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 56 names in this directory beginning with the letter D.
De novo entry
is the entry into an industry by forming a new company as opposed to combining with an existing firm in the industry.
Decentralization of authority
is called the tendency to disperse decision-making authority in an organization structure.
Decision control
is known as the fundamental ownership rights of shareholders to select management, monitor management and to determine reward incentive arrangements.
Decision making
the selection from among alternatives of a course of action; a rational selection of a course of action.
Decision management
decision functions related to day-to-day operations which may be delegated to managers. Includes initiation and implementation of policies and procedures.
Decision support system (DSS)
the application of computers to facilitate the decision-making process of semi-structured tasks.
Decision theory
an analysis of management that concentrates on rational decision making as the core of the management task.
Decision trees
an approach toward seeing risks and probabilities in a problem situation involving uncertainty, or chance events, by sketching in the form of a “tree” decision points, chance events, and the probabilities involved in various courses that might be undertaken.
Dedicated portfolio
bond portfolio that provides the cash flows to meet a series of fixed pension obligations at minimum cost.
Defeasance
borrower sets aside cash or bonds enough to service the borrower’s debt. Both the borrower’s debt and the offsetting cash or bonds are removed from the balance sheet.
Defensive diversification
entering new product markets to offset the limitations of the firm’s existing product-market areas.
Defined benefit plan
is a pension plan in which the annual contributions are specified in advance. Benefits upon retirement depend on the performance of the assets in which the contributions are invested.
Delegation of authority, process of
the determination of results expected from a subordinate, the assignment of tasks, the delegation of authority for accomplishing these tasks, and the holding of people responsible for the accomplishment of such tasks.
Delphi technique
is a technique normally used for forecasting such future events and conditions as technological developments by obtaining estimates of experts in a field and feeding back summaries of these estimates for additional estimates by those experts, until a reasonable degree of convergence in estimates is obtained.
Department
a distinct area, division, or branch of an enterprise over which a manager has authority for the performance of specified activities and results.
Departmentation by function
the grouping of activities in departments in accordance with the characteristic functions an enterprise undertakes; i.e. in a manufacturing company-marketing, production, engineering and finance.
Departmentation by process or equipment
the grouping of activities around a process or type of equipment used, such as electronic data-processing or painting departments.
Departmentation by territory
the grouping of activities by territorial segments; geographic departmentation.
Depreciation
(1) reduction in the book or market value of an asset. (2) portion of an investment that can be deducted from taxable income.
Differential managerial efficiency hypothesis
a theory which hypothesizes that more efficient managements take over firms with less efficient managements and achieve gains by improving the efficiency of the target.
Differentiation
a characteristic of an open system, and a social system, by which it tends to become more specialized in its structure and behavior patterns.
Direct lease
is the lease in which the lessor purchases new equipment from the manufacturer and leases it to the lessee.
Discount bond
debt sold for less than its principal value. If a discount bond pays no interest, it is called a “pure” discount bond.
Discriminatory poison pill
antitakeover plans which penalize acquires who exceed a given shareholding percentage (the kick-in-point).
Dissident
a shareholder or group of shareholders, who disagrees with incumbent management and seeks to make changes via a proxy contest to gain representation on the board of directors.
Distribution logistics
an operations research optimizing model that treats the entire materials flow system of an enterprise-from sales forecasting through purchasing and processing of materials, inventorying them, to shipping of finished goods to sales warehouses-as a single system.
Divestiture
sale of a segment of a company (assets, a product line, a subsidiary) to a third party for cash and/or securities.
Dividend method dual-class recapitalization
most widely method of converting to dual-class stock ownership. A stock split or dividend is used to distribute new inferior voting stock. The previously existing common stock is re-designated as superior-vote class B stock.
Dogs
A Boston Consulting Group term for business segments characterized by low market shares in product markets with low growth rates.
Double-tax agreement
is the agreement between two countries that taxes paid abroad can be offset against domestic taxes levied on foreign dividends.
Drop lock
an arrangement whereby the interest rate on a floating-rate note on preferred becomes fixed if it fails to a specified level.
Dual-class re-capitalization
corporate restructuring use to create two classes of common stock with the superior-vote stock concentrated in the hands of management.
Dual-class stock
two or more classes of common stock with equal rights to cash flows, but with unequal voting rights.
DuPont system
a financial planning and control system focusing on return on investment by relating asset turnover (effective asset management) to profit margin on sales (effective cost control).
Dynamic competition theory
a model of industrial organization theory which extends the traditional models of price and output decisions of firms in a static environment to decisions on product quality, innovation, promotion, marketing and so on in changing environments.
