Template-Type: ReDIF-Article 1.0
Author-Name: Rathin S. Rathinasamy
Author-Name: Les Livingstone
Author-Name: Chinmoy Sahu
Title: GLOBAL COST OF CAPITAL: THE CASE OF GLOBAL COMPUTER SYSTEMS
Abstract: Global Computer Systems (GCS) is a hypothetical multinational company in the IT industry. The company is a major player in the industry catering to clients from a variety of industries. GCS has different segments specializing in major areas of its operation. The case provides an opportunity to examine various issues that need consideration while making capital budgeting decisions. One of the significant issues is that of determining the cost of capital on the basis of which the hurdle rate is calculated in deciding whether a project is worth accepting. This forms the central issue around which the case is structured. This case is suitable for use in a core Finance courses of MBA programs, and for use in MBA and under-graduate senior level international finance courses. Ideally, the case should be distributed well before the session so that students have adequate preparation time to go through the case and visit relevant internet sources mentioned therein. The case discussion may take up anywhere between 60 minutes to 90 minutes depending on the depth to which the students are intellectually stimulated to delve into. Gordon Crown, Chief Financial Officer of GCS, would like you to help him develop a company-wide cost of capital policy that is consistent with modern finance theoretical constructs. He would also like you to provide your recommendation on the acceptability of the projects. He also feels that since stock prices often fluctuate, it would be advisable to use book value weights in computing the component capital costs and the cost of capital. However, his young deputy, Helen Chang who is a recent MBA graduate, feels that market prices are very important indicators of the health of the company and they provide very good signals to the corporation in terms of the future directions. As such, she feels that the market value weights approach would be the best approach. She is also of the opinion that the Required Rate of Return on any given project, in addition to the WACC, should also include various risk premiums like stand-alone or project specific risk which can be further broken down into political risk, repatriation risk, exchange rate risk etc. Further, she believes that the required rate of return should be increased by about 1% to allow for capital investment projects that have no cash inflows, such as pollution control equipment and safety equipment.
Classification-JEL: A23, D24, I22
Keywords: Cost of capital, computer systems, finance education, case study
Journal: Review of Business and Finance Studies
Pages: 1-17
Volume: 2
Issue: 1
Year: 2011
File-URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v2n1-2011/RBFS-V2N1-2011-1.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:rbfstu:v:2:y:2011:i:1:p:1-17

Template-Type: ReDIF-Article 1.0
Author-Name: Michael Martin
Author-Name: Joseph J. French
Title: AN ETHICAL AND EMPLOYMENT QUAGMIRE: THE CASE OF JBS
Abstract: This case describes a hypothetical ethical dilemma involving labor relations at JBS Swift in Greeley, Colorado. The case describes the employment decisions faced by a hypothetical manager working at JBS Swift during the 2008 labor dispute over working conditions for Somali workers during Ramadan. The case provides detailed background information on JBS Swift, current labor relationships in the meat packing industry, applicable labor laws and ethical frameworks. At the
end of the narrative the reader is asked to formulate ethically and legally sound recommendations. The suggested audiences for this case study are upper level undergraduate students and graduate students.
Classification-JEL: D63; J50; J40; J80
Keywords: Business Ethics, Labor relations, Case Study
Journal: Review of Business and Finance Studies
Pages: 19-40
Volume: 2
Issue: 1
Year: 2011
File-URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v2n1-2011/RBFS-V2N1-2011-2.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:rbfstu:v:2:y:2011:i:1:p:19-40

