Other Papers and Articles

Publications

Clients/Cases

Valuation Experience (by Industry and Security Type)

Title	Author	Publication Date
A Closer Look at Preferred Stock Financing This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty,Public Utilities Fortnightly, pp. 41-43.	1980 November 6
A Comparison of Alternative Models for Valuing Employee Stock Options This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, Financial Executives Research Foundation, Florham Park, NJ	2003 January
A Private Solution to a Public Problem: A Response from the Private Sector to the College Saving Crisis This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in Tax Incentives for Education. United States Senate Committee on Finance, Washington, D.C., pp. 194-204.	1988 March 15
An Analysis of Tuition Prepayment Plans This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in Proceedings of the Invitational Conference on College Prepayment and Savings Plans. College Entrance Examination Board, New York, pp. 25-31.	1988
An Overview of Corporate Securities Innovation This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, Journal of Applied Corporate Finance, pp. 23-39. Reprinted in Donald H. Chew, Jr., ed., The New Corporate Finance: Where Theory Meets Practice. McGraw-Hill, New York, 1993, pp. 212-228, and in Raymond H. Rupert, ed., The New Era of Investment Banking. Probus, Chicago, 1993, ch. 16.	1992 Winter
Calculating Damages in Broker Raiding Cases This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in John Siegal, Protecting Corporate IP Assets: Enforcing Restrictive Covenants in the Employment Context. Practising Law Institute, New York, pp. 111-145.	2005
Capital Investments This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	Douglas R. Emery and John D. Finnerty, in Burton S. Kaliski, ed., Encyclopedia of Business and Finance, vol. 1. Macmillan, New York, pp. 81-85.	2001
Damages Estimation After Natural Disasters This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in Jack P. Friedman, ed., Litigation Support Report Writing for Accounting, Finance, and Economic Issues. Wiley, New York.
Debt Innovative This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, Fordham Business Magazine, pp. 24-25.	2001 Spring/Summer
Designing Securities to Qualify as Capital for Bank Regulatory Purposes This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, Burton L. Raimi, and Neil R. Crowley, in Charles A . Stone and Anne Zissu, eds., Global Risk Based Capital Regulations: Management and Funding Strategies. Irwin Professional Publishing, Burr Ridge, IL, ch. 8.	1994
Evaluating a Stock-for-Debt Swap: The Proper Framework The deep discounts at which low-interest rate corporate bonds are trading provide attractive opportunities for companies to reacquire portions of outstanding issues profitably via so-called ''stock-for-debt swaps.'' Before undertaking such a swap, the economics of the swap should be evaluated. For an electric utility, the economics of the swap should be evaluated from the standpoint of the utility's common stockholders. An analytical framework is presented for making such an evaluation, and an example is provided to illustrate the procedure. The method can be used when the company's objective is either to enhance the profitability of refunding discounted debt or to achieve a permanent financial restructuring. One complication for a utility company is that a swap may have a positive net present value but regulators might channel all the benefits to the company's ratepayers.	John D. Finnerty, Public Utilities Fortnightly, pp. 27-32.	1982 August 5
Financial Engineering Financial engineering allows the creation of innovative financial instruments and processes and the formulation of creative solutions to complex financial problems. A new security is innovative only if it: 1. enables an investor to realize a higher aftertax-risk-adjusted rate of return without adversely affecting the issuer's aftertax cost of funds, and/or 2. lets an issuer realize a lower aftertax cost of funds without adversely affecting investors. The basic causal factors reflected in innovative financial processes are: 1. efforts to reduce transaction costs, 2. steps to reduce idle cash balances in response to higher interest rates, and 3. the availability of relatively inexpensive computer technology that facilitates quicker financial transactions. Creative solutions to corporate finance problems have concentrated on developing the most efficient strategy for calling high-coupon debt when interest rates decline.	John D. Finnerty, in the New Palgrave Dictionary of Money and Finance, vol. 2. Macmillan, London, pp. 56-63.	1992
