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Corporate Governance and Risk Management

Google v. Oracle: Software Theft or Fair Use

Matthew Sooy, Chris F. Kemerer, 2022

This case explores a current but also enduring and widely relevant intersection of challenges facing managers who compete in rapidly evolving technology markets. In the landmark US$9 billion Google LLC v. Oracle America, Inc. case, Google LLC (Google) leads development of the now-ubiquitous Android mobile operating system, used by billions of people globally. However, many of the laws governing development were unclear, having been written before the technologies being developed were even imagined. Thus, Google must balance competitive risks with other risks, such as legal uncertainty.

Under Armour Settles with the SEC

Mitchell Stein, Vaughan Radcliffe, David Booth, 2022

In May 2021, a recent graduate from the master of business administration program at Ivey Business School noticed a news article about one of his investments, the leading athletic apparel company Under Armour, Inc. The article stated that Under Armour, Inc. was fined US$9 Million by the US Security and Exchange Commission. The charges were a result of concerns over the company’s revenue reporting practices, but the company's share price dropped only very slightly following the announcement. The investor was considering his options regarding his investment. However, he was still curious and eager to learn more about the circumstances behind the US Security and Exchange Commission’s charge and potential consequences for the company. The investor decided to examine Under Armour, Inc.’s revenue reporting practices, financial reporting practices, and corporate governance issues.

Valeant Pharmaceuticals: Eroded Reputation and Stock Price

Mary Gillett, Amy Horrocks, 2020

In early January 2019, a recent Ivey Business School graduate logged into her online trading account to review her portfolio’s performance. As she scanned her investments, she paused at one stock in particular. It was time to make a decision regarding one of her most volatile stocks—Valeant Pharmaceuticals International Inc., recently renamed Bausch Health Companies Inc. The pharmaceutical company was once celebrated for its innovative business approach. However, both its stock price and reputation as one of Canada’s most valuable companies had plummeted in recent years, after accusations of price gouging and investigations for fraud by the US Securities and Exchange Commission. Overburdened with significant amounts of debt from a spree of acquisitions, the company was also scrutinized by investors and regulators for using non-GAAP accounting metrics for its financial statements. The recent graduate wondered if she should hold out hope that the stock would return to its historic highs, or if she should cut her losses and divest the stock.

Nora Lang: Pay Equity at FTS

Matthew Sooy, Lauren Iuliani, W. Spencer Ashby, 2020

In August 2018, a recent Canadian business school graduate was excited about starting her dream job at a global financial consulting firm headquartered in the United Kingdom. However, on her first day, she learned from discussions with co-workers that newly hired women (including herself) were offered lower salaries than men who were newly hired for the same positions. She later learned, in an onboarding session, that the company had a strict policy prohibiting pay discussions among employees. The new employee faced a difficult decision in considering what to do next: What were her responsibilities and options? How could she expect the human resources department to respond? Could her choices possibly put her or her colleagues at risk?

Magna International and Dual Share Unification

W. Glenn Rowe, Stephen Sapp, Nadine De Gannes, Abbas Khambati, 2020

After the management of Magna International Inc. (Magna) tabled a proposal to shareholders in May 2010 to acquire all of Frank Stronach's Class B voting shares for approximately US$1 billion, vociferous opposition emerged, heavily criticizing the process by which the terms had been agreed on and the lack of information provided by the board. The Ontario Securities Commission ruled that Magna needed to provide more information to shareholders. In compliance with that order, Magna released an amendment that included a report from its financial advisor, its advisor’s advice to the Magna board, and PricewaterhouseCooper's evaluation of the deal. In late August 2010, a Magna shareholder needed to decide whether to keep or sell her shares, and wanted to understand what amount, if any, would have been appropriate for Stronach’s Class B voting shares. As a consumer conscious of the environmental, social, and governance aspects of a corporation, she was also concerned whether Magna’s board and special committee had applied good governance principles.

