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I confess. I send out a lot of emails and I am sure that you don't read some of them. Since they sometimes contain important information as well as clues to my thinking (deranged though it might be), I will try to put all of the emails into this file. They are in chronological order, starting with the earliest one. They are in chronological order, starting with the earliest one. So, scroll down to your desired email and read on, or if the scrolling will take you too long, click on the link below to go the emails, by month.
| Date | Email content |
| 1/13/25 | Happy new year!. This is the first of many, many emails that you will get for me. You can view that either as a promise or a threat. I am delighted that you have decided to take the corporate finance class this spring with me and especially so if you are not a finance major and have never worked in finance. I am an evangelist when it comes to the centrality of corporate finance and I will try very hard to convert you to my faith. I also know that some of you may be worried about the class and the tool set that you will bring to it. I cannot alleviate all your fears now, but here are a few things that you can do to get an early jump:
1. Pre-work for class
As things stand now, and this could quickly change, we will meet in Paulson Auditorium, a cavernous amphitheater with all of the charm of Madison Square Garden on a bad day (which would be any day that the Knicks actually play there) every Monday and Wednesday, starting on January 27, going through May 5, from 10.30 am to 11.50 am. I will not take attendance, but I would really, really, really like to see you in class. If you do miss a class, the sessions will be recorded and will be available in three places:
You can find out all you need to know about the class (for the moment) by going to the web page for the class:
http://www.stern.nyu.edu/~adamodar/New_Home_Page/corpfin.htmlThis page has everything connected to the class, including webcast links, lecture notes and project links. The syllabus has been updated: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/cfsyllspr25.pdfIf you click on the calendar link, you will be taken to a Google calendar of everything related to this class. You will note references to a project which will be consuming your lives for the next four months. This project will essentially require you to do a full corporate financial analysis of a company. While there is nothing you need to do at the moment for the project, you can start thinking about a company you would like to analyze and a group that you want to be part of.
3. Class Material
Now for the material for the class. The lecture notes for the class are available as a pdf file that you can download and print. I have both a standard version (one slide per page) and an environmentally friendly version (two slides per page) to download. You can also save paper entirely and download the file to your iPad or Kindle. The first packed can be found at the link below:
It is a big file and will take while to download. Have patience
There is a book for the class, Applied Corporate Finance, but please make sure that you get the fourth edition. It is exorbitantly over priced but you can buy, rent or download it at Amazon.com or the NYU bookstore
While I have no qualms about wasting your money, I know that some of you are budget constrained (a nice way of saying "poor") . If you really, really cannot afford the book, you should be able to live without it.
4. Final Thoughts
I know that In the last decade, we have been forced to reexamine accepted wisdom in pretty much aspect of life, and corporate finance is no exception. As we struggle with the new and the different, we have to incorporate the lessons learned, unlearned and relearned over this period into corporate finance, and I will tru. There are assumptions that we have made for decades that need to be challenged and foundations that have to be reinforced. In other words, the time for cookbook and me-too finance (which is what too many firms, investment banks and consultants have indulged in) is over. At the same time, there is a whole lot nonsense that has been bandied about as the “new way to run business” and I will not mince any words (or spare any feelings) in talking about them. To close, I will leave you with a YouTube video that introduces you (in about 2 minutes) to the class.
I hope you enjoy it. That is about it. I am looking forward to this class. It has always been my favorite class to teach (even more so than valuation, my other teaching venture) and I have a singular objective. I would like to make it the best class you have ever taken, period. I know that this is going to be tough to pull off but I will really try. I hope to see you on January 27th, in class. Until next time!