Financial Engineering as a Solution to Interest-Rate Risk Management Challenges This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in Anthony G. Cornyn, Robert A. Klein, and Jess Lederman, eds., Controlling & Managing Interest-Rate Risk. New York Institute of Finance, New York, ch. 17.	1997
How Companies Account for the Cost of Options Prof. Alfred Rappaport quite rightly observes that the case for expensing employee stock options is compelling and that the FASB's prescription for calculating that expense is not (Manager's Journal: "Choosing a Useful Option," Sept. 24). However, he makes a fundamental mistake when he asserts that "the true annual cost of options is the difference between the value of options outstanding at the end of the year and at the beginning of the year, plus the gain employees realize on options exercised." Like many participants in the debate about ESOs, he is confusing cost at the time of grant and the ESOs' future value.	John D. Finnerty, Wall Street Journal, p. A15.	2002 October 10
How to Cope with Rising College Costs This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, Tax Management Financial Planning Journal, pp. 224-228.	1988 May 31
How to Lower the Cost of Floating a New Stock Issue Institutional demand for electric utility common stocks increased during 1982. This increase offered electric companies the opportunity to sell new issues of their common stock on advantageous terms. Certain electric companies may still be able to benefit from targeting all or a part of their next common stock offerings at institutional investors. A carefully timed and executed offering of a new issue to the investors can afford significant savings for electric utility companies whose common stock has institutional appeal. Investors recognize that reduced general inflation benefits electric utility common stocks by reducing long-term interest rates and by lowering the cost of equity capital to electric utilities. The common stock of electric companies that have reached the end of the current phase of their construction programs has comparatively more attractive dividend growth prospects than does the common stocks of other electric companies. The recognition of this fact by institutional investors helps to explain the renewed institutional interest in utility stocks.	John D. Finnerty, Public Utilities Fortnightly, pp. 25-29.	1983 March 17
How to Test Hedge Effectiveness Under FAS 133 This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty and Dwight Grant, Estratégica, pp. 8-16.	2001 April/June
Make Securities Innovation Work to Your Advantage This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty and Herbert S. Adler, Butterworths Journal of International Banking and Financial Law, pp. 64-67.	1992 February
Measuring Damages in Securities Fraud Class Action Lawsuits This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	Keith R. Ugone and John D. Finnerty, CD-ROM accompanying Michael R. Young, ed., Accounting Irregularities and Financial Fraud. Harcourt Professional Publishing, New York.	2000
Measuring the Duration of Floating-Rate Debt Instruments Although the concept of duration was developed over 50 years ago, only recently have attempts been made to calculate the duration of a floating-rate debt instrument. Morgan (1986) developed a formula for the duration of a floating-rate bond within a continuous time framework and, together with Chance (1986), adapted the model to a discrete time framework. The usefulness of this model is limited because it is tied to a specific example. The Chance-Morgan procedure is used to develop a computational formula within a discrete time framework that incorporates the sensitivity of the coupon rate index into changes in market interest rates. The formula assumes a flat term structure, but it can be extended to account for different shapes of and movements in the term structure.	John D. Finnerty, in Frank J. Fabozzi, ed., Advances & Innovations in the Bond and Mortgage Markets. Probus, Chicago, pp. 77-96.	1989
Measuring the Risk Premium on the Market Portfolio This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in Frank J. Fabozzi, ed., The Institutional Investor Focus on Investment Management. Ballinger, Cambridge, MA, pp. 161-167.	1989
Meeting the New Standard for 10b-5 Class Action Damage Calculations This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty and George M. Pushner, Analysis Group/Economics Issue Brief.	2002
Refunding High-Coupon Debt This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, Midland Corporate Finance Journal, pp. 59-74.	1986 Winter
Rule 10b-5 vs. Section 11 Securities Fraud Class-Action Damages This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty and George M. Pushner, Analysis Group/Economics Issue Brief.	2002
