Suraj Srinivasan - Faculty & Research - Harvard Business School
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Suraj Srinivasan

Philip J. Stomberg Professor of Business Administration

Accounting and Management

Suraj Srinivasan is a Professor in the Accounting and Management area at Harvard Business School. He is currently the course-head for the HBS required course Financial Reporting and Control. He also teaches to executives, Strategic Financial Analysis for Business Evaluation, and in corporate governance programs Making Corporate Boards More Effective, Audit Committees in a New Era of Governance and Compensation Committees: New Challenges, New Solutions, in the elective course Business Analysis and Valuation using Financial Statements and in HBS doctoral programs. 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 and case writing examines the institutions of 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. His research has been published in leading academic journals such as the Journal of Financial Economics, Journal of Accounting Research, and The Accounting Review among others. He is currently the co-Department Editor for Accounting at Management Science and serves on the editorial board of the Journal of Accounting Research.

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. Institutional Ownership and Corporate Tax Avoidance: New Evidence

    Mozaffar N. Khan, Suraj Srinivasan and Liang Tan

    We provide new evidence on the agency theory of corporate tax avoidance (Slemrod, 2004; Crocker and Slemrod, 2005; Chen and Chu, 2005) by showing that increases in institutional ownership are associated with increases in tax avoidance. Using the Russell index reconstitution setting to isolate exogenous shocks to institutional ownership, as well as a regression discontinuity design that facilitates sharper identification of treatment effects, we find a significant and discontinuous increase in tax avoidance following Russell 2000 inclusion. The tax avoidance involves the use of tax shelters, and immediate benefits include higher profit margins and the likelihood of meeting or beating analyst expectations. Collectively the results shed light on the effect of increased ownership concentration on tax avoidance.

    Keywords: tax avoidance; agency costs; institutional ownership; Private Ownership; Crime and Corruption; Taxation; Agency Theory;

    Citation:

    Khan, Mozaffar N., Suraj Srinivasan, and Liang Tan. "Institutional Ownership and Corporate Tax Avoidance: New Evidence." Accounting Review 92, no. 2 (March 2017): 101–122.  View Details
  2. Can Analysts Assess Fundamental Risk and Valuation Uncertainty? An Empirical Analysis of Scenario-Based Value Estimates

    Peter R. Joos, Joseph D. Piotroski and Suraj Srinivasan

    We use a dataset of sell-side analysts' scenario-based valuation estimates to examine whether analysts reliably assess the risk surrounding a firm's fundamental 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; Forecasting and Prediction;

    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." Journal of Financial Economics 121, no. 3 (September 2016): 645–663.  View Details
  3. Admitting Mistakes: Home Country Effect on the Reliability of Restatement Reporting

    Suraj Srinivasan, Aida Sijamic Wahid and Gwen Yu

    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 90, no. 3 (May 2015): 1201–1240.  View Details
  4. Market Competition, Earnings Management, and Persistence in Accounting Profitability Around the World

    Paul M. Healy, George Serafeim, Suraj Srinivasan and Gwen Yu

    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 19, no. 4 (December 2014): 1281–1308.  View Details
  5. SOX after Ten Years: A Multidisciplinary Review

    Suraj Srinivasan and John C. Coates IV

    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 28, no. 3 (September 2014): 627–671.  View Details
  6. Do Analysts Follow Managers Who Switch Companies? An Analysis of Relationships in the Capital Markets

    Francois Brochet, Gregory S. Miller and Suraj Srinivasan

    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
  7. Accountability of Independent Directors—Evidence from Firms Subject to Securities Litigation

    Francois Brochet and Suraj Srinivasan

    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
  8. Which U.S. Market Interactions Affect CEO Pay? Evidence from UK Companies

    Joseph Gerakos, Joseph Piotroski and Suraj Srinivasan

    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
  9. Non-Audit Services and Financial Reporting Quality: Evidence from 1978–1980

    Kevin Koh, Shiva Rajgopal and Suraj Srinivasan

    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
  10. Audit Quality and Auditor Reputation: Evidence from Japan

    Douglas Skinner and Suraj Srinivasan

    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
  11. Corporate Governance When Founders Are Directors

    Feng Li and Suraj Srinivasan

    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
  12. Signaling Firm Performance Through Financial Statement Presentation: An Analysis Using Special Items

    Edward J. Riedl and Suraj Srinivasan

    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
  13. Regulation and Bonding: The Sarbanes-Oxley Act and the Flow of International Listings

    Suraj Srinivasan and Joseph Piotroski

    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 the heightened governance costs imposed by the Act increasing the bonding-related benefits of a U.S. listing.

    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
  14. Consequences of Financial Reporting Failure for Outside Directors: Evidence from Accounting Restatements and Audit Committee Members

    Suraj Srinivasan

    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;

    Citation:

    Srinivasan, Suraj. "Consequences of Financial Reporting Failure for Outside Directors: Evidence from Accounting Restatements and Audit Committee Members." Journal of Accounting Research 43, no. 2 (May 2005): 291–334.  View Details
  15. Disclosure Practices of Foreign Companies Interacting with U.S. Markets

    Tarun Khanna, Krishna G. Palepu and Suraj Srinivasan

    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. What Else Do Shareholders Want? Shareholder Proposals Contested by Firm Management

    Eugene F. Soltes, Suraj Srinivasan and Rajesh Vijayaraghavan

    Shareholder proposals provide investors an opportunity to exercise their decision rights within firms, but managers can seek permission from the Securities and Exchange Commission (SEC) to dismiss proposals. We find that managers seek to exclude 39% of all proposals they receive, but the SEC does not permit exclusion in over a quarter of cases. Of the proposals that managers’ contest, but the SEC does not allow exclusion, 21% go on to win shareholder or firm support suggesting that managers often seek to exclude legitimate shareholder interests from their proxy statements. Our analysis illuminates the role that regulators play in mediating differences between firms and shareholders.

