In November 2023, Mark Branson, the head of Germany's Federal Financial Supervisory Authority (BaFin), reflected on the efficacy of the reforms initiated since the Wirecard scandal. BaFin had been discredited after Wirecard's downfall in 2020. The press had derided it as a "toothless tiger" because of its limited supervisory powers when it came to addressing warning signs of large-scale accounting fraud. Why did BaFin fail to detect the Wirecard scandal? Were the reforms sufficient to prevent another large-scale accounting fraud and to build trust with investors?
Set in June 2023, the C case explores Plug Power's recovery from its financial restatements, how it benefited from government subsidies, and new strategic alliances.
The case describes Ball's multi decade history of using Economic Value Added to drive decision making and workforce compensation. In 2016, the company acquired Rexam PLC and became the world's leading metal beverage container company. Consumer demand for varied aluminum can sizes led Ball to evaluate long term cost savings and efficiencies. In 2017, the company had to determine if it should open a new factory or upgrade two newly acquired factories. Opening the new factory required closing the other two. Ball used economic value added analysis to inform its decision making about this dilemma in this case.
Ball used Economic Value Added analysis to determine if it should open a new metal can manufacturing facility, which mandated closing two recently acquired factories, or recapitalize and update the two legacy factories.
Ball used Economic Value Added analysis to determine if it should open a new metal can manufacturing facility, which mandated closing two recently acquired factories, or recapitalize and update the two legacy factories.
In November 2022, Sam Bankman-Fried's multi-billion-dollar crypto exchange, FTX, collapsed, wiping out investors and throwing the crypto industry into disarray. As FTX's founder and CEO, Bankman-Fried developed a reputation for his unerring business sense and high-profile charitable giving. To many, it came as a shock when in the wake of FTX's collapse, the attorney responsible for restructuring the company professed he had never seen "such an utter failure of corporate controls at every level of an organization." How had Bankman-Fried managed to hide his malfeasance so well, and for so long? The investigation also raised questions about the people and organizations that enabled Bankman-Fried's wrongdoing. What should regulators have done differently? Were the VC funds that bankrolled FTX partly responsible?
Icahn Enterprises, a publicly traded limited partnership founded and operated by famed activist investor Carl Icahn, had earned above market returns for over a decade. Between 2018 and early 2023, it had a compound annual return of 31%. Icahn invested in undervalued companies and then publicly pressured boards of directors to make changes to increase the share price. Hindenburg Research (Hindenburg), an activist short-selling investment firm founded by Nathan Anderson, took short positions in companies it felt were overvalued, published research reports to drive down the stock price, and then profit from the decline. In May 2023, Hindenburg published a report claiming that Icahn Enterprises stock price was overvalued by 75%, that its 15% dividend yield was not sustainable, and that it sustained itself through a Ponzi-like economic model by issuing new stock to new investors so it could pay dividends to existing investors. Would Icahn Enterprises continue to outperform the market or was it a Ponzi disaster waiting to happen?
Set immediately after a December 2019 short-seller attack, the case explores Plug Power's long challenging history. It then focuses on two key issues raised in the short-seller report related to lease accounting and stock warrants that Plug purportedly used to boost profits.
The case is set in spring 2021, immediately after Plug Power made financial restatements dating back to 2018. The case describes the restatements, which revealed that Plug was reclassifying expense items to boost gross profits.
Dan McCrum, an investigative journalist for the Financial Times, had spent the past six years fighting to expose German payment processing firm Wirecard. The company had enjoyed years of exponential growth and was viewed by several investors as the poster child of Germany's tech sector. But to McCrum something smelled fishy and he couldn't help but wonder if Wirecard's true dealings weren't just hidden behind its complex business model. He started chronicling his suspicions of mass scale accounting fraud in his articles, but he could never had expected this would make him the target of several cyber attacks, spy operations and legal procedures. In June 2020, as Wirecard crumbles, McCrum reflects on his journey.
The case examines how to account for risks associated with loan assets (or receivables) through financial reporting for loan losses (or bad debt expenses) in the context of the adoption of the new accounting standard, Current Expected Credit Loss (CECL) model. CECL required banks to consider future economic conditions and to include forward-looking credit loss estimates in the setting of allowance for loan and lease losses (ALLL). This marked a departure from the previous standard, which is called the incurred loss model. Under that model, credit losses were recognized when it became "probable and estimable" that a credit loss had incurred based on historical data and current economic conditions. The case also explores what banks, regulators, and investors thought about the new method. Both bankers and regulators called CECL the biggest change ever to bank accounting. JPMorgan Chase CEO Jamie Dimon called CECL accounting crazy. Financial Accounting Standards Board member Hal Schroeder indicated CECL would lead to a safer financial system and a more resilient economy. Investors and analysts were trying to figure out the new CECL method and what impact it would have on financial statements.
Ginkgo Bioworks, a synthetic biology company based in Boston, Massachusetts, faced divergent views on its revenue possibilities and accounting practices. After a report emerged accusing it of fraudulent accounting and lack of innovation, its share price plunged. But some investors saw this as a buying opportunity and still believed in Ginkgo's prospects. Who was right?
In January 2022, Microsoft announces its acquisition of the video game company Activision Blizzard, in a deal valued at $68.7 billion, which would make Microsoft the world's third largest video game company. The deal came as Activision Blizzard faced gender pay disparity and sexual harassment allegations.