Accounting 302 9/18/12 Ernst & Young Guest Speaker Response After looking through the Ernst & Young PowerPoint presentation, there were certain points covered that were similar to our Sky Air activity from class. One of the key points covered was the idea of purchasing a company, and how much one would pay for it. It was brought to our attention from both the PowerPoint and class lecture that buyers and sellers may have different perceptions of value. This occurs because buyers do not want to “pay up front” for uncertain earnings.
From what we learned in the Sky Air activity, Thyestean, the principal, is similarly concerned about whether or not Kaplan, the agent, will be loyal enough to provide accurate data and analysis of his own company. Both the PowerPoint and Sky Air focus on information asymmetry, and how it can be reduced. We learned that having an independent Board of Directors and external auditor would improve the accuracy in the information provided to the principal, which will therefore reduce information asymmetry.
Another concept we went over in the Sky Air activity that was mentioned in the PowerPoint was the idea that there may be risky acquisitions. We learned from the slides that in order to reduce the risk, the principal must include a request or incentive. The example described from the slides included a Technology company was being sold for $100m. The buyer agreed to purchase it, under the circumstance that it shall have to meet certain projections. This shows that even though the shareholder is affected in the long run, he/she will not be affected (negatively) drastically since there are certain mandatory projections to uphold.
Similarly, in the Sky Air case, we came to the conclusion that if the buyer purchases the company, he/she should request that Kaplan’s compensation be linked to his profits, so that there is less risk (manager cares more about short-term, shareholder cares more about long-term, this way manager will care more too). Although the PowerPoint presentation was based more on the financial aspect of the company’s acquisition, it still provided relevant information that we learned in class, and too coincided with the Sky Air activity.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more