{"title":"A positive accounting theorist's take on the end of accounting","authors":"Jerold L. Zimmerman","doi":"10.1111/jacf.12527","DOIUrl":"10.1111/jacf.12527","url":null,"abstract":"","PeriodicalId":46789,"journal":{"name":"Journal of Applied Corporate Finance","volume":"34 4","pages":"16-21"},"PeriodicalIF":0.9,"publicationDate":"2023-02-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44162864","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The case for reinventing financial reporting in the 21st century","authors":"Anup Srivastava, Shivaram Rajgopal","doi":"10.1111/jacf.12526","DOIUrl":"10.1111/jacf.12526","url":null,"abstract":"","PeriodicalId":46789,"journal":{"name":"Journal of Applied Corporate Finance","volume":"34 4","pages":"8-15"},"PeriodicalIF":0.9,"publicationDate":"2023-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43183867","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Strategic financial management part III: Debt maturity and priority and corporate liquidity","authors":"Fangjian Fu, Clifford W. Smith","doi":"10.1111/jacf.12533","DOIUrl":"10.1111/jacf.12533","url":null,"abstract":"","PeriodicalId":46789,"journal":{"name":"Journal of Applied Corporate Finance","volume":"34 4","pages":"101-108"},"PeriodicalIF":0.9,"publicationDate":"2023-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46189650","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Message from the Editor","authors":"Don Chew","doi":"10.1111/jacf.12535","DOIUrl":"https://doi.org/10.1111/jacf.12535","url":null,"abstract":"","PeriodicalId":46789,"journal":{"name":"Journal of Applied Corporate Finance","volume":"34 4","pages":"2-3"},"PeriodicalIF":0.9,"publicationDate":"2023-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"137522009","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Xavier Sztejnberg, Carlos Whitaker, Vanessa Roberts, Phil Canfield, Jeffrey W. Kramer
{"title":"Texas Private Equity Conference 2022: Session II: The Role of Private Equity and Debt in Reshaping the Ownership, Valuation, and Governance of Private Companies","authors":"Xavier Sztejnberg, Carlos Whitaker, Vanessa Roberts, Phil Canfield, Jeffrey W. Kramer","doi":"10.1111/jacf.12517","DOIUrl":"10.1111/jacf.12517","url":null,"abstract":"<p>Although the phenomenal growth of private equity investments into a $2 trillion market has been widely recognized, little is known about the recent rise of the private credit market, which has doubled to over $1 trillion in the past five years and generated annual returns of close to 9% during the past 15 years. In this panel, three private and public debt professionals discuss the interplay between private equity and debt, pricing pressures, competition for assets, and deal terms for private equity and debt investors in an increasing-interest-rate environment.</p><p>Direct lending to PE-owned firms has expanded dramatically since the 2008 global financial crisis, driven in significant part by the effect of Dodd-Frank on traditional banks' lending to their core middle market segment. Alternative lenders such as Blackstone and Ares Capital Management have filled the resulting void in this large market. While much of this activity is direct lending to those small and mid-market companies, another major part is structured or asset-backed lending to a discrete pool of assets wherein repayment of that debt is derived solely from the contractual cash flows coming off those assets rather than from the company.</p><p>Morgan Stanley's Vanessa Roberts explains how the private debt markets, as evidenced by their continued growth, complement public debt markets without supplanting them. But as Phil Canfield emphasized, private equity sponsors value the speed of execution and certainty of commitment along with fewer public disclosures that come with private credit. It's typically a less complex process, one that removes regulatory obstacles to risk-reducing structures and ends up providing more flexible solutions. What's more, the dramatic expansion of private capital pools in 2021 has brought much more liquidity to the market and accelerated the move toward cash-flow-based lending.