    Keywords: Voting; Business and Shareholder Relations;

    Citation:

    Soltes, Eugene F., Suraj Srinivasan, and Rajesh Vijayaraghavan. "What Else Do Shareholders Want? Shareholder Proposals Contested by Firm Management." Harvard Business School Working Paper, No. 16-132, May 2016. (Revised October 2017.)  View Details
  2. Activist Directors: Determinants and Consequences

    Ian D. Gow, Sa-Pyung Sean Shin and Suraj Srinivasan

    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
  3. Consequences to Directors of Shareholder Activism

    Ian D. Gow, Sa-Pyung Sean Shin and Suraj Srinivasan

    Using a comprehensive sample for 2004–2012, we examine the impact of shareholder activist campaigns on the careers of directors of targeted firms. We find that activism is associated with directors being almost twice as likely to leave—and performance-sensitivity of turnover being higher over the subsequent two-year period. Our evidence suggests that director turnover occurs even without shareholder activists engaging in, let alone winning, proxy contests and, in contrast to most prior research, director election results matter. Overall, our evidence suggests that shareholder activism, even in the absence of proxy fights, is associated with greater accountability for independent directors.

    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. (Revised May 2016.)  View Details
  4. Securities Litigation Risk for Foreign Companies Listed in the U.S.

    Beiting Cheng, Suraj Srinivasan and Gwen Yu

    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
Core Curriculum Readings
  1. Financial Accounting Reading: Analyzing Financial Statements

    Suraj Srinivasan and V.G. Narayanan

    Core Curriculum Readings in Financial Accounting cover the fundamental concepts in financial accounting. Many Readings include videos and Interactive Illustrations to help students master complex concepts.
    This reading helps students understand that financial ratios—one financial statement item divided by another—are used to create useful metrics. In other words, the inputs or financial items are derived from the financial statements. The reading also shows how ROE is calculated using three ratios: profit margin, operation efficiency, and financial leverage.
    This Reading includes six Interactive Illustrations: "DuPont Framework," "Efficiency Ratios," "Inventory Turnover and Days in Inventory," "Cash Conversion Cycle," "Leverage Ratios," and "Profitability Ratios."

    Keywords: Financial Statements; Analysis; Accounting;

    Citation:

    Srinivasan, Suraj, and V.G. Narayanan. "Financial Accounting Reading: Analyzing Financial Statements." Core Curriculum Readings Series. Boston, MA: Harvard Business School Publishing 5056, 2017.  View Details
Cases and Teaching Materials
  1. Hikma Pharmaceuticals Governance Journey

    Lynn Paine, Suraj Srinivasan and Gamze Yucaoglu

    The case opens with Said Darwazah, chairman and CEO of Hikma Pharmaceuticals, the multinational generics company, anticipating the company’s 2017 AGM and reflecting on changes made over the previous year to address concerns expressed by proxy advisors and some shareholders about Hikma’s reliance on a combined chairman/CEO position, the long tenure of some directors, and the company’s approach to executive pay. The case describes Hikma’s origins as a Jordanian pharma company founded by Darwazah’s father in 1978, and traces the evolution of its governance as a private family company, then as a publicly-traded company listed on the London Stock Exchange in 2005, and finally as a member of the FTSE 100, beginning in March 2015. Ahead of the 2017 AGM, Darwazah is confident that shareholders will approve changes made to the company’s executive incentive plan (EIP) and steps taken to accelerate the turnover of long-serving directors, but he wonders how much longer the company will be able to continue with a combined Chairman/CEO and, more generally, how to marry the high level of governance expected by shareholders with the entrepreneurial spirit that had driven Hikma’s growth and development.

    Keywords: Jordan; emerging markets; private sector; for-profit firms; corporate governance; boards of directors; Pharmaceuticals; remuneration; shareholder engagement; Corporate Governance; Governing and Advisory Boards; Business and Shareholder Relations; Executive Compensation; Business Growth and Maturation; Pharmaceutical Industry; Jordan;

    Citation:

    Paine, Lynn, Suraj Srinivasan, and Gamze Yucaoglu. "Hikma Pharmaceuticals Governance Journey." Harvard Business School Case 318-108, February 2018.  View Details
  2. Sachem Head's Activism at Autodesk

    Suraj Srinivasan and Quinn Pitcher

    In 2015, activist hedge fund Sachem Head Capital, led by founder Scott Ferguson, launched an activist campaign at (computer aided design) CAD software maker Autodesk. The activist campaign, waged mainly in private, was over Autodesk's lacklustre financial performance, with Ferguson thinking that Autodesk's performance could improve with better cost management. Facing a proxy contest, Autodesk added Ferguson and two others to its board in exchange for a standstill agreement. Following two years of significantly improved performance, Ferguson eventually stepped down when longtime Autodesk CEO Carl Bass announced his retirement in February 2017. The case illustrates how even companies with stellar products can underperform and how benchmarking and financial analysis can help identify drivers of firm performance. The case describes how boards and investors can engage to improve governance and ultimately achieve sustainable performance objectives.