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| 1/20/25 | I hope that you have had a good week since my last email, and if your response is what last email, you may want to check this link:
Next week, at the first class, I will spend time laying out what the class is about, what I hope that we will accomplish during the semester, as well as establish the key themes that underlie corporate finance. You can download the syllabus ahead of time:
As you read the syllabus, you will notice mention of a project and in case you are curious, here is the link to the project resources:
Once we are through the syllabus in the first session, we will turn our attention to the lecture note packets, and every slide you see in class after this will be in that packet. The lecture notes are in two parts, and the first part can be obtained at this link (which I sent you last week as well):
It is also available in powerpoint form (though the file size is bloated), if you go to the lecture note page or webcast page of the class. (Again, if you have trouble getting these links to download, try a different browser)
Now that I have drowned you in stuff, just a little aside. I don’t much care for academic research and almost everything that I write is for practitioners, and my blog (sounds new age, doesn’t it?) has become the first repository for my writing. I spend the first few weeks of each year, talking about the data that I update on my website:
The first two updates re on my blog. Please browse through them, because they are relevant for class:
I will see you in class next week (Monday. January 27, at 10.30 am, NY time on in Paulson Auditorium. I would obviously love to see you in person in class, but if for any reason, you are unable to make it to class, it will be carried as a live zoom session, and the zoom link for all of the sessions is below:
The sessions will also be available in recorded form. Until next time! |
| 1/26/25 | As we finish up the last weekend before class, I am sending this as a last pre-class email. When I start class tomorrow, it will be my 41st year teaching and I am thankful that I still look forward to the day. There is no other profession where you can start with a clean slate every few months, even though you may screw it up in the subsequent days and weeks. We will meet in Paulson from 10.30 am - 11.50 am for our first class, and it will be glorious (I have got to hype it up as much as I can). I would love to see you all in class, but I do realize that some of you will not be able to make it in class for a variety of reasons, and worry not, since the class will be carried live on Zoom. The zoom link for the class is below:
The recorded versions of the session will also be accessible at the webcast page for the class (see link below).
This page also has the links to the lecture notes and other material for the class.
During the first class, it would have been standard practice for me to hand out the syllabus and project description, but I think that if we truly live in a digital world, it is time to phase out this practice. So, please download the two packets and bring either a digital or physical copy to class tomorrow.
Project Description: https://pages.stern.nyu.edu/~adamodar/pdfiles/cfovhds/cfproj.pdf
At the risk of repeating myself, the lecture note packets for the class are also ready and you can find the links at the top of the webpage for the class sessions:
I am a believer in data, respecting (but not revering) it, and every year, I play Moneyball, with public data. (If you have not watched the movie yet, that is your assignment for tonight). If you are interested in my data updates, you may want to start by reading my first three data posts for 2025:
Until next time!
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| 1/27/25 | I promised you with a ton of emails and I always deliver on my promises... Here is the first of many, many missives that you will receive for me….. First, a quick review of what we did in today's class. I laid out the structure for the class and an agenda of what I hope to accomplish during the next 15 weeks. In addition to describing the logistical details, I presented my view that corporate finance is the ultimate big picture class because everything falls under its purview. The “big picture” of corporate finance covers the three basic decisions that every business has to make: how to allocate scarce funds across competing uses (the investment decision), how to raise funds to finance these investments (the financing decision) and how much cash to take out of the business (the dividend decision). The singular objective in corporate finance is to maximize the value of the business to its owners. This big picture was then used to emphasize five themes: that corporate finance is common sense, that it is focused, that the focus shifts over the life cycle and that you cannot break first principles with immunity.
On to housekeeping details.
That is about it, for this email. |
| 1/28/25 | In the first puzzle for this semester, I am going to focus on the objective in corporate finance, In class, I said that the end game is to maximize the value of the business and that objective has given corporate finance its focus, but has also given rise to criticism that it comes at the expense of other claimholders. That is a legitimate point, and even the Business Roundtable seemed to come around to a stakeholder point of view in this missive:
In a post shortly thereafter, I took issue with the Business Roundtable, and argued that it was the wrong message and that the messenger, Jamie Dimon, was singularly ill equipped to talk about shareholder interests, given how cavalierly he has ignored them over his tenure.
I know that many of you will disagree with me on my conclusions, but I think that this will be a great start for tomorrow’s class. So, please read both and try to answer these questions:
Since this is the type of discussion that is enriched by everyone joining, I have created a forum on the topic under Brightspace, for this class. Log in, check under content, and then under weekly puzzles and you should see the forum. You can post your thoughts, any interesting links or dissenting points of view there. |
| 1/29/25 | In today's class, we started on what the objective in running a business should be. While corporate finance states it to be maximizing firm value, it is often practiced as maximizing stock price. To make the world safe for stock price maximization, we do have to make key assumptions: that managers act in the best interests of stockholders, that lenders are fully protected, that information flows to rational investors and that there are no social costs. We started on why one of these assumptions, that stockholders have power over managers, fails and we will continue ripping the Utopian world apart next class.