</p>","PeriodicalId":46789,"journal":{"name":"Journal of Applied Corporate Finance","volume":"34 3","pages":"64-71"},"PeriodicalIF":0.9,"publicationDate":"2022-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42342418","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A Message from the Editor","authors":"Don Chew","doi":"10.1111/jacf.12524","DOIUrl":"https://doi.org/10.1111/jacf.12524","url":null,"abstract":"<p>In what might be called the first principle of <i>modern</i> corporate finance, the primary source and main driver of a company's long-run value is said to be its strategy and what finance academics refer as the corporate <i>investment decision</i>—in brief, what corporate managers choose to do with the capital their investors have entrusted them with. Having committed themselves to a strategy and business plan, and figured out the amount of capital required to carry out the plan, the managers are then assumed to address the <i>financing decision</i>: What's our targeted capital structure? Should it be mostly equity, with few (visible) strings attached; or should it include large amounts of debt, with its contractually fixed and obligatory payments of interest and principal?</p>","PeriodicalId":46789,"journal":{"name":"Journal of Applied Corporate Finance","volume":"34 3","pages":"2-3"},"PeriodicalIF":0.9,"publicationDate":"2022-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"137719443","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Uncertainty in Capital Budgeting: Five Particular Safety-(or Danger-) Margins from the NPV Formula","authors":"Richard A. Miller","doi":"10.1111/jacf.12522","DOIUrl":"10.1111/jacf.12522","url":null,"abstract":"<p>The primary approaches for evaluating prospective capital projects, which are investments (outlays) with future financial benefits, are net present value (NPV) and the internal rate of return (IRR), both based on the discounted expected positive and negative cash flows. The NPV formula can be used to provide three additional insights into the evaluation of prospective investment opportunities: normal profit, economic (discounted) payback (or breakeven) period, and maximum investment cost.</p><p>A review of over two centuries of discussion of capital budgeting techniques reveals no discussion of two alternative approaches and little discussion of a third. This note explores the evolution of capital budgeting techniques, and explains with examples these variations of the NPV formula as additional approaches to evaluating inherently uncertain investment decisions. The formula can be used to calculate “safety-margins” (also “danger-margins”) in evaluating potential investments.</p>","PeriodicalId":46789,"journal":{"name":"Journal of Applied Corporate Finance","volume":"34 3","pages":"110-115"},"PeriodicalIF":0.9,"publicationDate":"2022-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41292890","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Texas Private Equity Conference 2022: Session I: The State of and Prospects for U.S. Private Equity","authors":"Rich Hall, Kewsong Lee","doi":"10.1111/jacf.12516","DOIUrl":"10.1111/jacf.12516","url":null,"abstract":"<p>Kewsong Lee, CEO of the Carlyle Group was interviewed by Rich Hall, Chief Investment Officer of UTIMCO. From his vantage point at Carlyle overseeing 300 portfolio companies, Lee sees US economic growth as positive but decelerating while inflation continues to be high. So far, Carlyle-owned firms have been able to pass through higher costs to their consumers although the expected Fed tightening would reduce asset values and general confidence.</p><p>Lee identified the international focus on climate change and achieving a “net-zero” CO<sub>2</sub> emissions level as a secular change. He warned that decarbonizing will be expensive and difficult to achieve and that divesting of carbon producing assets offered no solution. Private equity firms make their money by improving the operations of the companies they buy and not through financial engineering, according to Lee.</p><p>Lee cautioned listeners that a forty year long trend of declining interest rates is now reversing. This will have consequences for the real economy. Nevertheless, Lee emphasized, one should not underestimate the power of companies and technology to improve productivity. Relatively modest rate increases will not damage Carlyle's ability to buy companies as money is available and the leveraged finance markets are “wide open.”</p><p>Despite his industry's success, lee said that PE industry has “done a very bad job in helping the outside world appreciate who we are and what we do.” Accordingly, the PE industry must become becoming more stakeholder focused, and more socially comprehensive and aware, while also generating high returns.</p>","PeriodicalId":46789,"journal":{"name":"Journal of Applied Corporate Finance","volume":"34 3","pages":"58-63"},"PeriodicalIF":0.9,"publicationDate":"2022-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46659199","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}