    Keywords: shareholder activism; Investing; activist investing; corporate governance; technology; CEO Turnover; hedge fund activism; benchmarking; Corporate Governance; Technology; Investment Activism; Performance Improvement; Management Succession; United States;

    Citation:

    Srinivasan, Suraj, and Quinn Pitcher. "Sachem Head's Activism at Autodesk." Harvard Business School Case 118-086, March 2018.  View Details
  3. Whole Foods and JANA Partners

    Suraj Srinivasan and Quinn Pitcher

    In 2017, JANA Partners decided to launch an activist campaign at struggling supermarket chain Whole Foods Market. The company had struggled for the past several years, and JANA thought the presence of new directors could help turn around its operations, while Whole Foods resisted, adding new directors and announcing ambitious new financial targets. Facing continued pressure from JANA despite the new changes, Whole Foods accepted an acquisition offer from Amazon, ending the engagement with JANA.

    Keywords: Corporate Governance; Technology; Institutional Investing; Investment Activism; United States;

    Citation:

    Srinivasan, Suraj, and Quinn Pitcher. "Whole Foods and JANA Partners." Harvard Business School Case 118-076, February 2018.  View Details
  4. Trian Partners' Proxy Contest at Procter & Gamble

    Suraj Srinivasan and Quinn Pitcher

    Trian Partners launched a proxy fight against the largest company ever to be subject to such a fight, Procter & Gamble, in July 2017. Trian thought that P&G was underperforming due to a complex organizational structure and lack of product innovation, while P&G contended that it was already turning around performance and that Trian didn't bring any new ideas to the table.

    Keywords: Investment; Corporate Governance; Institutional Investing; Investment Activism; Business and Shareholder Relations; United States;

    Citation:

    Srinivasan, Suraj, and Quinn Pitcher. "Trian Partners' Proxy Contest at Procter & Gamble." Harvard Business School Case 118-049, January 2018.  View Details
  5. PrimeStone Capital and dormakaba

    Suraj Srinivasan and Quinn Pitcher

    London-based activist hedge fund PrimeStone Capital identifies a potential investment in Swiss security company Kaba. PrimeStone believes that the company is undervalued because it has been pushing back various financial targets and thinks it can help by proposing a new, incentivized executive compensation plan. The company's performance improves, and PrimeStone needs to decide whether its presence can continue to add value or whether it should exit the investment.

    Keywords: Investment Activism; Value Creation; Executive Compensation; Performance Improvement;

    Citation:

    Srinivasan, Suraj, and Quinn Pitcher. "PrimeStone Capital and dormakaba." Harvard Business School Case 118-047, January 2018.  View Details
  6. Blue Harbour's Activism at Babcock & Wilcox

    Suraj Srinivasan and Quinn Pitcher

    The case describes Blue Harbour Group's investment in Babcock & Wilcox and its transformation into BWX Technologies. In 2004, activist hedge fund Blue Harbour Group invested in Babcock & Wilcox, an energy and construction company. Blue Harbour developed an investment thesis around Babcock & Wilcox spinning off its non-nuclear, coal-based energy segments and focused on being a defense and nuclear power company. But when the company made the spin-off announcement, the stock price barely reacted. The case protagonist, Robb LeMasters (MBA ’05), managing director at Blue Harbour, joined the new company, BWX Technologies board of directors, to help guide it after the spin-off. The case allows students to discuss various value creation strategies that could be adopted by BWXT after the spin-off.

    Keywords: Corporate Governance; Investment Activism; Leading Change; Energy Industry; Construction Industry; United States;

    Citation:

    Srinivasan, Suraj, and Quinn Pitcher. "Blue Harbour's Activism at Babcock & Wilcox." Harvard Business School Case 118-045, January 2018.  View Details
  7. Blue Harbour's Activism at Babcock & Wilcox (B)

    Suraj Srinivasan and Quinn Pitcher

    Follow-up case detailing the changes and performance upswing at BWX Technologies after hedge fund Blue Harbour Group's investment and when the fund’s Managing Director Robb LeMasters (MBA’05) joined its board of directors.

    Keywords: Investment Activism; Organizational Change and Adaptation; Energy Industry; Construction Industry; United States;

    Citation:

    Srinivasan, Suraj, and Quinn Pitcher. "Blue Harbour's Activism at Babcock & Wilcox (B)." Harvard Business School Supplement 118-046, January 2018.  View Details
  8. JOE & THE JUICE Crosses the Atlantic (with video links)

    Ethan Rouen and Suraj Srinivasan

    As JOE & THE JUICE began its rapid U.S. expansion in 2017, its founder and CEO, Kaspar Basse, fretted about how he could keep his employees feeling like they were doing meaningful work. Founded in 2001, JOE & THE JUICE had always focused on making healthy juices, banning prepackaged or processed foods, and providing meaningful work for front-line food services employees. To instill employees with a sense of ownership, JOE & THE JUICE had developed a transparent promotion and compensation scheme, a rigid training program, and an explicit promise to promote only from within (the CFO was 31-years-old and had spent a decade working at the company). On the other hand, employees were encouraged to make the juice bars their homes. There were no required uniforms or scripts on how to interact with customers. This strategy had led to great success in Europe. In a decade, JOE & THE JUICE had spread across the continent and was immensely profitable. But as it moved into the United States and prepared for a potential IPO, the company began struggling to retain talent and worried about how it could successfully import its internal culture while maintaining its rapid growth.