1. Other People's Money: Just a few added notes relating to the class that I want to bring to your attention. The first is the movie Other People's Money, which is one of my favorites for illustrating the straw men that people like to set up and knock down. You can find out more about the movie here:
But I found the best part on YouTube. It is Danny DeVito's "Larry the Liquidator" speech:
Watch it when you get a chance. Not only is it entertaining but it is a learning experience (though I am not sure what you learn). Incidentally, it is much, much better than Michael Douglas's "Greed is good" speech in the first "Wall Street " which was a blatant rip-off of Ivan Boesky's graduation address to the UC Berkeley MBAs in 1986 (which I happened to be at, since I was teaching there that year).
2. DisneyWar: In next week’s session, I will be talking about the dysfunctional state of Disney in the 1990s. If you want to review these on your own, try this book written by James Stewart. It is in paperback, on Amazon:
If you want a more contemporary version of how Disney’s corporate governance is playing out, and want an insider’s perspective, Bob Iger’s autobiography is a solid bet:
3. Company Choice: On the question of picking companies for your group, some (unsolicited) advice:
As a final reminder. Please pick your company soon... As you can see from today's class, we are getting started on assessing your company…
4. If you want to download the financial statements for your company, I would recommend that you start with the annual report for the most recent year. You should be able to pull it off the website for the company, under investor relations. If you want to keep going, and it is a US company, go to o the SEC site (https://www.sec.gov/edgar). If it is a non-US company, you will have to find the equivalent regulatory body in your country. For some of your companies, you will find less data than on others. Don’t fret. It is what it is. Finally, I am attaching the post class test and solution for today’s session.
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| 1/30/25 | t is never too early to start nagging you about the project. So, let me get started with a checklist (which is short for this week but will get longer each week. Here is the list of things that would be nice to get behind you:
In doing all of this, you will need data and Stern subscribes to one of the two industry standards: S&P Capital IQ (the other is Factset). It is truly a remarkable dataset with hundreds of items on tens of thousands of public companies listed globally, including corporate governance measures. To get access to Capital IQ, you need to ask for it, and the attached document leads you through the process. As with all things IT related, I am sure that there are glitches and if you find them, let me know.
This is the seventh or eighth email for the class. If you have not been receiving these emails (which means that you are reading this in the chronicles), it is worth noting that I don’t keep an email list for the class. I use the Google groups that Stern creates. In theory, students registered for the class should be on Albert (the NYU official registration/grading site), Brightspace and Google Groups, and the three should be synced, but this is a university. What should be true in theory is not always the case in practice. I can do very little to alter the Google groups. If you are finding yourself locked out of the email list, start with IT, and if they won’t help, I will figure out a way to add you in. If you are a non-Stern student, and have an email address that does not end in@stern.nyu.edu, note that you were assigned a stern email address when you joined this class, and you should be able to find that address. Here is what I got from IT when I asked:
Since you are teaching a Stern course, all your students, exchange and non-Stern, are provided with a Stern account and Gmail.
You can have them all head over to 'start.stern.nyu.edu' to activate their account.
I think I have exhausted my welcome, Until next time! Attachment: Capital IQ Access |
| 1/31/25 | First things first. As I noted yesterday, the DeepSeek story is a corporate finance, and one with the potential to alter the end game for an entire business (AI), with ripple effects for all of us. With the lead-in that I am an AI novice, and that I have far more insight into potato chips (salt and vinegar beats BBQ, and waffle style is the best) than silicon chips, I decided to put my thoughts down on paper (and it kept going and going). Here is the post that just went up five minutes ago:
There is no rocket science here, nor advanced finance, but I would love to get your thought.