Russian Settlements Will Put Credit Derivatives to the Test Opinion. Focuses on the credit derivatives used in Russia. Effectiveness as a risk management tool; Value of the instrument; Structures of credit derivatives; Legal documentation of credit derivatives; Issues in using credit derivatives.	John D. Finnerty, American Banker, p. 21.	1998 December 4
Securitizing Political Risk Investment Insurance: Lessons from Past Securitizations This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in Theodore H. Moran, ed. International Political Risk Management: Exploring New Frontiers. World Bank, Washington, DC, pp. 77-147.	2001
Sources of Value Added from Structuring Asset-Backed Securities to Reduce or Reallocate Risk This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in Charles Stone, Anne Zissu, and Jess Lederman, eds., The Global Asset Backed Securities Market. Probus, Chicago, ch. 3.	1993
Standing to Sue Under Rule 10b-5: A Fresh Look at the New Investment Doctrine Several decisions have addressed the question of whether post-transaction amendments or modifications and securities exchanges satisfy the purchase or sale requirements under Section 10(b) and Rule 10b-5. Nonetheless, there is no constant and reliable approach to the question of what constitutes a new investment decision. This article analyzes the purchase or sale requirements under Section 10(b) and Rule 10b-5, then examines the recent decision in Department of Economic Development v. Arthur Anderson & Co., and finally looks at how economic models for risk analysis can lead to a consistent approach to the issue of what constitutes a new investment decision.	Robert Sidorsky and John D. Finnerty, Securities Regulation Law Journal, pp. 113-198.	2001 Summer
Structures and Contracts which Reallocate Risk This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, in proceedings of the conference on Structured Finance: Design, Engineering & Production. Euromoney, Brussels, pp. 75-96.	1992 June 4-5
Structuring Derivative Instruments to Adjust Risk Exposure: The Arithmetic of Financial Instruments This e-mail address is being protected from spambots. You need JavaScript enabled to view it for more information.	John D. Finnerty, PricewaterhouseCoopers LLP, New York	1999
Testing Hedge Effectiveness SFAS 133, Accounting for Derivative Instruments and Hedging Activities, marked a large step forward in FASB's quest to record financial instruments at fair value. The new accounting for hedges can introduce some complexity into the financial statements that can be avoided if the hedge qualifies as a "highly effective" hedge. Applying the definition of such a hedge, however, is subject to debate. Three common methodologies for testing hedge effectiveness are presented and analyzed: the dollar-offset method, the variability-reduction method, and the regression method. The dollar-offset method, which is more sensitive to small changes, but also stresses the importance of examining all the specifics of the situation, is not recommended. SFAS 133 standardizes the accounting treatment for derivative instruments by requiring all entities to report derivatives as assets and liabilities on the balance sheet at their fair value. A case of a company that is considering hedging a purchase is used to illustrate the methods described.	John M. Althoff and John D. Finnerty, in Henry A. Davis, ed., FAS 133 and the New Derivatives Accounting Landscape. Institutional Investor, New York, pp. 44-51.	2001 Fall
The Case for Issuing Synthetic Convertible Bonds Contact us for more information.	John D. Finnerty, Midland Corporate Finance Journal, pp. 73-82. Reprinted in Clifford W. Smith, Jr., and Charles W. Smithson, eds., The Handbook of Financial Engineering. Harper & Row, New York, 1990, ch. 21.	1986 Fall
The Pluses of Zeros Contact us for more information.	John D. Finnerty, Euromoney, p. 67.	1985 May
The PricewaterhouseCoopers Credit Derivatives Primer Contact us for more information.	John D. Finnerty, PricewaterhouseCoopers LLP, New York	1998
The Trend in Corporate Financial Disclosure Contact us for more information.	John D. Finnerty and Heidi Donoghue, in Esmeralda O. Lyn and George J. Papaioannou, eds., Financial Services in the Evolving Global Marketplace. Hofstra University Press, New York, pp. 192-209.	2002
Using a PERCS-for-Common Exchange Offer to Reduce the Costs of a Dividend Cut Contact us for more information.	Douglas R. Emery and John D. Finnerty, Journal of Applied Corporate Finance, pp. 77-89.	1995 Winter
Valuing Employee Stock Options: A Comparison of Alternative Models Contact us for more information.	John D. Finnerty, FMA Online.	2003 Summer
Where is the Value Added in Securities Innovation Contact us for more information.	John D. Finnerty, in John Thackray, ed., Chief Financial Officer USA 1987, SPL Associates Limited, London, pp. 202-205.	1987
Will Credit Derivatives Survive the Stress Test? Contact us for more information.	John D. Finnerty, Solutions, pp. 5, 8.	1999 Winter