    Keywords: Organizational Culture; Employees; Retention; Expansion; Growth Management;

    Citation:

    Rouen, Ethan, and Suraj Srinivasan. "JOE & THE JUICE Crosses the Atlantic (with video links)." Harvard Business School Multimedia/Video Case 118-039, November 2017. (Revised January 2018.)  View Details
  9. Fair Value Accounting Controversy at Noble Group (A)

    Siko Sikochi, Suraj Srinivasan and Quinn Pitcher

    Noble Group, founded in 1986, was a large commodities trader based in Hong Kong and listed on the Singapore Stock Exchange. In 2012, Noble shifted its business strategy towards an asset-light model. Under this model, Noble did not own mines or farms to produce commodities but built commodity sourcing capacity by working with and investing in producers in exchange for purchase and marketing contracts. Noble also worked with customers to secure supply contracts. Noble had a portfolio of 12,000 commodity contracts by end of 2014. The contracts were measured at fair value. Iceberg Research, an anonymous blog, released a series of reports starting in February 2015 alleging that Noble was too aggressive in its fair value accounting for contracts and investments in producers. Iceberg did not accuse Noble of fraud, but suggested that Noble’s profits and balance sheet were highly inflated and Noble was headed for disaster. Noble defended its accounting policies and hired PricewaterhouseCoopers (PwC) to provide an independent review of fair value measurement. PwC released a positive review of Noble’s accounting. However, questions remained whether Noble’s contracts and investments were overvalued. The case explores Noble’s business and investigates whether questions about its accounting practices were in the past following the attestation by PwC.

    Keywords: Fair Value Accounting; Policy; Goods and Commodities; Contracts; Valuation;

    Citation:

    Sikochi, Siko, Suraj Srinivasan, and Quinn Pitcher. "Fair Value Accounting Controversy at Noble Group (A)." Harvard Business School Case 118-034, November 2017. (Revised January 2018.)  View Details
  10. Accounting for Political Risk at AES

    Gerardo Pérez Cavazos and Suraj Srinivasan

    As a global energy generating company, AES frequently faces challenges from political changes and instability. This is exacerbated by the fact that in many instances AES' primary customer is the government, which is also in charge of law-making. For example, AES' management team has encountered expropriation risks in Venezuela, collection problems in the Dominican Republic, and regulatory changes in the United States that have led to asset impairments. More recently, the Bulgarian energy regulator announced its intentions to seek a 30% price reduction on a power purchase agreement signed over ten years ago with AES. Accordingly, AES' management is evaluating whether the renegotiation will lead to any asset impairments and the overall effects on its financial statements.

    Keywords: political risk; Asset impairment; Risk factors; Fair Value; Fair Value Accounting; Financial Reporting; Financial Statements; Energy Industry; Bulgaria; Dominican Republic; United States; Venezuela;

    Citation:

    Pérez Cavazos, Gerardo, and Suraj Srinivasan. "Accounting for Political Risk at AES." Harvard Business School Case 118-023, August 2017. (Revised November 2017.)  View Details
  11. Ak Gıda: IPO or Strategic Sale

    Suraj Srinivasan and Eren Kuzucu

    In 2015, Yıldiz Holding, one of the world’s largest producer of confections, biscuits and crackers, was at the end of its divesture process from Ak Gida, one of the leading dairy companies in Turkey. The company had adopted a dual track process, pursuing an initial public offering (IPO) process as well as attempting, in parallel, a strategic sale to create a competitive bidding process.
    Ak Gida was co-founded in 1996 by the Ulker and Topbas families as a result of a joint vertical integration strategy: Ulker family, owners of Yildiz Holding, would secure milk powder, one of the main raw materials for its biscuits and chocolate production, and Topbas family would be able to create its own private label dairy products for its nation-wide hard-discount chain BIM.
    Following Yildiz Holding’s acquisition of United Biscuits for over $3 billion in 2014, the Holding’s CFO Cem Karakas and its Chief Strategy and Growth Officer Nurtaç Ziyal Afridi, were tasked with divesting of its vertical assets including Ak Gida. The duo had prepared Ak Gida for an IPO in Istanbul, while also having negotiated with multiple parties for its sale. Now, the duo needed to make a final decision: should they go forward with the listing, or should they sell Ak Gida to the world’s largest dairy company, Groupe Lactalis?

    Keywords: Valuation; Private Sector; For-Profit Firms; Business Model; Business Strategy; Competitive Advantage; Growth and Development Strategy; Value Creation; Decision Making; Growth Management; Mergers and Acquisitions; Initial Public Offering; Business Conglomerates; Business Exit or Shutdown; Family Business; Joint Ventures; Food and Beverage Industry; Turkey;

    Citation:

    Srinivasan, Suraj, and Eren Kuzucu. "Ak Gıda: IPO or Strategic Sale." Harvard Business School Case 118-036, January 2018.  View Details
  12. Data Breach at Equifax

    Suraj Srinivasan and Quinn Pitcher

    Examining the cause of and response to the 2017 data breach at Equifax that exposed the information of over 145 million consumers.

