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 53 names in this directory beginning with the letter E.
Efficiency
the achievement of the ends with the least amount of resources; the accomplishment of objectives at the least cost or other unsought consequences.
Efficient portfolio
is the portfolio that offers the lowest risk (standard deviation) for its expected return and the highest expected return for its level of risk.
Elaboration
the tendency of an open system, and a social system, to enlarge its boundaries or create a new supersystem with wider boundaries.
Empirical test
systematic examination of data to check the consistency of evidence with alternative theories.
Employee stock ownership plan (ESOP)
defined contribution pension plan (stock bonus and/or money purchase) designed to invest primarily in the stock of the employer firm.
Employment Retirement Income Security Act (ERISA)
1974 Federal legislation regulating pension plans including some ESOPs. Sets vesting requirements, fiduciary standards, minimum funding standards. Established Pension Benefit Guarantee Corporation (PBGC) to guarantee pensions.
End of regulation
A theory hypothesizing that takeovers occur following deregulation of an industry as a result of increased competition which exposes management inefficiency which may have been masked by regulation.
Enterprise self-audit
the making by an enterprise of an audit, or appraisal, of its position, where it is heading under present programs, what its objectives should be, and whether revised plans are needed to meet these objectives.
Entrepreneurs
people with the ability to see an opportunity, to obtain the necessary capital, labor, and other inputs, and know how to put together an operation successfully, and with the willingness to take the personal risk of success or failure.
Environment, economic
that environment of managers which has to do with such elements as capital, materials, labor availability, quality, and price; price levels, productivity, availability of high-quality entrepreneurs and managers, government fiscal and tax policy, customers and demands for goods and services.
Environment, ethical
that environment of managers which has to do with generally accepted sets of standards of personal conduct.
Environment, political
that environment of managers which has to do with the complex of laws, regulations, and government agencies and their actions.
Environment, social
that environment of managers that has to do with the attitudes, desires, expectations, degrees of intelligence, beliefs, and customs of people in any given group or society; social forces.
Environment, technological
that environment of managers which has to do with such elements as knowledge of ways of doing things; inventions; and techniques in the areas of processes, machines and tools.
Environmental forecasting,
forecasting the future environment-economic, technological, social, ethical, and political-as it may affect the enterprise.
Equipment trust certificate
form of secured debt generally used to finance railroad equipment. The trustee retains ownership of the equipment until the debt is repaid.
Equity
(1) common stock and preferred stock. Often used to refer to common stock only. (2) net worth.
Equity carveout
a transaction in which a parent firm offers some of a subsidiary’s common stock to the general public, to bring in a cash infusion to the parent without loss of control.
Equity theory
refers to the individuals’ subjective judgments about the equity or fairness of the reward they receive in relation to their inputs (which include factors such as effort, experience, and education) in comparison with orders.
Equivalent annual cash flow
annuity with the same net present value as he company’s proposed investment.
Ethics
a system of moral principles or values dealing with moral judgment, duty, and obligation; the discipline concerned with what is good or bad, right or wrong.
Euribid (Euro Inter-Bank Bid Rate)
the interest rate at which major international banks in London borrow to each other.
Euribor (Euro Inter-Bank Offered Rate)
the interest rate at which major international banks in London lend to each other.
Event study
an empirical test of the effect of an event (i.e. a merger, divestiture) on stock returns. The event is the reference date from which analysis of returns is made regardless of the calendar timing of the occurrences in the sample of firms.
Ex-rights
purchase of shares in which the buyer is not entitled to the rights to buy shares in the company’s rights issue.
Exchange method dual-class recapitalization
means of converting to a dual-class stock corporate structure. High-vote stock is issued to insiders in exchange for their currently outstanding (low-vote) stock. The remaining low-vote stock, in the hands of outside shareholders, generally receives a higher dividend.
Exchange of assets
acquisition of another company by purchase of its assets in exchange for cash or shares.
Exchange of stock
acquisition of another company by the purchase of its stock in exchange for cash or shares.
Exchange offer
a transaction which provides one class (or note) of securities with the right or option to exchange part or all their holdings for a different class of the firm’s securities, i.e. an exchange of debt for common stock. Enables a change in the capital structure with no change in investment.
Exit-type firm
in Jensen’s free cash flow hypothesis, a firm with positive free cash flows. The theory predicts that for such a firm, stock prices will increase with unexpected increases in payout.
Expectancy theory of motivation
the theory that people will be motivated by their expectancy that a particular action on their part will lead to a desired outcome.
Experience losses
in a pension plan, losses resulting from any difference between expectations and experience (i.e. a decline in the value of the pension fund’s securities).
External finance
is the finance that is not generated by the firm: new borrowing or an issue of stock.
