewed the focus on corporate governance policies world-wide, but especially in Japan, where the lack of board independence and a deep-rooted corporate culture entrenched in personal loyalties fostered an environment that made it difficult for scandals such as this to be unveiled, let alone for whistleblowers to come forward about them.

    Citation:

    Lorsch, Jay W., and Suraj Srinivasan. "Olympus (A)." Harvard Business School Teaching Note 114-072, February 2014. View Details
  16. Ahold versus Tesco—Analyzing Performance

    The case relates to understanding and comparing the performance of two leading retail companies—Ahold and Tesco. The case introduces the tools of Dupont and Modified Dupont Decomposition. While performance as measured by return on equity has been similar for the two companies, Ahold has had significantly better stock market performance compared to Tesco. Ahold also has a significant amount of cash on its balance sheet leading to low levels of net debt. The case requires students to analyze performance using Modified Dupont Decomposition techniques to assess if firm performance is resulting from operating profitability or from financial leverage and then suggest strategies to improve performance. To perform the modified Dupont Decomposition, students learn how to reformat and condense the balance sheet and income statement to separately measure profitability arising from operating activities and financing activities. Students also see how excess cash holdings can depress profitability and what factors should drive the appropriate level of leverage for a company.

    Keywords: Performance Evaluation; Retail Industry;

    Citation:

    Srinivasan, Suraj, and Penelope Rossano. "Ahold versus Tesco—Analyzing Performance." Harvard Business School Case 113-040, November 2012. View Details
  17. Netflix: Valuing a New Business Model

    In autumn 2011, Netflix was working to right the ship after publicly stumbling through a price hike and strategic shift and then retreat. The company was changing its business model to focus on streaming video service rather than the DVDs by mail that had brought the company success and praise. One important wrinkle in this business model shift came in the accounting of streaming content. The case describes the rule, FAS 63, that Netflix used to account for streaming content and the implications for the future of the company that could be attributed to this accounting shift.

    Keywords: accounting; performance measurement; online business; asset recognition; Accounting; Performance Evaluation; Online Technology; Motion Pictures and Video Industry; United States; Canada; Latin America; West Indies;

    Citation:

    Brochet, Francois, Suraj Srinivasan, and Michael Norris. "Netflix: Valuing a New Business Model." Harvard Business School Case 113-018, August 2012. (Revised January 2013.) View Details
  18. The Risk-Reward Framework at Morgan Stanley Research

    The case describes the Risk-Reward framework that Morgan Stanley analysts use as a systematic approach to communicate a broader range of fundamental insights about a company rather than the traditional single point estimates. The goal of the framework is to focus the analysts' work on critical uncertainties and model a limited number of scenarios relevant to key investment debates. By outlining a bear, base and a bull case, the analysts can present the risk surrounding the expected outcome over the forecast horizon. The case outlines the key elements of the methodology and the process Morgan Stanley undertook to implement the framework on a world-wide basis starting in 2007, and discusses the challenges and opportunities that managers of the research department face as the framework is increasingly identified with their firm.

    Keywords: Financial Statements; Forecasting and Prediction; Equity; Framework; Management Analysis, Tools, and Techniques; Risk Management; Business Processes; Research; Valuation;

    Citation:

    Srinivasan, Suraj, and David Lane. "The Risk-Reward Framework at Morgan Stanley Research." Harvard Business School Case 111-011, January 2011. View Details
  19. Brink's Company: Activists Push for a Spin-off

    The case studies the decision of the security services corporation Brink's Company to spin-off its home security division from the rest of the company. The decision followed intense pressure on the company by three activist hedge funds that felt that Brink's was chronically undervalued and the individual businesses were worth more than the combined company. The company resisted the decision for over a year before agreeing to the break up. The case follows the argument made by the company and each of the investors. It also describes the actions by the company to convince its shareholders of the merits of keeping the company together, as well as the actions the activist investors took to get the attention of management, the board, and other investors. The businesses, secure transportation, and home security monitoring are described from both a business strategy and a financial perspective so that the potential value of different value enhancing options can be analyzed.