    Keywords: Safety; Information Management; Technology Industry; United States;

    Citation:

    Srinivasan, Suraj, and Quinn Pitcher. "Data Breach at Equifax." Harvard Business School Case 118-031, October 2017. (Revised March 2018.)  View Details
  13. Accounting Turbulence at Boeing

    Jonas Heese, Suraj Srinivasan, David Lane and James Barnett

    Unlike its rival Airbus, Boeing had used a practice called program accounting to record its commercial aircraft expenses since the 1980s. Program accounting allowed Boeing to expense estimated average costs instead of the actual production costs of an aircraft. This practice lowered the effect of the initially high costs of manufacturing new aircraft models on Boeing’s profitability and reflected potential learning efficiencies that could drive down manufacturing costs over time. By 2016, Boeing had deferred about $27 billion in production costs related to its 787 program. If Boeing had been forced to expense these costs, it would have shown profits of $1.4 billion between 2012 and 2016 instead of $25.2 billion, raising questions about Boeing’s true profitability.

    Keywords: asset recognition; program accounting; airline industry; Accounting; Production; Cost; Air Transportation Industry;

    Citation:

    Heese, Jonas, Suraj Srinivasan, David Lane, and James Barnett. "Accounting Turbulence at Boeing." Harvard Business School Case 118-020, August 2017. (Revised October 2017.)  View Details
  14. Signet Jewelers: Assessing Customer Financing Risk

    Gerardo Pérez Cavazos, Suraj Srinivasan and Monica Baraldi

    Marc Cohodes, a renowned short seller, has identified weaknesses in Signet's business strategy, which he argues is heavily reliant on providing loans to customers with subprime credit scores. He believes that the company accounts for its receivables portfolio using recency accounting to hide the problem. The case presents Cohodes' thesis, the response by Signet's management team, as well as the reactions by sell-side analysts.

    Keywords: short selling; bad debt expense; Accounting; Financial Reporting; Financial Statements; Finance; Financing and Loans; Valuation; Retail Industry; Financial Services Industry; United States;

    Citation:

    Pérez Cavazos, Gerardo, Suraj Srinivasan, and Monica Baraldi. "Signet Jewelers: Assessing Customer Financing Risk." Harvard Business School Case 117-038, June 2017. (Revised March 2018.)  View Details
  15. Sales Misconduct at Wells Fargo Community Bank

    Suraj Srinivasan, Dennis W. Campbell, Susanna Gallani and Amram Migdal

    Set in early 2017, this case examines widespread sales misconduct at Wells Fargo Community Bank. Wells Fargo's governance and controls are described in the lead up to the September 2016 announcement that Wells Fargo had settled with regulators for $185 million in relation to the years-long period of misconduct in sales. Subsequent investigations, terminations, compensation clawbacks, and other consequences are described.

    Keywords: Corporate Governance; Governance Controls; Governing Rules, Regulations, and Reforms; Governing and Advisory Boards; Executive Compensation; Lawsuits and Litigation; Crisis Management; Mission and Purpose; Organizational Design; Business and Community Relations; Business and Government Relations; Crime and Corruption; Business Organization; Business Model; Ethics; Corporate Accountability; Governance Compliance; Policy; Compensation and Benefits; Resignation and Termination; Laws and Statutes; Legal Liability; Business or Company Management; Risk Management; Business Processes; Organizational Culture; Organizational Structure; Failure; Agency Theory; Business and Shareholder Relations; Business and Stakeholder Relations; Risk and Uncertainty; Salesforce Management; Public Opinion; Banking Industry; North and Central America;

    Citation:

    Srinivasan, Suraj, Dennis W. Campbell, Susanna Gallani, and Amram Migdal. "Sales Misconduct at Wells Fargo Community Bank." Harvard Business School Case 118-009, June 2017.  View Details
  16. Uber in 2017: One Bumpy Ride

    Suraj Srinivasan, Jay W. Lorsch and Quinn Pitcher

    Uber Technologies Inc., the popular ride-hailing company, entered 2017 having doubled its bookings in 2016 and achieving a valuation of nearly $70 billion, making it the largest venture capital-backed company in the world. Co-founder and CEO Travis Kalanick embodied the company, with a hard-charging attitude embedded in the company’s workplace culture that allowed it to successfully take on the entrenched taxi industry. Uber looked to enjoy another year of global growth in 2017, until lawsuits and a cascading series of scandals surrounding that same workplace culture led a group of powerful investors to seek Kalanick’s resignation to protect their investment. This case presents an overview of the growth of Uber, the impact of Kalanick, and the role that Uber’s board of directors had in shaping the company’s growth. It centers on the factors leading to Uber board members and investors to call for Kalanick’s resignation, focusing on how board oversight can help shape company culture and how entrepreneurial boards deal with founder CEOs. It then deals with the events that happened in the aftermath of Kalanick's resignation, including the appointment of Dara Khosrowshahi as CEO and the changes, the lawsuit brought against Kalanick by venture capital firm Benchmark Capital, and the governance changes proposed at the end of September 2017.

    Keywords: Governance; Technology; Transportation; Venture Capital; Organizational Culture; Technology Industry; Transportation Industry; United States;

    Citation:

    Srinivasan, Suraj, Jay W. Lorsch, and Quinn Pitcher. "Uber in 2017: One Bumpy Ride." Harvard Business School Case 117-070, June 2017. (Revised October 2017.)  View Details
  17. Darby's Investment in Sirma: Professionalizing an Entrepreneurial Firm

    Suraj Srinivasan and Eren Kuzucu

    In March 2010, Burak Dalgın (HBS MBA 2004) led private equity firm Darby's investment in Sırma, a local Turkish water and beverage company. Sırma was owned and managed by members of two Turkish business families. The existing management, while being highly entrepreneurial, had paid less attention to managing the company in a professional manner, leading to a highly leveraged balance sheet and a significant need for financing. After the investment, Sırma introduced new products, opened a new factory, and built up its financial reporting system from scratch. Two years after Darby’s investment, Sırma’s operational performance had improved. However, the company was still suffering from significant financial problems. By early 2013, although Sırma had received two cash injections from Darby, the company still required another round of financing. Dalgın was looking at three potential options: Should Darby make another investment in Sırma? If Darby stayed invested in Sırma, should it replace its managing partners? If Dalgın advised Darby to exit, would that be a premature move?