Also, as promised, here is the first of the weekly in-practice webcasts. These are 10-15 minute webcasts designed to work on practical issues in corporate finance. This week’s issue is a timely one, if you are working on picking companies for your project (as you should be..). It is about the process of collecting data for companies, the first step in understanding and analyzing them. The webcast link is below:
It is a little dated (but I have been too lazy to update it), but I don’t think it is too painful to watch, and you may even find it useful. I have also put the link up on the webcast page for the class:
The webcasts for the first two classes should be on there, if you missed (physically, metaphysically or mentally) and the links to the project and syllabus that I handed out in the class. You can stream or YouTube the sessions, or download videos/audios. Also, if you joined the class late, you can get all emails sent up till today here:
Finally, have you had a chance to look at the weekly puzzle? If not, give it a shot by going here:
At the risk of nagging, please do get the lecture note packet 1 downloaded before Monday’s class. It is accessible on the webcasts page linked above. |
| 2/1/25 | As you start the weekend, I decided to butt in with the first of my newsletters. As you browse through it (and I hope you do), you will realize that this is not really news or even fake news. It is more akin to a GPS for the class telling you where we’ve been and where we plan to go. It is a good way to get a sense of whether you are falling behind on either the class or the project, especially as we get deeper into the class. On a different note, it looks like your groups and jelling and I will be playing matchmaker to get the rest of you in groups. So, the next step is to go into the class master list and enter the name of the company that you will be analyzing as soon as you have picked one:
https://docs.google.com/spreadsheets/d/1xsASDBhkGo_1WhivAMLMkhi_z6cyYFnv1Q9G4y2TN4I/edit?gid=0#gid=0
Enjoy your weekend and I will see you on Monday!
Attachment: Issue 1 (February 1) |
| 2/2/25 | No email |
| 2/3/25 | In today’s session, we spent almost a large chunk of out time on the assessment of where the power lies in a company. In the utopian world, the power lies entirely with shareholders, but in the real world, that is not often the case. It can lie with managers, if shareholdings are diffuse and shareholders are passive. It can lie with a subset of inside shareholders, who have large holdings and/or are part of incumbent management. In some cases, that power can come from having voting and non-voting shares. It can lie with governments, lenders or employees. The first step in understanding why a company does what it does is to assess the power structure, and I suggested that you look at the largest shareholders in the company. One source for this is Bloomberg, and while almost all of the information you will find on it can be found elsewhere, it does provide a convenient place to get information. The first step is finding a Bloomberg Terminal, and there are three on the fourth floor of KMEC, in the MBA Study Room. I have never used them, but reliable sources have told me that that the usernames and passwords are in the computer wallpers (they are BBREADING1, 2 or 3 and then a password that is Alpha, Delta or Gamma followed by numbers). Once you are able to get on the terminal, type in the name of your company and a bunch of listings on your company will show up. It may take a little trial and error, but you should eventually find your local listing of your stock. If you can get on a Bloomberg terminal, try this:
1. Press the EQUITY button
2. Choose FIND YOUR SECURITY
3. Type the name of your company
4. You might get multiple listings for your company, especially if it is a large company with multiple listings and securities. Try to find your local listing. For a US company, this will usually be the one with your stock symbol followed by US. For a non-US company, it will have the exchange symbol for your country (GR: Germany, FP: France, LN: UK etc...) It may take some trial and error to find the listing....
5. Type in HDS
6. Print off the first page of the HDS (it should have the top 17 investors in your company).
If you cannot get to a Bloomberg, much of that same information is available on Yahoo! Finance and other online financial data providers. Here is the Yahoo! Finance page for NVDA.
Check out the percent of shares held by insiders (includes founders, managers and individuals owning more than 5%) and by institutions. Then, check out the biggest players. You can see the growth of passive investing in the top two on this (and probably every other large cap company in the universe) - Vanguard and Blackrock, both of which have index funds that track the S&P 500. |
| 2/4/25 | In this week’s puzzle, I thought I would use the recent kerfuffle at the Adani Group to talk about corporate governance in family group companies., You can find the puzzle described here:
That puzzle points you towards two posts from my blog. In the first post, I wrote a long time ago, where trouble was brewing at the Tata Group, the family group controlling Tata Motors:
I note the pluses and minuses for shareholders from investing in family group companies. I then turn to my last year's post on the Adani Grop, a first-generation family group company founded by Gautam Adani. It is heavily focused on infrastructure business, is connected strongly to political power in India and has seen its market cap zoom over the last two years in particular. In the post, I look at the Adani Group's growth over time, and examine how it has become the focus of a US-based short seller in Hindenburg, which contends that the group has indulged in earnings and price manipulation, and that institutions have looked away.
