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Corporate Governance; Stockholder Analysis on Starbucks Cooperation; taking into the following account: Risk and Return Measuring Investment Returns...

Corporate Governance; Stockholder Analysis on Starbucks Cooperation; taking into the following account:

• Risk and Return

• Measuring Investment Returns

• Capital structure Choices

• Optimal Capital Structure

• Mechanics of Moving to the Optimal

• Dividend Policy

• A Framework for Analyzing Dividend Policy

Please see attached document for your easy reference (this document show you have to answer this questions.
Corporate Governance; Stockholder Analysis on Starbucks Cooperation; taking into the following account: Risk and Return Measuring Investment Returns Capital structure Choices Optimal Capital Structure Mechanics of Moving to the Optimal Dividend Policy A Framework for Analyzing Dividend Policy I. Corporate Governance Analysis o To understand the relationship between managers and stockholders, try answering the following questions. Note that you may not have the information to answer every question, but try to keep your focus on the big questions. 1. The Chief Executive Officer Who is the CEO of the company? How long has he or she been CEO? If it is a family run company, is the CEO part of the family? If not, what career path did the CEO take to get to the top? (Did he or she come from within the organization or from outside?) How much did the CEO make last year? What form did the compensation take? (Break down by salary, bonus and option components) How much stock and options in the company does the CEO own? 2. The Board of Directors Who is on the board of directors of the company? How long have they served as directors? How many of the directors are inside directors? (i.e. employees or managers of the company) How many of the directors have other connections to the firm (as suppliers, clients, customers. .)? How many of the directors are CEOs of other companies? Do any of the directors have large stockholdings or represent those who do? 3. Share Voting Structure Are there differences in voting rights across shares? If so, do incumbent managers own a disproportionate share of the voting shares? To understand the relationship between the firm and financial markets, try asking the following questions: 1. Financial Market Concerns
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o How many analysts follow the firm? o How much trading volume is there on this stock? To understand the relationship between the firm and society try answering the following questions: 1. Societal Constraints o Does the firm have a particularly good or bad reputation as a corporate citizen? o If it does, how has it earned this reputation? o If the firm has been a recent target of social criticism, how has it responded? II. Stockholder Analysis To understand who the average and marginal investors in the firm are, try answering the following questions: 1. Who holds stock in this company? o How many stockholders does the company have? o What percent of the stock is held by institutional investors? o Does the company have listings in foreign markets? (If you can, estimate the percent of the stock held by non-domestic investors) 2. Insider Holdings o Who are the insiders in this company? (Besides the managers and directors, anyone with more than 5% is treated as an insider) o What role do the insiders play in running the company? o What percent of the stock is held by insiders in the company? o What percent of the stock is held by employees overall? (Include the holdings by employee pension plans) o Have insiders been buying or selling stock in this company in the most recent year? III. Risk and Return To understand the risk profile of the company, estimate risk parameters and the hurdle rates for the firm, try answering the following questions: 1. Estimating Historical Risk Parameters (Top Down Betas) Run a regression of returns on your firm's stock against returns on a market index, preferably using monthly data and 5 years of observations (or) If you have access to Bloomberg, go into the beta calculation page and print off the page (after setting return intervals to monthly and using 5 years of data) What is the intercept of the regression? What does it tell you about the performance of this company's stock during the period of the regression? What is the slope of the regression? o What does it tell you about the risk of the stock? o How precise is this estimate of risk? (Provide a range for the estimate.) What portion of this firm's risk can be attributed to market factors? What portion to firm- specific factors? Why is this important? How much of the ìriskî for this firm is due to business factors? How much of it is due to financial leverage? 1. Comparing to Sector Betas (Bottom up Betas) o Break down your firm by business components, and estimate a business beta for each component
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