    Keywords: financial reporting; control systems; Variance Analysis; emerging markets; private equity; debt; family ownership; Food and Beverage Industry; Turkey; valuation; Business or Company Management; Private Equity; Financial Reporting; Investment; Budgets and Budgeting; Food and Beverage Industry; Turkey;

    Citation:

    Srinivasan, Suraj, and Eren Kuzucu. "Darby's Investment in Sirma: Professionalizing an Entrepreneurial Firm." Harvard Business School Case 117-033, November 2016. (Revised April 2018.)  View Details
  18. 'Golden Leash' Pay for Directors at The Dow Chemical Company

    Ian Gow, Suraj Srinivasan and Neeraj Goyal

    In November 2014, The Dow Chemical Company was faced with the prospect of a proxy battle with prominent hedge fund and activist investor Third Point Management. The activist had criticized Dow’s recent performance and advocated that the company split itself to maximize its potential. The activist also proposed two director candidates to join Dow’s board. Third Point offered its director nominees what had come to be known as a “golden leash” incentive structure—a significant amount of incentive payment from the investor if the company performed well. Supporters and critics had weighed in on the pros and cons of such incentive schemes for corporate independent directors. Faced with the prospect of a proxy fight, Dow’s board had to decide whether to invite the two directors to join the company’s board knowing they came with the special payment scheme from the hedge fund.

    Keywords: Motivation and Incentives; Governing and Advisory Boards; Executive Compensation; Investment Activism; Chemical Industry;

    Citation:

    Gow, Ian, Suraj Srinivasan, and Neeraj Goyal. "'Golden Leash' Pay for Directors at The Dow Chemical Company." Harvard Business School Case 117-029, July 2016.  View Details
  19. Cyber Breach at Target

    Suraj Srinivasan, Lynn S. Paine and Neeraj Goyal

    In November and December of 2013, Target Corporation suffered one of the largest cyber breaches to date. The breach that occurred during the busy holiday shopping season resulted in personal and credit card information of approximately 110 million Target customers being compromised. The case describes the details of the breach, circumstances that lead to it, consequences for customers and for Target, and the company's response. Additionally, the case discusses the role of management and the board of directors in cyber security at Target. Target's board of directors was subject to intense criticism by shareholders and governance experts such as the leading proxy advisor Institutional Shareholder Services (ISS). Lastly, the case discusses the critique and defense of the board's role and is designed to allow for a discussion of the causes and consequences of the cyber breach and accountability of directors in cyber security.

    Keywords: Safety; Credit Cards; Customer Relationship Management; Online Technology; Governing and Advisory Boards; Crisis Management; Retail Industry;

    Citation:

    Srinivasan, Suraj, Lynn S. Paine, and Neeraj Goyal. "Cyber Breach at Target." Harvard Business School Case 117-027, July 2016. (Revised October 2016.)  View Details
  20. Dollar General Bids for Family Dollar

    Jonas Heese, Paula A. Price, Suraj Srinivasan and David Lane

    In spring 2015, Dollar General's CEO Rick Dreiling was looking ahead to retiring at year's end but worried about ensuring continued growth for the company he had built since 2008 into a market leader in the U.S. discount retail world. Dollar General operated over 11,500 stores in 40 states at the start of 2015 but had recently been rebuffed in a tender offer for its leading rival, Family Dollar. Though Dollar General had held talks with Family Dollar as early as 2013, Family Dollar shareholders chose to ignore Dollar General's more lucrative tender offer and the urging of several activist investors and sold their firm to the smaller Dollar Tree chain. Dreiling could not help but revisit some of the key decisions he and the rest of the board had made in their pursuit of Family Dollar. From a governance perspective, he was confident that the Dollar General board had fulfilled its duty to shareholders during the bidding process despite Family Dollar's decision to sell to Dollar Tree. From a strategic perspective, he wondered whether Family Dollar had been the right competitor to buy.

    Keywords: Dollar General; Family Dollar; Dollar Tree; antitrust; board of directors; corporate strategy; Activist Investors; Federal Trade Commission; Acquisition; Valuation; Corporate Strategy; Retail Industry; United States;

    Citation:

    Heese, Jonas, Paula A. Price, Suraj Srinivasan, and David Lane. "Dollar General Bids for Family Dollar." Harvard Business School Case 116-007, November 2015. (Revised October 2017.)  View Details
  21. Dollar General Bids for Family Dollar

    Jonas Heese, Paula A. Price and Suraj Srinivasan

    In spring 2015, Dollar General CEO Rick Dreiling was looking ahead to retiring at year's end but worried about ensuring continued growth for the company he had built since 2008 into a market leader in the U.S. discount retail world. Dollar General operated over 11,500 stores in 40 states at the start of 2015, but had recently been rebuffed in a tender offer for its leading rival, Family Dollar. Though Dollar General had held talks with Family Dollar as early as 2013, Family Dollar shareholders chose to ignore Dollar General's more lucrative tender offer and the urging of several activist investors and sold their firm to the smaller Dollar Tree chain. Dreiling could not help but revisit some of the key decisions he and the rest of the board had made in their pursuit of Family Dollar. From a governance perspective, he was confident that the Dollar General board had fulfilled its duty to shareholders during the bidding process despite Family Dollar's decision to sell to Dollar Tree. From a strategic perspective, he wondered whether Family Dollar had been the right competitor to buy.