Template-Type: ReDIF-Article 1.0
Author-Name: Paul J. Brennan 
Title: A PARTNERSHIP, A SHAM, OR A LOAN?
Abstract: This case was an adapted version of a tax case heard in U.S. Federal District Court and the US Court of Appeals. The case involved a partnership set-up by a large US corporation with its own subsidiaries as managing partners and foreign partners as outside investors. The formation of the partnership resulted from a stated objective of finding an alternative to debt financing, but provided far more significant tax savings benefits. The case was intended for use in an undergraduate taxation class focusing on business entities or an undergraduate accounting capstone or special topics course. The case and its attendant exercises were designed as applied vehicles for exploring the dimensions of the debt vs. equity classification and the nature of economic substance doctrine. The case and exercises require little knowledge of partnership taxation, but some research of the economic substance doctrine, the concept of what constitutes a partnership, and the arguments for debt vs. equity classification are required. The case may be used as a writing assignment or for class discussion. Estimated time for completion of the assignments, including research, is about four hours. Estimated time for class discussion of answers is less than one hour.
Classification-JEL: K34, H26
Keywords: Tax Law, Tax Evasion
Journal: Review of Business and Finance Studies
Pages: 41-56
Volume: 2
Issue: 1
Year: 2011
File-URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v2n1-2011/RBFS-V2N1-2011-3.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:rbfstu:v:2:y:2011:i:1:p:41-56

Template-Type: ReDIF-Article 1.0
Author-Name: Marion S. Mogielnicki 
Title: CORPORATE CODES OF CONDUCT AND BUSINESS PRINCIPLES IN LIGHT OF THE GOLDMAN SACHS LAWSUIT SETTLEMENT
Abstract: The Securities and Exchange Commission recently settled a monumental lawsuit against the investment firm of Goldman Sachs, Inc. The settlement mandated that the Wall Street titan agree to strengthen its ethical policies and procedures. This paper will discuss Goldman Sachs as a complicated corporate entity and examine its relationship to its own Code of Conduct and Ethics in light of the lawsuit. It will present an historical perspective and a summary of the research and efficacy of Codes. This review postulates that business should implement their Codes and ethical programs by way of thorough and effective analysis of new investment products such as mortgage-backed securities. It explains how Goldman should have better utilized ethical mechanisms to examine these products. The paper condenses the more relevant recommendations of the Report of the Business Standards Committee of Goldman Sachs. Finally, this review evaluates the definition of waivers contained in Codes and concludes that businesses should eliminate this exception.
Classification-JEL: K19; K22; K42
Keywords: Ethics, Implementation, Code of Conduct or Ethics, Business Principles, Business Standards Committee, Waiver, Conflict of Interest, SEC, Abacus, Mortgage Backed Securities
Journal: Review of Business and Finance Studies
Pages: 57-68
Volume: 2
Issue: 1
Year: 2011
File-URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v2n1-2011/RBFS-V2N1-2011-4.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:rbfstu:v:2:y:2011:i:1:p:57-68

Template-Type: ReDIF-Article 1.0
Author-Name: Brian J. Quarles 
Title: JOHN RAWLS’ DIFFERENCE PRINCIPLE: EVIDENCE FROM GUATEMALA
Abstract: While literature indicates that strong intellectual property (IP) protection is needed to attract foreign direct investment (FDI) in developing countries like Guatemala, the literature fails to address adequately the economic, social, and political considerations facing developing nations in the reformation of their IP laws. This article addresses those considerations by applying John Rawls’ Difference Principle. Rawls’ Difference Principle depicts justice as an issue of fairness, which focuses on the distribution of resources and permits an unequal distribution only to the extent that the weakest members of society benefit from that inequality. This article finds that Rawls would reject the findings from the literature and support a weak IP regime in Guatemala for three key reasons. First, economically, Guatemala’s weakest members would have immediate access to otherwise price-prohibitive products. Second, socially, Guatemala could reallocate resources to service Guatemala’s weakest members more pressing needs. Third, politically, Guatemala’s IP weak regime would be entirely consistent with the letter of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and improve relations with its trading partners. According to Rawls, Guatemala’s approach to maintain a weak IP regime would be ethically sound.
Classification-JEL: F12, O34, O38
Keywords: John Rawls, Difference Principle, Guatemala
Journal: Review of Business and Finance Studies
Pages: 69-78
Volume: 2
Issue: 1
Year: 2011
File-URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v2n1-2011/RBFS-V2N1-2011-5.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:rbfstu:v:2:y:2011:i:1:p:69-78