    Keywords: Investment Activism;

    Citation:

    Srinivasan, Suraj, Aldo Sesia, and Amy Kaser. "Brink's Company: Activists Push for a Spin-off." Harvard Business School Case 112-055, November 2011. View Details
  20. Brink's Company: Activists Push for a Spin-off (TN)

    The case this Teaching Note addresses studies the decision of the security services company Brink's Corporation to spin off its home security division from the rest of the company. The decision followed intense pressure on the company by three activist hedge funds that felt that Brink's was chronically undervalued and the individual businesses were worth more than the combined company. The company resisted the decision for more than a year before agreeing to the break-up. The case follows the argument made by the company and each investor. It also describes the actions by the company to convince its shareholders of the merits of keeping the company together as well as the actions activist investors took to get the attention of management, the board, and other investors. The businesses, secure transportation and home security monitoring, are described from both a business strategy and a financial perspective so that the potential value of different value enhancing options can be analyzed.

    Keywords: Activist Investors; Spin-off; leveraged recapitalization; debt; valuation; hedge funds; conglomerates; Valuation; Restructuring; Accounting; Business Strategy; Investment Activism; Service Industry;

    Citation:

    Srinivasan, Suraj. "Brink's Company: Activists Push for a Spin-off (TN)." Harvard Business School Teaching Note 113-053, November 2012. View Details
  21. Strategy and Governance at Yahoo! Inc.

    Yahoo! faces a number of governance and strategic challenges in late 2011 as it tries to compete with rivals such as Google and find ways to monetize its shareholding and business links with Alibaba Group in China and Yahoo! Japan. The company is now valued at almost half the offer that Microsoft had made in its acquisition offer in 2008. The depth of the challenge is underscored by the frequent CEO changes the company has had, culminating in the recent firing of the latest CEO, Carol Bartz. The case examines the successes and failures at Yahoo! and the decisions now facing its board as it encounters investor pressure to improve performance.

    Keywords: Competitive Strategy; Corporate Governance; Web Services Industry;

    Citation:

    Palepu, Krishna G., Suraj Srinivasan, David Lane, and Ian McKown Cornell. "Strategy and Governance at Yahoo! Inc." Harvard Business School Case 112-040, October 2011. View Details
  22. Mike Mayo Takes on Citigroup (A)

    The case details the conflict between Mike Mayo, an influential banking analyst and Citigroup about what Mayo considers aggressive accounting policies. Mike Mayo questions Citigroup's lack of a valuation allowance against their Deferred Tax Assets despite Citi's recent loss. The case discusses the economics and accounting for deferred tax assets. It also focuses on management-analyst relations and challenges faced by analysts in providing bad news on companies. The inclusion of deferred tax assets in Tier 1 capital and implications for regulatory capital are also discussed.

    Keywords: Accounting; Taxation; Capital; Financial Reporting; Corporate Disclosure; Valuation; Banks and Banking; Financial Strategy; Money; Conflict Management; Capital Budgeting; Asset Management; Banking Industry;

    Citation:

    Srinivasan, Suraj, and Amy Kaser. "Mike Mayo Takes on Citigroup (A)." Harvard Business School Case 112-025, August 2011. (Revised July 2012.) View Details
  23. Mike Mayo Takes on Citigroup (B)

    Mike Mayo takes on Citigroup (B) is a supplementary exercise to go along with Mike Mayo takes on Citigroup (A) case and is designed to give students an opportunity to understand the creation of deferred tax liabilities (DTLs) and the life cycle of a DTL using an example based on the difference between Modified Accelerated Cost Recovery System (MACRS) depreciation which is allowed for tax purposes, and straight line depreciation which is typically the method used for financial statements.

    Keywords: Taxation; Accounting; Banking Industry;

    Citation:

    Srinivasan, Suraj, and Amy Kaser. "Mike Mayo Takes on Citigroup (B)." Harvard Business School Supplement 112-051, October 2011. (Revised July 2012.) View Details
  24. Ken Langone: Member, GE Compensation Committee

    On September 2003, Richard Grasso stepped down as chairman and CEO of the New York Stock Exchange, following weeks of intense public criticism over the size of his $190 million compensation package. As chairman of the committee that oversaw Grasso's payout, Ken Langone believed firmly that the payment was fair and reasonable. However, NYSE members, government regulators, and the media alike blamed the board for its oversight and viewed Langone as the mastermind behind Grasso's huge payout. Calls to oust Langone as director from all his board positions came within days of Grasso's resignation. This case follows immediate backlash against Langone over his role at the NYSE as well as the connection this scandal had on his eventual departure from General Electric's board of directors. Should Langone have resigned from GE's board?