Toshiba's Westinghouse Dilemma

Mitchell Stein, Vaughan S. Radcliffe, Eden Ip, 2020

In October 2017, the managing director at Ohtani Capital faced a critical decision—should the company divest its long-term investment in Toshiba Corporation (Toshiba)? Recent events surrounding Toshiba's disagreement with its auditor over how to best report the write down of its US nuclear power unit (Westinghouse Electric Co. LLC) had negatively impacted the company’s profitability and internal management, leading to the company’s possible delisting from the Tokyo Stock Exchange. The managing director needed to decide if Toshiba could overcome its difficulties, improve its internal management, and return to profitability, which would then enable the company to secure the necessary emergency funding to survive.

The Ontario Fair Hydro Plan: Rate-Regulated Accounting and Public Policy

Vaughan S. Radcliffe, George Crouch, 2020

This case explores Ontario's Fair Hydro Plan, a 2017 policy of the Government of Ontario that aimed to reduce consumer electricity rates by borrowing to provide subsidies. This borrowing was to be repaid through increased rates levied on future consumers in the province. This policy was accounted for using the principles of rate-regulated accounting. The impetus for these changes was the rapidly rising electricity rates.

Politics and the Public Purse: The Government of Ontario versus Public Sector Pension Accounting

Vaughan S. Radcliffe, Grace Wu, Rahul Bedi, 2018

On October 3, 2016, the Government of Ontario released its finance statements for the province without the opinion of Ontario's auditor general. This incident stemmed from a disagreement between the auditor and the government over public-sector pension accounting interpretations, which had the potential to seriously affect the province’s budget balance and long-term debt levels. It was uncertain how this disagreement would be resolved. Many members of the media, think tanks, and opposition political parties decried the government for refusing to co-operate with the auditor, while others felt the auditor had gone too far in her interpretation of Public Sector Accounting Standards.

Accounting for Faulty Ignition Switches at General Motors Company

Darren Henderson, Julia Cutt, 2014

In this case the chief executive officer (CEO) of General Motors (GM) must decide whether to issue a recall based on a defect that had been found through an internal safety committee investigation. In deciding whether to issue a recall, consideration must be given to which car models to include, whether to offer any additional compensation to drivers, the potential legal and public relations repercussions, and the accounting implications of these contingencies and potential costs.

Alleged Accounting Fraud at Nortel Networks Corporation

Darren Henderson, Chris Sturby, Christine Liu, 2012

This case investigates the analysis made by an investor of Nortel Networks Corporation, after the company files for bankruptcy protection in the United States and Canada. The investor tries to understand the accounting issues raised in the SEC and OSC investigations so that he learns from his losses in Nortel to make better future investment decisions.

Barrick Gold: Eliminating the Gold Hedging Strategy

 Murray J. Bryant, Ken Mark, 2011

This work talks about the steps taken by Barrick Gold, the largest gold producer in the world, to eliminate its longstanding gold hedging program, especially after facing rising gold prices in the 2000s. The case allows students to review Barrick’s hedging program and consider the impact of its decision not to hedge going forward.

Infosys: Peer Review at Board Level

Yaqi Shi, Ramasastry Chandrasekhar, 2014

Having positioned itself from the beginning as a global enterprise in information technology, Infosys benchmarked its governance practices with the best in the world right from the start, focusing on the importance of performance appraisal at all levels, including that of the board. Indeed, Infosys broke fresh ground when it introduced a model of Peer Review at the board level wherein each board member would annually review the performance of every other individual member of the board. Launched as the personal initiative of the chairman of the board and chief mentor – who also designed its process framework – the Peer Review was meant to raise the stature of corporate governance at Infosys.

More than seven years later, Infosys launched Board Review, a more common form of performance appraisal wherein each individual member of the board would annually review the performance of the board as a whole during the previous year. As he re-examined Peer Review in light of this new model of appraisal, the chairman of the board had to decide if Peer Review was serving its purpose, if it was damaging to boardroom collegiality, and how to institutionalize performance appraisal processes before he retired.

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