    Keywords: Dollar General; Family Dollar; Dollar Tree; antitrust; board of directors; corporate strategy; Activist Investors; Federal Trade Commission; Acquisition; Valuation; Corporate Strategy; Retail Industry;

    Citation:

    Heese, Jonas, Paula A. Price, and Suraj Srinivasan. "Dollar General Bids for Family Dollar." Harvard Business School Teaching Note 116-052, April 2016. (Revised June 2017.)  View Details
  22. Alibaba Goes Public (A)

    Krishna Palepu, Suraj Srinivasan, Charles C.Y. Wang and David Lane

    In 2014 Alibaba debuted on the New York Stock Exchange, creating not only the largest IPO in history but this initial desire to list on the Hong Kong Stock Exchange was denied due to the company's desire to preserve its partner's control over decision rights. Why did Hong Kong deny Alibaba's requests to list dual-class shares or to allow its partners to nominate a majority of the board of directors, and in the process turn away a superstar in Alibaba? Why did American stock markets approve of Alibaba's governance structures, despite the warnings of many governance experts? How can investors ensure that their capital would be deployed effectively by the company's top management?

    Keywords: corporate governance; dual-class share structure; Alibaba; IPOs; VIE; Corporate Governance; Financial Services Industry; United States; Hong Kong; China;

    Citation:

    Palepu, Krishna, Suraj Srinivasan, Charles C.Y. Wang, and David Lane. "Alibaba Goes Public (A)." Harvard Business School Case 115-029, December 2014. (Revised November 2015.)  View Details
  23. Alibaba Goes Public (B)

    Krishna Palepu, Suraj Srinivasan, Charles C. Y. Wang and David Lane

    Update on Alibaba Group's share price performance and related events in the year following its September 2014 IPO.

    Keywords: corporate governance; dual-class share structure; Alibaba; IPOs; VIE; Initial Public Offering; Corporate Governance; United States;

    Citation:

    Palepu, Krishna, Suraj Srinivasan, Charles C. Y. Wang, and David Lane. "Alibaba Goes Public (B)." Harvard Business School Supplement 116-031, February 2016.  View Details
  24. The Allergan Board Under Fire (A)

    Lynn S. Paine, Suraj Srinivasan, John C. Coates and David Lane

    In 2014, the Allergan Inc. board of directors received a surprise takeover offer from Valeant Pharmaceuticals in alliance with hedge fund activist Bill Ackman's Pershing Square Capital Management. In the unprecedented arrangement between an acquirer and a hedge fund activist, Pershing Square had quietly amassed a 9.7% stake in Allergan prior to the Valeant bid, making Pershing Square Allergan's largest shareholder. The case presents students with many of the decisions Allergan's directors faced amid challenges to Allergan's governance, management, and business model. In particular, the Allergan board must decide whether to pursue a $10 billion acquisition of Salix Pharmaceuticals while under threat of a proxy contest and a special shareholder meeting to vote on replacing Allergan's directors with a slate more favorable to the Valeant merger. The proposed Salix acquisition would give Allergan a new therapeutic market but would also make Allergan too big for Valeant to acquire.

    Keywords: Allergan, Inc.; Valeant; Ackman; Pershing Square; tender offer; Activist Investors; business models; R&D; board of directors; Securities Litigation; acquisition strategy; takeover defenses; hedge funds; shareholder rights; proxy contest; shareholder special meetings; legal issues in contested takeovers; Governing and Advisory Boards; Mergers and Acquisitions; Corporate Governance; Management Teams; Business and Shareholder Relations; Pharmaceutical Industry;

    Citation:

    Paine, Lynn S., Suraj Srinivasan, John C. Coates, and David Lane. "The Allergan Board Under Fire (A)." Harvard Business School Case 316-010, January 2016.  View Details
  25. The Allergan Board Under Fire (B)

    Lynn S. Paine, Suraj Srinivasan, John C. Coates and David Lane

    In 2014, the Allergan Inc. board of directors received a surprise takeover offer from Valeant Pharmaceuticals in alliance with hedge fund activist Bill Ackman's Pershing Square Capital Management. In the unprecedented arrangement between an acquirer and a hedge fund activist, Pershing Square had quietly amassed a 9.7% stake in Allergan prior to the Valeant bid, making Pershing Square Allergan's largest shareholder. The case presents students with many of the decisions Allergan's directors faced amid challenges to Allergan's governance, management, and business model. In particular, the Allergan board must decide whether to pursue a $10 billion acquisition of Salix Pharmaceuticals while under threat of a proxy contest and a special shareholder meeting to vote on replacing Allergan's directors with a slate more favorable to the Valeant merger. The proposed Salix acquisition would give Allergan a new therapeutic market but would also make Allergan too big for Valeant to acquire.

