Unit 4 Pt. 2 Flashcards
(26 cards)
Why Can Companies No Longer Avoid ESG?
As investor momentum builds, some argue that companies can no longer afford to discount their ESG ratings.
Primary Factor in ESG Integration
Financial performance, while impact investing is meant to maximize, w. a quantifiable impact, societal reach.
Reasons FOR ESG Investing
- Moral reasons- choosing to completely shun companies that don’t align w/ their views
- Majority consider ESG factors from a financial risk standpoint
- Ex. If a company doesn’t employ equal pay practices, there could be backlash + high turnover rate which can in turn impact the stock performance
Concerns w/ ESG Investing
- Difficult to assign an ESG “score” to a company since many of these factors are subjective (like brand appeal)
- Difficult to prove that ESG is being integrated into investment decisions
- ESG weeds out bad behaviour, not spark innovation + progress against things like climate change
Why is Entrepreneurship Important for Canada’s Economy?
- Encourages innovation –> innovation elevates living standards
- Small businesses increase the GDP + create jobs
- Increase tax revenue
Initial Public Offering (IPO)
A company’s first equity issue made available to the public. This issue occurs when a privately held company decides to go public.
Why do Companies go Public?
- New capital
- Future capital
- Mergers & acquisitions
IPO Disadvantages
- Expensive- a typical firm may spend about 15% of the money raised on direct expenses
- Reporting Responsibilities- once public, most continuously file reports w/ the SEC/CSE + the stock exchange they list on
- Loss of Control- ownership is transferred to outsiders who can take control + fire the entrepreneur
Determinants of Suitability
- General stock market condition
- Industry market condition
- Frequency + size of all IPOs in the financial cycle
The IPO Process
- Select an Underwriter
- Register IPO w/ SEC/CSE
- Print Prospects
- Present Road-shows
- Price the Securities
- Sell the Securities
SPAC Risks
- Targets companies run the risk of having their acquisition be rejected by SPAC shareholders
- Investors are literally going blindly into the investment
- Sponsors most tasked w/ finding a workable acquisition w/in 2 yrs + not necessarily the best possible deal
MANY firms
Perfect Competition
Differentiated Product
Monopolistic Competition
No control over price
Perfect Competition
Almost complete price control
Monopoly
Difficulty entry
Oligopoly
Some price control with collusion
Oligopoly
Almost complete price control
Monopoly
Public relations advertising
Monopoly
no advertising
Perfect Competition
Standardized or differentiated product
Oligopoly
Standardized product
Perfect Competition
Few firms
Oligopoly
Limited control over price
Monopolistic Competition