    Keywords: Accounting; Corporate Governance; Governing and Advisory Boards; Employee Stock Ownership Plan; Executive Compensation; Governing Rules, Regulations, and Reforms; Labor and Management Relations; Wages; Change Management; Energy Industry; New York (city, NY);

    Citation:

    Srinivasan, Suraj, and Lizzie Gomez. "Ken Langone: Member, GE Compensation Committee." Harvard Business School Case 111-060, October 2010. (Revised October 2011.) View Details
  25. Kanebo Ltd. (A)

    Speculation as to how Japanese companies might implement IFRS with particular emphasis on consolidation accounting.

    Keywords: History; Business Conglomerates; Misleading and Fraudulent Advertising; Consolidation; Financial Statements; International Finance; International Accounting; Standards; Goodwill Accounting; Manufacturing Industry; Japan;

    Citation:

    Hawkins, David F., Suraj Srinivasan, Akiko Kanno, and Lizzie Gomez. "Kanebo Ltd. (A)." Harvard Business School Case 111-037, December 2010. (Revised September 2011.) View Details
  26. Kanebo Ltd. (B)

    Financial statements before and after restatement following revelation of fraud.

    Keywords: Cost Accounting; Financial Statements; Crime and Corruption; Business Conglomerates; Japan;

    Citation:

    Hawkins, David F., Suraj Srinivasan, and Akiko Kanno. "Kanebo Ltd. (B)." Harvard Business School Supplement 111-038, January 2011. (Revised August 2011.) View Details
  27. Kanebo Ltd. (C)

    The exposure of the Kanebo Ltd. fraud raises questions of Japan's preparedness to adopt International Financial Reporting Standards.

    Keywords: International Accounting; Standards; Financial Reporting; Crime and Corruption; Japan;

    Citation:

    Hawkins, David F., Suraj Srinivasan, and Akiko Kanno. "Kanebo Ltd. (C)." Harvard Business School Supplement 111-068, January 2011. (Revised August 2011.) View Details
  28. The Crisis at Tyco - A Director's Perspective

    In 2002, Wendy Lane had been a member of the board of directors at Tyco International a little more than a year when the company's CEO Dennis Kozlowski and other top executives were accused of fraud, which ultimately led to resignations, imprisonments, lawsuits, and SEC filings. In a short period of time Tyco lost 2/3rds of its market value. Many outside the company questioned the board's leadership and diligence. Lane, who had a successful career in investment banking before becoming a professional director, was caught in the firestorm. The case discusses the events that led to the crisis, her reflections on managing the crisis both personally and professionally, the reputational risk she encountered, and the lessons she learned as a director.

    Keywords: Management Teams; Reputation; Governing and Advisory Boards; Crisis Management; Accounting Audits; Problems and Challenges; Risk Management; Finance; Managerial Roles; Lawsuits and Litigation; Service Industry; United States;

    Citation:

    Srinivasan, Suraj, and Aldo Sesia. "The Crisis at Tyco - A Director's Perspective." Harvard Business School Case 111-035, May 2011. (Revised June 2011.) View Details
  29. Target Corporation: Ackman versus the Board

    After 15 years of great performance, Target's faltering performance during an economic downturn led an activist shareholder to initiate a proxy fight. Target Corporation, the second largest discount store retailer in the U.S., had competed successfully against industry leader Wal-Mart for years by promoting an upscale discount shopping experience in comparison to Wal-Mart's focus on low prices. This strategy worked well for Target in good economic times. The economic crisis of 2008–2009, however, caused shoppers to abandon Target in favor of Wal-Mart. In the spring of 2009, one of Target's largest shareholders initiated a proxy fight to place his five director nominees on the board. Target won the proxy fight, but still faced questions about whether it had a strategy that could work in both good times and bad.

