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A Wall Street Journal article states, “At PepsiCo, Inc., cola was king, but it is quietly being dethroned.” PepsiCo is composed of three lines of business: soft drinks, restaurants, and snack foods. Using data from comparable pure-play companies, the student is asked to compute divisional costs of capital and see if they can be reconciled with the company's reported cost of capital, 11%.

This study enables to critique the development of a sustainability strategy brand; integrated reports, sustainability reports, usage of safe internet and online learning skills to reduce inequalities and increase stakeholders’ values.

Digi Telecommunications (Digi) has been publishing annual sustainability reporting in line with Global Reporting Initiatives since 2009. Albern Murty, Chief Executive Officer (CEO) of Digi, the largest player in the mobile telecommunications industry in Malaysia by the number of subscribers, decided to establish a responsible business brand known as Yellow Heart in 2018 to better serve their stakeholders demand. There was a low stakeholder understanding of Digi’s sustainability efforts and societal impacts. Digi’s Sustainability department aspired to make Yellow Heart the best industry practice for continuous improvements by making Responsible Business commitment one of the main pillars of the company’s strategy and vision. Yellow Heart was linked to Sustainable Development Goals (SDG)10 on reducing inequalities by focusing on Digital Inclusion and Resilience to increase safe access opportunities, provide marginalized communities with opportunities to pursue interests in digital learning pathways and create a more sustainable digital future for all. The case study illustrates the sustainability management at Digi and the planned migration from sustainability reporting to integrated reporting to build trust in the business with all the stakeholders. The case dilemma involves the challenges that Philip Ling Oon Hun, the Head of the Sustainability, faced in deciding the SDGs to focus on and measuring and reporting their outcomes to contribute to the greater good, not only in pure business terms but also to society at large.

This case is appropriate for undergraduate or graduate-level programs in Accounting, Corporate Governance and Strategy Implementation.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.

The case study is designed to help students understand how the “growth at all costs” attitude can lead to compromised corporate governance in a start-up leading to disastrous implications for all the stakeholders. This case study aims to make students understand the components of the fraud triangle, the impact of financial fraud on various stakeholders, the role of venture capitalist (VC) investors and the importance of good corporate governance in start-ups. The case study presents an excellent opportunity for students to discuss the consequences of ignoring good governance in the pursuit of growth in a start-up. After analyzing the case study, the students shall be able to explain the concept of the fraud triangle and to be able to identify the motivation, opportunity and rationalization of financial irregularities in a start-up; analyze the impact of financial irregularities on various stakeholders; comprehend the business model of VCs and evaluate its influence on VC-funded start-ups; and appraise the importance of good corporate governance in start-ups.

The case study revolves around the confession of financial irregularities made by one of the cofounders of GoMechanic, a start-up headquartered in Gurugram, India. On January 18, 2023, Amit Bhasin confessed to financial irregularities in the company’s financial statements, leading to laying off 70% of the workforce of the company. GoMechanic had earlier raised close to US$62m [1] from maverick global investors including Sequoia Capital, Tiger Global, Orios Venture Partners and Chiratae Ventures, and was negotiating to raise Series D financing from the Japanese multinational SoftBank with aspirations to be a unicorn (start-up with a valuation of over $1bn). The confession led to a debate about the consequences of the “growth at all cost” culture being followed by start-ups as well as VCs. GoMechanic was not an isolated instance of a lack of governance in the start-ups. The confession had consequences not only for the GoMechanic but for the entire start-up ecosystem of India, which was the third largest in the world. Bhasin stated that the founders take full responsibility for the situation, and they were working on a plan which was most viable under the circumstances. However, it was not going to be easy to regain the confidence of the investors.

The case study is best suited for senior undergraduate- and graduate-level business school students and in executive education programs in courses such as corporate governance and ethics, private equity and entrepreneurial finance.

Teaching notes are available for educators only.

CSS 1: Accounting and finance

The learning outcomes of this study are to gain an understanding of the banking regulations and their impact on banking performance, to understand the intermediation role of banks by channelizing depositors’ savings and providing loans to borrowers, to explain an impact of a recent regulatory change in the Indian banking that directly impacts their financial performance, to critically evaluate the different financial ratios to analyze the performance of a bank and to build a DuPont analysis framework for banks.