In the post, I also look at the ownership structure for the Adani Group and note that not only does the group control 73% of the shares outstanding in the company, but that statistic has barely budged over the last decade, even as the company has grown massively. There is a valuation in the post, but I would like your focus to stay on corporate governance at Adani specifically and at family group companies, in general. The puzzle ends with five questions:
In terms of mechanics, how does a family keep its ownership stake intact as a company is growing?
Give it a shot and you don’t need a finance background or have anything to do with India to do it. It is all about power.
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| 2/5/25 | The objective function matters, and there are no perfect objectives. That is the message of the last two classes. Once you have absorbed that, I am willing to accept the fact that you still don't quite buy into the "maximize value" objective. That is fine and I would like you to keep thinking about a better alternative with three caveats. First, you cannot cop out and give me multiple objectives - I too would like to maximize stockholder wealth, maximize customer satisfaction, maximize social welfare and employee benefits at the same time but it is just not doable. Second, your objective function has to be measurable. In other words, if you define your objective as maximizing the social good, how would you measure social good? Third, take your objective (and the measurement device you have developed) and ask yourself a cynical question: How might managers game this system for maximum benefit, while hurting you as an owner? In the long term, you may almost guarantee that this will happen.
Building on the theme of social good and stockholder wealth a little more, there are a number of fascinating moral and ethical issues that arise when you are the manager in a publicly traded firm. Is your first duty to society (to which we all belong) or to the stockholders (who are your ultimate employers)? If you have to pick between the two and you choose the former, do you have an obligation to be honest and let the latter know? What if you believed that the market was overvaluing your stock? Should you sit back and let it happen, since it is good for your stockholders, or should you try to talk the stock price down? On the question of socially responsibility, there are groups out there that rank companies based upon social responsibility. I have listed a few below, but they are a few of many:
JUST Capital: https://justcapital.com/rankings/
Calvert Social Index: https://www.calvert.com/calvert-indexes.php
Dow Jones Sustainability Index: https://www.spglobal.com/spdji/en/indices/esg/sp-500-sustainability-screened-index/#overview
And this is just the tip of the iceberg. Environmental organizations, labor unions and other groups all have their own corporate rankings. In other words, whatever your key social issue is, there is a way to stay true (as a consumer and investor). Notice how the rankings vary even across the ethics sphere. No surprise that no one has a monopoly on virtue. In the last few years, though, you have the ESG movement push for composite scores for companies, and that has created an eco system that I am cynical about, in terms of what will be ultimately accomplished. If you are interested in my perspective on ESG, please try these two posts that I have on the topic:
In addition, I did mention that the one thing that impact investing does not seem to measure itself on is actual impact, and here is the link:
Finally, to cement my standing as an amoral, unethical “cares only about money” standing, I wrote about the sacred cow that sustainability has become, and why it too may be heading for the slaughterhouse:
While it may seem like we are paying far too much attention to these minor issues, I think that understanding who has the power to make decisions in a company will have significant consequences for how the company approaches every aspect of corporate finance - which projects it takes, how it funds them and how much it pays in dividends. So, give it your best shot.. On a different note, we will be start on our discussion of risk on Monday. As part of that discussion, we will confront the question of who the marginal investor in your company is. If you have already printed off the list of the top stockholders in your company (HDS page in Bloomberg or the Major Holders page from Yahoo! Finance), bring it with you again. If you have not, please do so before the next class. Also, watch for the in-practice webcast day after tomorrow, because I will go through how to break down the HDS page. I am also attaching the post-class test & solution for this session.
