Corporate Issuers

In this section

• Chapter 1: Organizational Forms, Corporate Issuer Features, and Ownership
  Chapter 1: Organizational Forms, Corporate Issuer Features, and Ownership (CFA Level 1): Key concepts explained with clear definitions, formulas, and exam-focused examples.
  • Business Structures (Sole Proprietorship, Partnership, Corporation)
    Business Structures (Sole Proprietorship, Partnership, Corporation) (CFA Level 1): Key Features of a Sole Proprietorship, Partnerships, and General Partnerships. Key definitions, formulas, and exam tips.
  • Public versus Private Companies
    Public versus Private Companies (CFA Level 1): Key Comparisons, Public (Listed) Companies, and Private (Unlisted) Companies. Key definitions, formulas, and exam tips.
  • Equity and Debt Claims
    Equity and Debt Claims (CFA Level 1): Understanding Equity Claims, Common Stock, and Preferred Stock. Exam-focused explanations with key terms and takeaways.
  • Share Classes and Voting Rights
    Share Classes and Voting Rights (CFA Level 1): Common Stock Classes, Class A vs. Class B Shares, and Founder or Family Control. Key definitions, formulas, and exam tips.
  • Hybrid Legal Structures (LLCs, LLPs)
    Hybrid Legal Structures (LLCs, LLPs) (CFA Level 1): Key Characteristics, LLCs in Focus, and Pass-Through Taxation (LLCs). Key definitions, formulas, and exam tips.
  • Convertible Debt and Other Hybrid Securities
    Convertible Debt and Other Hybrid Securities (CFA Level 1): Convertible Bonds, Structure and Basic Features, and Conversion Dynamics and Bond Pricing. Key definitions, formulas, and exam tips.
  • Legal and Compliance Requirements for Corporate Issuers
    Legal and Compliance Requirements for Corporate Issuers (CFA Level 1): Why Legal and Compliance Requirements Matter, Key Regulations and Filings, and Timely Disclosure Requirements. Key definitions, formulas, and exam tips.
  • Dual-Class Share Structures
    Dual-Class Share Structures (CFA Level 1): Definition and Key Characteristics, Rationale and Motivations, and Concerns and Criticisms. Key definitions, formulas, and exam tips.
  • Corporate Bylaws and Articles of Incorporation
    Corporate Bylaws and Articles of Incorporation (CFA Level 1): Corporate Bylaws, Key Features of Bylaws, and Articles of Incorporation. Key definitions, formulas, and exam tips.
  • Regulatory Reporting Requirements (IFRS vs. US GAAP) and Strategic Considerations
    Regulatory Reporting Requirements (IFRS vs. US GAAP) and Strategic Considerations (CFA Level 1): Key Concepts: IFRS vs. US GAAP, Principles-Based vs. Rules-Based Approaches, and Main Areas of Difference. Key definitions, formulas, and exam tips.
• Chapter 2: Investors and Other Stakeholders
  Chapter 2: Investors and Other Stakeholders (CFA Level 1): Key concepts, definitions, and exam tips with practical examples. Use it to reinforce intuition and avoid common pitfalls.
  • Lenders versus Shareholders
    Lenders versus Shareholders (CFA Level 1): Key Distinctions and Motivations, Debt Capital and Creditors’ Priorities, and Equity Capital and Shareholder Perspectives. Key definitions, formulas, and exam tips.
  • Stakeholder Groups and Their Interests
    Stakeholder Groups and Their Interests (CFA Level 1): Stakeholder Theory and Why It Matters, Key Stakeholder Groups, and Employees. Key definitions, formulas, and exam tips.
  • Stakeholder Conflicts and Agency Issues
    Stakeholder Conflicts and Agency Issues (CFA Level 1): Agency Relationship and Its Challenges, Separation of Ownership and Control, and Agency Problem. Key definitions, formulas, and exam tips.
  • Environmental, Social, and Governance Factors
    Environmental, Social, and Governance Factors (CFA Level 1): Why ESG Matters, Key ESG Factors, and Environmental Factors. Key definitions, formulas, and exam tips.