The case serves as a primer on banking regulations in India and provides insights into banking performance. Banking regulations play an important role in maintaining financial stability, specifically in emerging economies like India. The protagonist of the case is Salil Kumar who presented his internship project to the review committee of Stock Investment Company on April 16, 2021. However, he had to rework and present his final project within seven days on the basis of the feedback received from the committee. Kumar faced the dilemma of bringing together a comparative study across two banks, namely, Industrial Credit and Investment Corporation of India (ICICI Bank) and State Bank of India (SBI) and building a DuPont framework covering the different aspects of banking performance. The case exemplifies the intricate regulatory landscape in India within which banks operate and highlights the recent alterations introduced by the Reserve Bank of India. For instance, the framework for dealing with domestic systemically important banks (D-SIBs) was introduced in 2014 and subsequently adopted in August 2015. The D-SIB framework provides inherent guarantee to large banks such as ICICI Bank and SBI. This ensures government backup in the event of any failure, thereby securing financial stability. The case study is suitable for banking and financial accounting courses taught in postgraduate management programs. Once the case is studied, the students are expected to understand the basics of banking, regulations, impact of regulations on banking performance and financial measures.

The case provides valuable insights into the intricate dynamics of the banking industry, offering a critical perspective for analysis. A well-structured teaching note would serve as a valuable tool for instructors, allowing them to facilitate engaging classroom discussions and effectively guide students toward achieving the desired teaching objectives.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.

The case examines the development and launch of an exchange-traded fund (ETF) based on JUST Capital's socially responsible corporate ranking methodologies. The case provides a market overview of Environment, Social, and Corporate Governance (ESG) and socially responsible investing (SRI), what has driven growth in those areas worldwide, and several best-practice investment approaches. Following the overview, the case describes the founding and development of JUST Capital, explores JUST Capital's ranking methodologies, and presents the decision point faced by the CEO: requisite selection of one of three strategies in order for JUST Capital to generate “self-sustaining” revenue.

This case focuses on valuation using various methods to price a firm. Students attempting this case should know the basics of how to value a company using discounted cash flow, comparable multiples and comparable transactions. Students will need to calculate the weighted average cost of capital using comparable companies and the capital asset pricing model and determine differences in value created by an acquisition vs a leveraged buyout (LBO). The case also discusses qualitative issues in mergers, such as fit between target and acquirer, integration issues, potential high debt from LBO.

This case was library-researched, using Amazon and Whole Foods public filings and business press papers.

Whole Foods Markets received a buyout offer from Amazon. Whole Foods could solicit offers from other firms, including firms more directly in the grocery business. Whole Foods also considered a management buyout or purchase by a private equity firm. Whole Foods had underperformed, with a falling stock price and reduced profitability. Amazon’s bid was attractive, a premium of about 40 per cent over Whole Foods’ pre-merger stock price. Whole Foods also wanted to consider issues such as culture. Whole Foods’ strategy was to sell organic foods at premium prices, while Amazon was a retail discounter with a largely online business.

This case is appropriate for graduate students at the end of their introductory course or for graduate or undergraduate students in a corporate finance elective, particularly a merger/restructuring elective. The case has been used in an advanced undergraduate finance elective, with a team presenting the case to the class, with remaining students in the class required to write case summaries and questions for the presenting group.

On completion of analysis of this case, students would be able to: appreciate the context of a typical delisting decision of a public company that is part of a large business group; analyze the complex nature of the relationships among the promoter shareholders, minority shareholders, government-controlled financial institutions, independent directors and executive directors in such a situation of transfer of value; and develop the best possible course of action for the promoters, independent directors and public shareholders, keeping into consideration the principles of corporate governance and the objective of shareholders’ wealth maximization.

The case presents an opportunity to examine the corporate restructuring and governance issues associated with the delisting attempt of India-based mining company Vedanta Ltd., by its London-based parent company, Vedanta Resources. The case focuses on the conflict of interests between the promoters of a business group and the public shareholders of a subsidiary, and the pivotal roles independent directors and proxy advisory firms play in supporting the public shareholders.