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| 2/6/25 | As for the project & class, time sure does fly, when you are having fun... We are exactly 15.38% (4 sessions out of 26) through the class (in terms of class time) and we will kick into high gear in the next two weeks. I am going to assume for the moment that my nagging has worked and that you have picked a company to analyze. Here is what you can be doing (or better still, have done already):
I will be putting up a webcast tomorrow on how to analyze the "top shareholder" list, using a range of companies. Hope you to get a chance to watch it. I also hope that you have had a chance to register for Capital IQ and if you have not, I am reattaching the directions on how to do so. |
| 2/7/25 | Ahead of Super Bowl weekend , I thought I would get in the in-practice webcast for this week and nag you about your project (yet again). Since these webcasts are directly connected to what you will or should be doing on the project, the best way to use them is to pick a company and use the webcasts to get the relevant parts of the project done. This webcast looks at ways to assess the corporate governance at your company, using HP from 2013 as an example. I use HP's annual report, its filings with the SEC and other public information to make my assessment of the company.
HP Annual Report: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/webcasts/corpgovHP/HPAnnual.pdf
You can find these links in my webcast page, and it looks at what information to use and how to use it to assess the corporate governance structure of a company. (Sorry about the striped sweater… Should have known better)….. |
| 2/8/25 | 1. Newsletter: First things, first. Your newsletter is attached for the week. As is usually the case, there is not much news there, especially if you have been coming to class.
2. Company choice & groups: I was checking the corporate finance master sheet:
https://docs.google.com/spreadsheets/d/1xsASDBhkGo_1WhivAMLMkhi_z6cyYFnv1Q9G4y2TN4I/edit?usp=sharing
I am glad that it is filling up, and thank you to those of you who have entered the company name. I will be emailing those of you who have no company choice yet, right after this email. So, please don’t panic when you get that email. I am just trying to push you towards a decision.
3. Corporate Finance Puzzles: I have been posting the puzzles that I send out each week on Brightspace in the discussion section. I know that you have lots of things to do, but if you want to discuss and debate, that forum works well. The first discussion was about stakeholders in companies and the second one about corporate governance at family group companies…
4. Blog post on hurdle rates: I just posted my sixth data update for 2025, looking at hurdle rates in businesses.
While I know that you have other things on your plate this weekend, this may be an excellent post for you to read while you watch the Super Bowl halftime show, since it is directly relevant to what we will be b doing next week in lass.
One final note. If you are having trouble opening links on my emails or my webpage, try switching browsers. Google Chrome has issues with links to stern server sites.. (Don’t ask… It will unleash a stream of frustration…)
Attachment: Issue 2 (February 8) |
| 2/9/25 | I hope that you will be watching the Super Bowl this evening, not prepping for corporate finance. That said, my point about everything being corporate finance applies starting with the insane amount of money that it will cost a network to carry the Super Bowl today (and whether you can make it back on ad revenues or whether you need the show to boost other shows revenues), whether the halftime show will boost the earnings of the entertainer in question and what these ads tell you about the businesses doing the advertising.. Inquiring minds want to know. So, as you much your chips and watch Mahomes throw the ball from angles that look physically impossible, start tallying up the numberers.
Tomorrow, we will complete our discussion of corporate governance and start with a discussion of risk and how it plays out in hurdle rates. In the process, we will talk about the model that started the ball rolling, the capital asset pricing model (CAPM, how it is mystified by some and vilified for others, often in advancement of their agendas, and about alternatives to i5. We will move through this discussion in hyper speed for two reasons. One is that I have zero interest in reinventing modern portfolio theory and showing the mechanics of correlation and covariance. The second is that while I use the CAPM as a tool to estimate hurdle rates, I am not wedded to it and accept all kinds of alternatives (some of which we will talk about in class). If you are still shaky about even the assumptions that underlie the model, my suggestion is that you read chapter 3 from the applied corporate finance book before the class. If you don’t have the book, or not in the mood to read an entire chapter, please read my data posts from this year
These posts will prepare you for what’s coming in the sessions after, we will start on the fun stuff of applying the model, starting with what should be a slam dunk (risk free rates) which is increasingly not and then turning to the equity risk premium, a number that analysts often turn towards services to look up but really has deep implications for both valuation and corporate finance. So, much to do and I hope that you come along for the ride. |