  • Activist Investors and Corporate Social Responsibility
    Activist Investors and Corporate Social Responsibility (CFA Level 1): Understanding Activist Investors, Key Techniques of Activist Investors, and Link between Activism and Corporate Governance. Key definitions, formulas, and exam tips.
  • Proxy Voting, Meetings, and Shareholder Resolutions
    Proxy Voting, Meetings, and Shareholder Resolutions (CFA Level 1): Proxy Voting Fundamentals, Why Proxy Voting Matters, and Proxy Statement. Key definitions, formulas, and exam tips.
  • Minority Shareholder Rights and Protections
    Minority Shareholder Rights and Protections (CFA Level 1): Importance of Minority Shareholder Protections, Core Challenges for Minority Shareholders, and Key Legal Protections. Key definitions, formulas, and exam tips.
  • Institutional Investors
    Institutional Investors (CFA Level 1): Key Types of Institutional Investors, Pension Funds, and Insurance Companies. Key definitions, formulas, and exam tips.
  • Communication Channels with Stakeholders
    Communication Channels with Stakeholders (CFA Level 1): Importance of Effective Communication, Key Communication Channels, and Annual Reports and Financial Statements. Key definitions, formulas, and exam tips.
• Chapter 3: Corporate Governance: Conflicts, Mechanisms, and Risks
  Chapter 3: Corporate Governance: Conflicts, Mechanisms, and Risks (CFA Level 1): Key concepts explained with clear definitions, formulas, and exam-focused examples.
  • Principal–Agent Conflicts and Agency Costs
    Principal–Agent Conflicts and Agency Costs (CFA Level 1): Principal–Agent Problem, Common Agency Costs, and Monitoring Costs. Key definitions, formulas, and exam tips.
  • Internal Governance Mechanisms (Board of Directors, Compensation Policies)
    Internal Governance Mechanisms (Board of Directors, Compensation Policies) (CFA Level 1): Board of Directors, Composition and Role, and Board Dynamics: Independence vs. Management. Key definitions, formulas, and exam tips.
  • External Governance Mechanisms (Market for Corporate Control, Regulators)
    External Governance Mechanisms (Market for Corporate Control, Regulators) (CFA Level 1): Market for Corporate Control, Hostile Takeovers as a Governance Tool, and Takeover Defenses. Key definitions, formulas, and exam tips.
  • Risks of Weak Governance and Benefits of Effective Governance
    Risks of Weak Governance and Benefits of Effective Governance (CFA Level 1): Why Weak Governance is Risky, Visualizing the Consequences of Weak Governance, and Benefits of Effective Governance. Key definitions, formulas, and exam tips.
  • Corporate Governance Codes of Best Practice
    Corporate Governance Codes of Best Practice (CFA Level 1): Major Codes and Their Foundational Principles, OECD Principles of Corporate Governance, and UK Corporate Governance Code. Key definitions, formulas, and exam tips.
  • Executive and Board Compensation Structures
    Executive and Board Compensation Structures (CFA Level 1): Need for Balanced Compensation, Key Components of Executive Compensation, and Base Salary. Key definitions, formulas, and exam tips.
  • Board Diversity and Composition
    Board Diversity and Composition (CFA Level 1): Dimensions of Board Diversity, Rationale for Board Diversity, and Board Composition Essentials. Key definitions, formulas, and exam tips.
  • Board Committees (Audit, Compensation, Nominating)
    Board Committees (Audit, Compensation, Nominating) (CFA Level 1): Role of Board Committees in Corporate Governance, Audit Committee, and Key Responsibilities. Key definitions, formulas, and exam tips.
  • Board Evaluations and Succession Planning
    Board Evaluations and Succession Planning (CFA Level 1): Board Evaluations: Why They Matter, Approaches to Board Evaluation, and Key Steps in the Board Evaluation Process. Key definitions, formulas, and exam tips.
