個案總覽

In 2021, the investment bank Credit Suisse Group AG lost an estimated US$6.4 billion from exposure to two hedge fund implosions that occurred within a month. Archegos Capital Management lost US$4.7 billion and Greensill Capital lost US$1.7 billion. Various arrangements between Credit Suisse Group AG and Archegos Capital Management, as well as structural factors at Credit Suisse Group AG, may have contributed to the bank having a higher level of exposure to these collapses than its industry peers. Underlying these miscues were recent changes in leadership, strategy, and tone at Credit Suisse Group AG. All three of these changes appeared to have collectively impaired the skepticism and voice exercised by its risk management group. In July 2021, Credit Suisse Group AG replaced its chief risk officer in an attempt to reshuffle its risk and compliance leadership. The task of the new chief risk officer was to reshape Credit Suisse Group AG’s risk management framework and internal controls, from the top to the bottom.

During an Allianz Benelux SA (Allianz) board meeting held in early 2019, Allianz’s chief financier officer (CFO) had a profound discussion with Allianz’s chief data and analytics officer (CDAO) on improving the company’s profit and loss (P&L) statement by targeting problematic cases among disability claims related to Allianz’s life insurance product. It appeared that certain claims had very long durations, leading to recurrent payouts surpassing the total amount of premiums. Consequently, there were too many claims that could translate into future losses. If this phenomenon persisted, Allianz could lose millions of dollars in revenues. Therefore, the CFO contacted the CDAO and his data office and requested that the team identify the client segments in which the most problematic cases of disability claims occurred. Additionally, the CFO wanted the data office to build a predictive model that could estimate the duration of a claim, to adapt the premium coverage to specific customer segments.

Spreadsheet to accompany product W27373.

During an Allianz Benelux SA (Allianz) board meeting held in early 2019, Allianz's chief financier officer (CFO) had a profound discussion with Allianz's chief data and analytics officer (CDAO) on improving the company's profit and loss (P&L) statement by targeting problematic cases among disability claims related to Allianz's life insurance product. It appeared that certain claims had very long durations, leading to recurrent payouts surpassing the total amount of premiums. Consequently, there were too many claims that could translate into future losses. If this phenomenon persisted, Allianz could lose millions of dollars in revenues. Therefore, the CFO contacted the CDAO and his data office and requested that the team identify the client segments in which the most problematic cases of disability claims occurred. Additionally, the CFO wanted the data office to build a predictive model that could estimate the duration of a claim, to adapt the premium coverage to specific customer segments.

Spreadsheet Supplement for Case W27373

Spreadsheet supplement for case 123008.

In January 2021, the co-founder of Mystery Books Co. (Mystery Books) was evaluating the company’s 2020 performance under the leadership of his daughter as the new chief executive officer. His daughter had ambitions of securing Walmart Inc. as a key client, so the co-founder had promised her an additional performance bonus of 5 per cent of his 30 per cent ownership of common stock if she grew the company’s net income by 20 per cent over the previous year. Throughout his thirty years of managing the company as chief executive officer, the co-founder had maintained very conservative accounting policies, some of which had been modified under his daughter's management. After reviewing the 2020 financial information, the co-founder harboured several concerns: Should he have specified more conditions for his daughter's performance incentive? Would the accounting policy changes pass the scrutiny of the company’s external auditors? And how should he proceed with regard to the suspicious sales activity he noticed? With these questions at the front of his mind, the co-founder of Mystery Books thought that perhaps he should have somehow left more reporting guidance for the company prior to leaving.

In July 2022, a portfolio manager for an investment company was considering adding the Coca-Cola Company (Coca-Cola) stock to its flagship global blend fund, which invested in firms with neither predominant value nor growth characteristics. Her initial task was to develop an investment thesis by first gathering qualitative and quantitative information related to Coca-Cola and its peers. Her thesis would consider what long-term trends might play out in the industry, as well as any short- and medium-term considerations related to the economy, the industry, and Coca-Cola itself. She wondered whether an analysis of recent financial performance coupled with expectations of future performance could provide any clues as to the suitability of current investments. Recognizing that further analysis would follow (such as an in-depth discounted cash flow analysis), the portfolio manager needed to know whether the fund should consider investing in Coca-Cola’s stock based on her preliminary analysis.

Spreadsheet to accompany product W31037.

A renowned "short selling activist," Muddy Waters Capital LLC (Muddy Waters) claimed that 90% of YY Live's live streaming revenue was fake. YY Live was one of the live streaming platforms JOYY Inc. (JOYY, NASDAQ: YY) operated. The vast majority of JOYY's revenue came from live streaming, in particular, the YY Live platform. Revenue was in the form of virtual gifts that paying users (PUs) sent to performers (channels). Muddy Waters used various methods to substantiate that most PUs were fake paying users (FUs) under direct control of JOYY itself. Rather than substantiating Muddy Waters's work, students will grapple with questions about how to assess the reasonableness of the 90% fraud estimate from financial and statistical points of view. They will answer the question of how to choose an appropriate reporting period or year for adjustments. Across the balance sheet, profit and loss, and cash flow statement, which financial items should be adjusted and how? Based on the adjusted financial statements, how would various profitability ratios, insolvency ratios, liquidity ratios, P/E, and price-to-book ratio (P/B), and so on be affected?