Template-Type: ReDIF-Article 1.0
Author-Name: Carol M Connell 
Title: DID CONFIDENCE KILL THE TRIFFIN PLAN?
Abstract: I examine two competing proposals for reforming and reviving confidence in the international monetary regime. Robert Triffin introduced and championed the proposal for centralized reserves. Fritz Machlup championed the proposal for flexible rates originally introduced by Milton Friedman. Triffin claimed that Fritz Machlup did more than anyone to ensure that floating exchange rates won the policy debate because of his influence on academic economists and policy makers. I examine Machlup’s influence on these opinion molders through his leadership of the Bellagio Group conferences.
Classification-JEL: B22, B23, B31, E42
Keywords: Triffin Plan; world monetary regime reform; confidence, liquidity and adjustment
Journal: Review of Business and Finance Studies
Pages: 79-87
Volume: 2
Issue: 1
Year: 2011
File-URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v2n1-2011/RBFS-V2N1-2011-6.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:rbfstu:v:2:y:2011:i:1:p:79-87

Template-Type: ReDIF-Article 1.0
Author-Name: José Gabriel Aguilar Barceló
Author-Name: Alejandro Mungaray Lagarda
Author-Name: Martín Ramírez Urquidy
Author-Name: Natanael Ramírez Angulo
Title: ENTREPRENEURSHIP UNDER SEVERE ADVERSE CONDITIONS: THE NORTHWEST MEXICAN CASE
Abstract: We analyzed the performance of marginalized subsistence microenterprises, through dichotomous logistic regressions by maximum likelihood. We tested 52,224 hypotheses, trying to find behavior patterns on microenterprises. The results show that performance is the result of a combination of factors related to the owners and the decisions made by them on their entrepreneurial environment, if measured as an approximation of the success/failure ratio. It is possible to know many of these variables before the business starts. In addition, some variables did not show the expected relation; this suggests that these projects deserve a different treatment than the formal micro and small enterprise. These factors may well influence the design of microenterprises’ assistance programs, micro loans and the establishment of commercial areas that allow an enhanced micro entrepreneur profile.
Classification-JEL: C35, D12, D13, D14
Keywords: Small business, marginalization, performance, logit, maximum likelihood.
Journal: Review of Business and Finance Studies
Pages: 89-101
Volume: 2
Issue: 1
Year: 2011
File-URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v2n1-2011/RBFS-V2N1-2011-7.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:rbfstu:v:2:y:2011:i:1:p:89-101

Template-Type: ReDIF-Article 1.0
Author-Name: Igor Pustylnick 
Title: GREY MARKETING A CAUSE FOR ANALYSIS OF PRICE AND DISTRIBUTION CHAIN DEFICIENCIES
Abstract: The vast majority of grey marketing cases are not discovered until the matter is brought before courts of law or arbitrage tribunal. Because of this, it is hard to build the dynamics of an average case and draw conclusions on the phenomenon in general. This paper observes a real life grey marketing case from its inception to the eventual winding down. This case shows the effects of the grey marketing do not only inflict damage to the bottom line of the original manufacture. They also set consumer expectations for lower product prices. Grey marketing pricing strategy appears to serve as a guideline for pricing policies of makers of competing products entering the market.
Classification-JEL: M16, M19, M31
Keywords: Grey Marketing, Pricing, Distribution Chain, Price Strategy, Competitive Pricing
Journal: Review of Business and Finance Studies
Pages: 103-113
Volume: 2
Issue: 1
Year: 2011
File-URL: http://www.theibfr2.com/RePEc/ibf/rbfstu/rbfs-v2n1-2011/RBFS-V2N1-2011-8.pdf
File-Format: Application/pdf
Handle: RePEc:ibf:rbfstu:v:2:y:2011:i:1:p:103-113