The role of this glossary is to present brief definitions of most of the key concepts in corporate finance and management (in total 900 names-definitions) with aim the reader to be able to understand and become familiar with the terminology in the analyses that will present in the category Corporate & Business.
Additionally, we hope that the reader by acquiring intimacy with the specific terminology, he will also love the science of finance and management, giving to it a significant part of his personal time.
In the following glossary we tried to include the most well-known definitions and terms in the field of Corporate Finance & Management. If you still find that a term or definition is missing and you know that it can be included in this glossary, please do not hesitate to contact us via the contact form of our web-site (Contact Us) and the Liberal Globe will edit it and will include it.
Glossary Corporate Finance & Management
There are currently 45 names in this directory beginning with the letter A.
Abnormal return
is named the part of the return that is not predicted; the change in value caused by the event.
Accelerated cost recovery system (ACRS)
is called a schedule of depreciation rates allowed for tax purposes.
Accelerated depreciation
is called any depreciation method that produces larger deductions for depreciation in the early years of a project’s life i.e. double declining balance depreciation, sum of the years-digits depreciation.
Accrued-benefit cost method
is named the method for estimating the normal costs of a pension plan. Its principle is that the company should contribute each year the present value of any benefits that have accrued (level cost method).
Acquisition
is named the purchaser of a controlling interest in a firm, generally via a tender offer for the target shares.
Acquisition MLP (start-up master limited partnership)
is named the situation where the assets of an existing entity are transferred to an MLP, and the business is henceforth conducted as an MLP.
Adjusted present value
is named net present value of an asset if financed solely by equity, plus the present value of any financing side effects.
Adventure
is named a goal in joint ventures in addition to the expectation of profits. Suggests a speculative motive.
Adverse selection (in corporations)
is named the false signaling. Firms with serious problems may signal that they are healthy firms interested in mergers or selling out.
Agency theory problem
is named the struggle of interest between principal (i.e. shareholders) and agent (i.e. managers) in which the agent has a motive to act in his own self-interest because he bears less than the total costs of his actions.
Aggregate concentration ratio
is called the overall concentration nationwide, the percentage of sales controlled by the largest 50 or 100 firms.
Aging schedule
is named the record of the length of time that accounts receivable has been outstanding.
All-or none underwriting
is named the procedure that the security issue is canceled if the underwriter is unable to resell the entire issue.
American depositary receipt (ADR)
a security issued in U.S. to represent shares of a foreign company.
Anergy
negative synergy. Instead of a “2+2=5” effect, anergy implies “2+2=3”. Business units actively interfere with each other and may have more value if separated.
Annuity
is called that investment which produces a level stream of cash flows for a limited number of periods.
Anti takeover amendment
is named the corporate charter amendment which is intended to make it more difficult for an unwanted acquirer to take over the firm.
Anti-greenmail amendment
is named the corporate charter amendment which prohibits targeted share repurchases at a premium from an unwanted acquirer without the approval of nonparticipating shareholders.
Anticipation
are called the arrangements whereby customers who pay before the final date may be entitled to deduct a normal rate of interest.
Any or all offer
is called the situation in which a tender offer does not specify a maximum number of shares to be purchased, but none will be purchased if the conditions of the offer are not met.
Appraisal right
is called the right of minority shareholders to obtain an independent valuation of their shares in order to determine the appropriate back-end value in a two-tier tender offer.
Approach to management, group behavior
is called that analysis in which the management is considered as a study in group behaviour patterns.
Approach to management, interpersonal behaviour
is called an analysis of management as a study of interpersonal relations.
Approach to management, mathematical or “management science”
is named an analysis of management primarily as a matter of developing mathematical models of managerial decision areas.
Approach to management, McKinsey’s 7-S framework
is named that analysis of management which organizes managerial knowledge around the following categories: strategy, structure, systems, style, staff, shared values and skills.
Approaches to management, sociotechnical systems
are called that analysis of management which views managerial situations as involving a combination of interacting social and technical systems.
Arbitrage
is called that procedure where takes place the purchase of one security and the simultaneous sale of another to give a risk-free profit. In the context of M&As, risk arbitrage refers to investing in the stock of takeover targets for short-term resale to capture a portion of the gains which typically accrue to target shareholders.
Arbitrage pricing theory (APT)
is named a general approach to asset pricing which allows for the possibility that many factors may be used to explain asset returns, as opposed to the capital asset pricing model in which the market return is the sole explanatory factor.
Assessment center
is named that technique which has aim to aid in the selection and evaluation of potential managers whereby candidates are subjected to numerous tests and exercises and their performance is observed and evaluated by assessors.
Atomistic competition
is called the numerous small sellers and buyers, none of which have the power to influence market prices or output.
Atomistic shareholders
are called all those shareholders which each one of them has only a small amount of stock. Small shareholders have less incentive to monitor management than large block shareholders.
Auction
is named the situation in which two or more bidders competing for a single target. An auction increases the price target shareholders receive.
Auction rate preferred
a variant of floating rate preferred stock where the dividend is reset every 49 days by auction.
Authorized share capital
is called the maximum number of shares that a company can issue, as specified in the firm’s articles of incorporation.