This case focuses on the customer loyalty program of Qutoutiao Inc. (QTT, NASDAQ: QTT). Financial analysis, unit economics, and accounting treatments will be explored in the case. QTT operated a mobile content platform, "Qutoutiao," in China, which literally meant "fun headlines" in Chinese. QTT aggregated mobile content from various sources and used AI-based algorithms to present customized content to users. The data analytics capabilities of the algorithms enabled QTT to analyze user data and customize feeds to users in order to generate more advertising revenue. In December 2019, Wolfpack Research (Wolfpack) published a report on QTT, casting serious doubts about the sustainability of its business model, in particular, the customer loyalty program. The program comprised "user engagement" and "user acquisition" activities that were found to be "extremely expensive." Days later, Wolfpack published a follow-up report extensively using unit economics to support its claims. Students will be asked to apply unit economics to analyzing QTT's operating and financial data. For financial analysis and forensic accounting purposes, students will also grapple with questions on how to substantiate the loyalty program expenses and liabilities, and to assess the financial implications of QTT's accounting treatment in recording the loyalty program expenses.

Spreadsheet Supplement for Case HK1397

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?

The case describes BMW's electrification and decarbonization strategy, and how the company measured carbon emissions throughout the life cycle of its vehicles and used tools like carbon abatement cost curves to evaluate decarbonization opportunities. In mid-2022, automakers, consumers, regulators, and investors were focusing on the transition from internal combustion engine (ICE) vehicles to electric vehicles (EV). While this would reduce tail-pipe emissions, the production of EVs-and especially their batteries-increased emissions in the supply chain. Under CEO Oliver Zipse, BMW was focusing on life cycle emissions and was pursuing a flexible powertrain strategy by offering vehicles with several powertrain options: gasoline and diesel-fueled ICE, plug-in hybrid electric vehicles (PHEV), and battery electric vehicles (BEV). Meanwhile, competing automakers were announcing deadlines by which they would stop selling ICE vehicles, buoyed by investment analysts and favorable press. BMW's approach was receiving a frostier reception in the stock market. Facing these pressures, how should BMW communicate and convince its stakeholders that its strategy was sustainable for both the environment and BMW's financial performance?

The Edmonton Opera Association (Edmonton Opera) was founded in 1963 as a not-for-profit arts organization with the aim of providing audiences with compelling productions that combined music, song, and theatre. Over the years, Edmonton Opera had been successful in providing its services, but, in 2020, it was challenged. Just when it had almost recovered from a deficit, reported in 2012, the global COVID-19 pandemic occurred, and an economic slowdown followed. The board of directors knew that many organizations, in addition to Edmonton Opera, had had to suspend their operations temporarily due to COVID-19 restrictions, and they wanted to know how the pandemic had affected Edmonton Opera’s operations. A newly minted board member with a background in finance and accounting was assigned the task of conducting a financial statement analysis. Because not all members of the board had the necessary skills to provide oversight of the association’s accounting matters, this new board member was also asked to address Edmonton Opera’s specific accounting issues.

This case is based on a hypothetical company that was newly established for a mobile gaming app. Before the company was incorporated, an experienced game developer and "creative strategist," Leon, and Lucas, a gaming influencer and streamer who was very popular in the Spanish-speaking world, had jointly created a game called sangre y acero®, meaning "Blood and Steel" in Spanish. Lucas's name on his streaming channel on Twitch and YouTube was Rey de Acero®, meaning "King of Steel" in Spanish. This game had passed most of the game-testing stages. A trademark had been obtained for the game's name and logo. A copyright was also obtained for the game's codes, art, music, scripts, and story and plot. These were the pre-incorporation events. Later, Leon and Lucas contributed their sangre y acero® trademark and this copyrighted game to the incorporation of the company. Their friends contributed funds. A new company, SYA Inc., was formed on 1 January 2022. On 1 July 2022, the app was fully launched. The purpose of the case is to have students prepare financial statements based on provided financial data, touching on a wide array of accounting concepts and common issues.

Spreadsheet Supplement for Case HK1387

Wedbush Securities analyst Michael Pachter said "hell freezing over" was more likely than him upgrading the "sell" rating he had maintained on movie and television streaming giant Netflix since 2011, despite meteoric subscriber and share price growth. In 2022, however, Pachter raised his rating - twice. The case explores the sell-side equity analyst industry, Netflix from the perspective of an equity analyst, Pachter's "bear" thinking through the years, and his logic in becoming a "bull."