    Keywords: Financial Crisis; Investment Activism; Governing and Advisory Boards; Business and Shareholder Relations; Business Strategy; Value; Retail Industry;

    Citation:

    Palepu, Krishna G., Suraj Srinivasan, and James Weber. "Target Corporation: Ackman versus the Board." Harvard Business School Case 109-010, June 2009. (Revised January 2011.) View Details
  30. Target Corporation: Ackman versus the Board (TN)

    Teaching Note for 109010.

    Keywords: Business Strategy; Problems and Challenges; Governing and Advisory Boards; Conflict and Resolution; Voting; Investment Activism;

    Citation:

    Palepu, Krishna G., and Suraj Srinivasan. "Target Corporation: Ackman versus the Board (TN)." Harvard Business School Teaching Note 111-053, October 2010. View Details
  31. Citigroup 2007: Financial Reporting and Regulatory Capital

    This case introduces 1) financial statements for banks, 2) basic regulatory capital calculations, and 3) actions Citigroup must consider under a scenario of continued losses/fair value declines in 2008 (leading to potential violation of regulatory capital).

    Keywords: Fair Value Accounting; Financial Reporting; Financial Statements; Financial Crisis; Capital; Financial Strategy; Governing Rules, Regulations, and Reforms; Banking Industry; United States;

    Citation:

    Srinivasan, Suraj, Edward J. Riedl, and Sharon Katz. "Citigroup 2007: Financial Reporting and Regulatory Capital." Harvard Business School Case 111-041, September 2010. (Revised July 2012.) View Details
  32. Citigroup 2007: Financial Reporting and Regulatory Capital (TN)

    Teaching Note for 111041.

    Keywords: Financial Statements; Capital; Governing Rules, Regulations, and Reforms; Financial Services Industry;

    Citation:

    Riedl, Edward J., Suraj Srinivasan, and Sharon Katz. "Citigroup 2007: Financial Reporting and Regulatory Capital (TN)." Harvard Business School Teaching Note 111-061, November 2010. View Details
  33. New Century Financial Corporation (Abridged)

    After years of rapid growth and stock price appreciation, New Century Financial Corporation, one of the largest subprime loan originators in the U.S., reported accounting problems in early 2007. The resulting liquidity crisis forced the company to file for Chapter 11 bankruptcy protection. According to the Bankruptcy Examiner assigned to investigate New Century, the company's troubles "were an early contributer to the subprime meltdown" which fueled a financial crisis in the U.S. and beyond. The case study examines New Century's business model and accounting practices and focuses on the role of management, audit committee, and external auditors in the problems at New Century based on the findings of the Bankruptcy Examiner.

    Keywords: accounting; audit committees; financial management; control systems; securities; loan evaluation; Accounting; Value; Financial Services Industry; United States;

    Citation:

    Palepu, Krishna G., Suraj Srinivasan, and Ian Cornell. "New Century Financial Corporation (Abridged)." Harvard Business School Case 113-002, July 2012. View Details
  34. New Century Financial Corporation

    After years of rapid growth and stock price appreciation, New Century Financial Corporation, one of the largest subprime loan originators in the U.S., reported accounting problems in early 2007. The resulting liquidity crisis forced the company to file for Chapter 11 bankruptcy protection. According to the Bankruptcy Examiner assigned to investigate New Century, the company's troubles "were an early contributor to the subprime meltdown" which fueled a financial crisis in the U.S. and beyond. The case study examines New Century's business model and accounting practices and focuses on the role of management, audit committee, and external auditors in the problems at New Century based on the findings of the Bankruptcy Examiner.

    Keywords: Accounting Audits; Financial Reporting; Business Model; Financial Crisis; Insolvency and Bankruptcy; Mortgages; Financial Services Industry; United States;

    Citation:

    Palepu, Krishna G., Suraj Srinivasan, and Aldo Sesia. "New Century Financial Corporation." Harvard Business School Case 109-034, October 2008. (Revised October 2009.) View Details
  35. New Century Financial Corporation

    Teaching Note for [109034] and [113-002].

    Keywords: Management Practices and Processes; Business Model; Financial Liquidity; Insolvency and Bankruptcy; Managerial Roles; Accounting Audits; Financial Crisis; Financial Services Industry; United States;

    Citation:

    Srinivasan, Suraj, and Krishna G. Palepu. "New Century Financial Corporation." Harvard Business School Teaching Note 110-032, October 2009. (Revised July 2014.) View Details