    Keywords: Allergan, Inc.; Valeant; Ackman; Pershing Square; tender offer; Activist Investors; business models; R&D; board of directors; Securities Litigation; acquisition strategy; takeover defenses; hedge funds; shareholder rights; proxy contest; shareholder special meetings; legal issues in contested takeovers; Corporate Governance; Investment Activism; Business and Stakeholder Relations; Business Model; Business and Shareholder Relations; Valuation; Pharmaceutical Industry;

    Citation:

    Paine, Lynn S., Suraj Srinivasan, John C. Coates, and David Lane. "The Allergan Board Under Fire (B)." Harvard Business School Supplement 316-029, January 2016.  View Details
  26. Southeastern Asset Management Challenges Buyout at Dell

    Paul Healy, Suraj Srinivasan and Aldo Sesia

    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; Leveraged Buyouts; 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 May 2017.)  View Details
  27. Say on Pay: Qualcomm, Inc. Shareholders Vote 'Maybe' in 2012

    Suraj Srinivasan, Charles C.Y. Wang and Kelly Baker

    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's 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 September 2014.)  View Details
  28. Say on Pay: Qualcomm, Inc. Shareholders Vote 'Maybe' in 2012

    Suraj Srinivasan and Charles C.Y. Wang

    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. (Revised July 2015.)  View Details
  29. Showdown at Cracker Barrel

    Suraj Srinivasan and Tim Gray

    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
  30. Ken Traub at American Bank Note Holographics

    Suraj Srinivasan and Michael Norris

    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
  31. NovaStar Financial: A Short Seller's Battle

    Suraj Srinivasan and Amy Kaser

    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
  32. Diamond Foods, Inc.

    Suraj Srinivasan and Tim Gray

    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
  33. Coca-Cola: Residual Income Valuation

    Suraj Srinivasan, Beiting Cheng and Edward J. Riedl

    The case illustrates the use of the residual income (also known as the abnormal earnings) valuation approach. Students are asked to provide a valuation of Coca-Cola Company using the residual income valuation methodology and understand how it maps into the discounted cash flow method. Students learn how forecasts of sales, performance, dividends, and other valuation inputs feeds into a valuation model. Students also learn the modified Dupont decomposition technique and how to reclassify financial statements to perform the modified Dupont analysis.

    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
  34. Coca-Cola: Residual Income Valuation

    Suraj Srinivasan and Edward J. Riedl

    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
  35. First Solar: CFRA's Accounting Quality Concerns

    Suraj Srinivasan and Ian McKown Cornell

    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
  36. Trouble Brewing for Green Mountain Coffee Roasters

    Suraj Srinivasan and Michael Norris

    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
  37. Jim Johnson's Re-election to the Goldman Sachs Board

    Suraj Srinivasan and Kelly Baker

    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
  38. Olympus (A)

    Jay W. Lorsch, Suraj Srinivasan and Kathleen Durante

    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
  39. Olympus (A)

    Jay W. Lorsch and Suraj Srinivasan

    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
  40. Olympus (B)

    Jay W. Lorsch, Suraj Srinivasan and Kathleen Durante

    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
  41. Ahold versus Tesco—Analyzing Performance

    Suraj Srinivasan and Penelope Rossano

    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
  42. Netflix: Valuing a New Business Model

    Francois Brochet, Suraj Srinivasan and Michael Norris

    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 July 2017.)  View Details
  43. The Risk-Reward Framework at Morgan Stanley Research

    Suraj Srinivasan and David Lane

    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
  44. Brink's Company: Activists Push for a Spin-off

    Suraj Srinivasan, Aldo Sesia and Amy Kaser

    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: Activist Investors; Spin-off; leveraged recapitalization; debt; valuation; hedge funds; conglomerates; 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
  45. Brink's Company: Activists Push for a Spin-off (TN)

    Suraj Srinivasan

    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
  46. Strategy and Governance at Yahoo! Inc.

    Krishna G. Palepu, Suraj Srinivasan, David Lane and Ian McKown Cornell

    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
  47. Mike Mayo Takes on Citigroup (A)

    Suraj Srinivasan and Amy Kaser

    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
  48. Mike Mayo Takes on Citigroup (B)

    Suraj Srinivasan and Amy Kaser

    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
  49. Ken Langone: Member, GE Compensation Committee

    Suraj Srinivasan and Lizzie Gomez

    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
  50. Kanebo Ltd. (A)

    David F. Hawkins, Suraj Srinivasan, Akiko Kanno and Lizzie Gomez

    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
  51. Kanebo Ltd. (B)

    David F. Hawkins, Suraj Srinivasan and Akiko Kanno

    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
  52. Kanebo Ltd. (C)

    David F. Hawkins, Suraj Srinivasan and Akiko Kanno

    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
  53. The Crisis at Tyco - A Director's Perspective

    Suraj Srinivasan and Aldo Sesia

    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
  54. Target Corporation: Ackman versus the Board

    Krishna G. Palepu, Suraj Srinivasan and James Weber

    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
  55. Target Corporation: Ackman versus the Board (TN)

    Krishna G. Palepu and Suraj Srinivasan

    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
  56. Citigroup 2007: Financial Reporting and Regulatory Capital

    Suraj Srinivasan, Edward J. Riedl and Sharon Katz

    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
  57. Citigroup 2007: Financial Reporting and Regulatory Capital (TN)

    Edward J. Riedl, Suraj Srinivasan and Sharon Katz

    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
  58. New Century Financial Corporation (Abridged)

    Krishna G. Palepu, Suraj Srinivasan and Ian Cornell

    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; 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
  59. New Century Financial Corporation

    Krishna G. Palepu, Suraj Srinivasan and Aldo Sesia

    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
  60. New Century Financial Corporation

    Suraj Srinivasan and Krishna G. Palepu

    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
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