More from these Authors

• Background Note | HBS Case Collection | July 2020

  Gender Diversity on Boards: Views from Norway

  Aiyesha Dey

  Citation:

  Dey, Aiyesha. "Gender Diversity on Boards: Views from Norway." Harvard Business School Background Note 120-065, July 2020.  View Details

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• Case | HBS Case Collection | January 2020 (Revised July 2020)

  BlackRock: Linking Purpose to Profit

  Rohit Deshpandé, Aiyesha Dey and George Serafeim

  The case revolves around the actions that Barbara Novick, co-founder and Vice-Chair of Blackrock, and Michelle Edkins, Global Head of Investment Stewardship, would need to take in response to the controversial CEO letters from Laurence (Larry) Fink, Chairman and CEO of BlackRock. Fink’s letters focused on the importance of corporate purpose and investing considering environmental, social, and governance (ESG) issues. The case also discusses Blackrock’s plans for a new model of shareholder engagement to help drive the changes proposed in the letters. The case presents the opportunity to discuss the governance role played by major institutional investors as well as how the responsibilities and actions of one large investor, BlackRock, should evolve in this role going forward. It is not clear whether BlackRock should play such a role and, if so, whether they have the ability to enforce corporate compliance and to carry out this role given they are primarily an index investor. The case is likely to generate spirited debate about the merits of BlackRock’s pronouncements and the importance of corporate investments in ESG themes and allow for discussions on measurement and disclosure strategies that can judge progress on these dimensions.

  Keywords: boards of directors; Institutional investors; disclosure; transparency; corporate purpose; Corporate profits; ESG; ESG disclosure metrics; corporate sustainability; engagement strategy of institutions; stewardship role of institutions; Corporate Governance; Governing and Advisory Boards; Institutional Investing; Accounting; Corporate Disclosure; Mission and Purpose; Profit; Environmental Sustainability; Climate Change; Diversity; Corporate Accountability;

  Citation:

  Deshpandé, Rohit, Aiyesha Dey, and George Serafeim. "BlackRock: Linking Purpose to Profit." Harvard Business School Case 120-042, January 2020. (Revised July 2020.)  View Details

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• Case | HBS Case Collection | June 2020 (Revised July 2020)

  Accounting for Leases at American Airlines (A)

  Jonas Heese, Gerardo Pérez Cavazos and Julia Kelley

  In March 2020, as coronavirus reduced demand for air travel, an analyst was forecasting American Airlines’ (American’s) first quarter financial results. To develop a forecast, she needed to familiarize herself with Accounting Standards Update (ASU) 2016-02, “Leases (Topic 842),” passed four years earlier by the Financial Accounting Standards Board. ASU 2016-02 required companies to disclose all leases on their balance sheets, but it made an exception for leases with variable payments, allowing companies to leave such leases off-balance sheet. The Wall Street Journal estimated that more than 50% of American’s leases remained off-balance sheet due to the exclusion of variable leases. Should American and other companies be allowed to leave variable lease payments off-balance sheet? How did the decision to leave these payments off-balance sheet affect companies’ risk profiles and valuations?

  Keywords: Accounting; Financial Reporting; Financial Statements; Finance; Governance; Corporate Accountability; Corporate Governance; Governing Rules, Regulations, and Reforms; Governing and Advisory Boards; Leasing; Accounting Industry; Air Transportation Industry; North and Central America; United States;

  Citation:

  Heese, Jonas, Gerardo Pérez Cavazos, and Julia Kelley. "Accounting for Leases at American Airlines (A)." Harvard Business School Case 120-069, June 2020. (Revised July 2020.)  View Details

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