1. As explained in our textbook, we can think of the firm as the locus of a set of contracts. Below, I have posted a diagram from the text that highlights some of those contracts. Note that some of these contracts are quite explicit, detailed, and formal, whereas others are implicit and based on a shared general understanding rather than on a formal legal agreement.

In this context, your task is to write an essay outlining which of the contracts identified in the diagram you see as the most important, in the sense that they need to be formal and carefully written, and which of these you see as the least important, in the sense that they are simply based on generally acceptable shared expectations, from the firm’s perspective. As part of your answer make sure to explain carefully whether or not, and if and why, you believe some of the contracts identified in the text require more attention than others.

Note that you are free to use any and all resources at your command in writing your answer, with the caveat that everything you write must be in your own words, all direct quotes must be properly identified

2. The covid pandemic has disrupted a variety of different firms, industries, and markets. Consumer behavior has changed, supply chains have been interrupted, labor and resource markets have been affected in a variety of different ways, etc. Many have suffered due to these disruptions and yet others have seized new opportunities that have also appeared amidst the chaos.

In this context, your task is to identify at least 4 specific industries or businesses that have benefitted from, and seen overall growth during, the pandemic. For each of the cases that you identify, you should write a detailed explanation of exactly how and why the industries or businesses benefited and how the pandemic brought on opportunities for value creation for the industries or businesses at hand.

Note that you are free to use any and all resources at your command in writing your answer, with the caveat that everything you write must be in your own words, all direct quotes must be properly identified

3. This last Friday (December 3, 2021) the China Evergrande Group, which is one of the largest property development companies in the world, announced that the company would be seeking to restructure its debt. Then, earlier today (Monday, December 6, 2021), the company added that it is forming a “risk management committee” to handle the details of its debt restructuring. This committee will include a number of Chinese State officials and the committee’s objective will be to try to salvage what can be salvaged from the company’ liquidity crisis.

For some background: The company has grown exponentially, with the company’s asset holdings increasing by a factor of over 22, while its equity value increased by a factor of over 16, just since 2010. At the same time, the company has taken on huge dept to finance its expansion; to the point where the current outstanding debt exceeds 310 billion US dollars. This debt is held by a variety of different banks, investors, and suppliers around the world and if the company were to go bankrupt, this would represent one of the largest bankruptcies in history. Based on this, some have argued that this company is truly “too big to fail.”

In this context, your assignment is to write an essay outlining how and why you believe things went wrong for the company. As part of your answer, make sure that you discuss to what extent you believe that the company’s current liquidity problems should have been foreseeable, and also what you believe the likely incentives were for those who made the decisions that eventually landed the company in its current liquidity crisis.

Note that you are free to use any and all resources at your command in writing your answer, with the caveat that everything you write must be in your own words, all direct quotes must be properly identified.

Some Potential References:

WSJ article on China Evergrande’s Managed Restructuring

Xi Jinping Sails Into an Economic Shoal – WSJ

Evergrande Group – Wikipedia

Evergrande: will it collapse and what would happen if it did? | China | The Guardian

Evergrande’s Haircut and Some Help for Chinese Banks – WSJ

Back in 2012 an American Investor suggested that Evergrande was headed for insolvency. The report below is the Hong Kong government’s refutation of that investor, which eventually culminated on a 5 year ban on that investor in Hong Kong.

Evergrande_Report.pdf (mmt.gov.hk)

4. As explained in our textbook, decisions that are made within firms are different from decisions that are made in markets where buyers (looking out for their own best interest) trade with sellers (who are likewise looking out for their own best interest).

Within the firm, the decisions are made by managers, who may or may not be looking out for the best interests of the firm. For example, in stock corporations we often see a separation between ownership and management. If no single shareholder has the resources to know what management is up to, let alone the power to curb potential management excesses, then management may take advantage of the shareholders. Eventually this may affect corporate profit and stock prices, but in large stock corporations, especially if the firm has some monopoly power, this may take a long time. In other cases, the managers and the workers of a firm may want to keep it going even if it is continually losing money.

It is usually under these kinds of conditions that we see hostile takeovers. For example, Alden Global Capital is a hedge fund that has specialized in taking over newspapers that were losing money. Recently, Alden has been attempting to take over Lee Enterprises, which publishes a series of local newspapers. In the process, Alden has offered to pay any shareholders who are willing to sell their Lee stock as much as a 30% premium above the market close.

In this context, your task is to write an essay explaining why Alden would be willing to pay such a premium, and also why and how the Lee might resist this offer, which otherwise would clearly benefit the stockholders of the company. As part of your answer make sure to discuss the specific incentives and tactics involved.

Note that you are free to use any and all resources at your command in writing your answer, with the caveat that everything you write must be in your own words, all direct quotes must be properly identified.

Some potential references:

Lee, owner of World-Herald, rejects board nominations from would-be buyer Alden | Local Business News | omaha.com

Alden Global Capital mounts takeover bid for Lee Enterprises – Poynter