The case can be discussed in a graduate-level corporate strategy course that deals with restructuring and governance issues in companies, especially large group companies. It can also be discussed in a course of corporate governance where students have the opportunity to understand the potential conflict between promoters and other shareholders, and the moderating roles the independent directors and institutions may play in resolving such conflicts.

Teaching notes are available for educators only.

CSS 11: Strategy.

Gary Parr, deputy chairman of Lazard Freres & Co. and Kellogg class of 1980, could not believe his ears. “You can't mean that,” he said, reacting to the lowered bid given by Doug Braunstein, JP Morgan head of investment banking, for Parr's client, legendary investment bank Bear Stearns. Less than eighteen months after trading at an all-time high of $172.61 a share, Bear now had little choice but to accept Morgan's humiliating $2-per-share, Federal Reserve-sanctioned bailout offer. “I'll have to get back to you.” Hanging up the phone, Parr leaned back and gave an exhausted sigh. Rumors had swirled around Bear ever since two of its hedge funds imploded as a result of the subprime housing crisis, but time and again, the scrappy Bear appeared to have weathered the storm. Parr's efforts to find a capital infusion for the bank had resulted in lengthy discussions and marathon due diligence sessions, but one after another, potential investors had backed away, scared off in part by Bear's sizable mortgage holdings at a time when every bank on Wall Street was reducing its positions and taking massive write-downs in the asset class. In the past week, those rumors had reached a fever pitch, with financial analysts openly questioning Bear's ability to continue operations and its clients running for the exits. Now Sunday afternoon, it had already been a long weekend, and it would almost certainly be a long night, as the Fed-backed bailout of Bear would require onerous negotiations before Monday's market open. By morning, the eighty-five-year-old investment bank, which had survived the Great Depression, the savings and loan crisis, and the dot-com implosion, would cease to exist as an independent firm. Pausing briefly before calling CEO Alan Schwartz and the rest of Bear's board, Parr allowed himself a moment of reflection. How had it all happened?

An analysis of the fall of Bear Stearns facilitates an understanding of the difficulties affecting the entire investment banking industry: high leverage, overreliance on short-term financing, excessive risk taking on proprietary trading and asset management desks, and myopic senior management all contributed to the massive losses and loss of confidence. The impact on the global economy was of epic proportions.

Capital structure theory.

The case is meant for teaching and class discussion, and uses only secondary data based on published sources. The interpretation and perspectives presented are based solely on the secondary data.

This paper aims to help current and future managers understand capital structure theory and the various equity and debt finance options available for raising capital. It also examines the financial analysis and strategic management of black swan events. After the class discussion, students will understand how to financially and strategically manage a company during black swan events and also have a deep dive into capital structure analysis of a large company.

MBA/postgraduate/undergraduate courses on corporate finance or advanced corporate finance. Executive/management development programs and short duration Massive Open Online Courses on investment decision-making and advanced corporate finance. MBA/postgraduate/undergraduate courses on corporate strategy and economic environment and planning.

This case is based on using the fraud triangle, theoretical aspects like rationalization and motivation for understanding the financial pressures and corporate greed lead to accounting fraud. Building on the corporate governance’s weakness, the case explores the challenges and the changes that the company has to make to survive.

The case study has been entirely based on published resources. The case explores out the reasons why the companies commit accounting fraud using the motivations, financial pressures and the opportunities exploited due to a weak governance system.

The case deals with a RMB 2.2bn accounting fraud at Luckin Coffee Inc. (L.K.), a US-listed Chinese company, which led to a steep fall in its share price by more than 80% in April 2020. The company’s CEO had to resign in light of the accounting fraud, which involved fabricating the transactions in 2019, the same year it got listed on the NASDAQ stock exchange. The case is a classic example of greed, corporate ambition and flaws in the corporate governance that led to the fraud while framing a course of action for the company moving forward. The case allows the learners to dive deep into the facts to find out why the fraud happened and its repercussions for the company and its various stakeholders. The case can be useful in Accounting, Corporate governance or Ethics modules for both undergraduate and postgraduate students.

The case can be used for both postgraduate and undergraduate financial accounting or corporate governance modules or the executive development programmes explicitly dealing with ethical challenges and accounting fraud.