• Chapter 4: Working Capital and Liquidity
  Chapter 4: Working Capital and Liquidity (CFA Level 1): Key concepts, definitions, and exam tips with practical examples. Use it to reinforce intuition and avoid common pitfalls.
  • Cash Conversion Cycle Components and Analysis
    Cash Conversion Cycle Components and Analysis (CFA Level 1): Key Components of the Cash Conversion Cycle, Days Sales Outstanding (DSO), and Days Inventory Outstanding (DIO). Key definitions, formulas, and exam tips.
  • Managing Receivables, Payables, and Inventory
    Managing Receivables, Payables, and Inventory (CFA Level 1): Working Capital Cycle, Receivables Management, and Credit Policies and Terms. Key definitions, formulas, and exam tips.
  • Measuring Liquidity (Ratios and Metrics)
    Measuring Liquidity (Ratios and Metrics) (CFA Level 1): Why Liquidity Matters for Corporate Issuers, Core Liquidity Ratios, and Current Ratio. Key definitions, formulas, and exam tips.
  • Short-Term Funding Strategies and Sources
    Short-Term Funding Strategies and Sources (CFA Level 1): Key Funding Instruments and Strategies, Bank Credit Lines, and Revolving Credit Facilities. Key definitions, formulas, and exam tips.
  • Approaches to Working Capital Policy (Aggressive vs. Conservative)
    Approaches to Working Capital Policy (Aggressive vs. Conservative) (CFA Level 1): Key Concepts and Policy Spectrum, Net Working Capital Formula, and Aggressive Policy. Key definitions, formulas, and exam tips.
  • Short-Term Credit Rating Implications
    Short-Term Credit Rating Implications (CFA Level 1): Understanding Short-Term Credit Ratings, Major Credit Rating Agencies, and Key Determinants of Short-Term Ratings. Key definitions, formulas, and exam tips.
  • Factoring, Asset-Based Lending, and Alternative Financing
    Factoring, Asset-Based Lending, and Alternative Financing (CFA Level 1): Factoring: A Key Tool for Liquidity Management, Factoring Basics, and With Recourse vs. Without Recourse. Key definitions, formulas, and exam tips.
  • Liquidity Stress Testing
    Liquidity Stress Testing (CFA Level 1): Objectives and Key Considerations, Governance and Oversight, and Quantitative vs. Qualitative Approaches. Key definitions, formulas, and exam tips.
  • Supply Chain Financing (Reverse Factoring)
    Supply Chain Financing (Reverse Factoring) (CFA Level 1): Key Concepts and Definitions, Mechanics of Reverse Factoring, and Advantages of Supply Chain Financing. Key definitions, formulas, and exam tips.
• Chapter 5: Capital Investments and Capital Allocation
  Chapter 5: Capital Investments and Capital Allocation (CFA Level 1): Key concepts explained with clear definitions, formulas, and exam-focused examples.
  • Types of Capital Projects
    Types of Capital Projects (CFA Level 1): Key Considerations in Identifying Capital Project Types, Expansion Projects, and Replacement Projects. Key definitions, formulas, and exam tips.
  • Discounted Cash Flow Analysis (NPV, IRR, MIRR, PI)
    Discounted Cash Flow Analysis (NPV, IRR, MIRR, PI) (CFA Level 1): Net Present Value (NPV), Why NPV Matters, and Defining NPV. Key definitions, formulas, and exam tips.
  • Project Interactions and Real Options
    Project Interactions and Real Options (CFA Level 1): Understanding Project Interactions, Types of Projects and Their Interactions, and Why Interactions Matter. Key definitions, formulas, and exam tips.
  • Common Pitfalls in Capital Budgeting
    Common Pitfalls in Capital Budgeting (CFA Level 1): Overoptimistic Forecasts, Inclusion of Sunk Costs, and Misalignment with Strategic Objectives. Key definitions, formulas, and exam tips.
  • Other Project Evaluation Methods (Payback Period, Discounted Payback)
    Other Project Evaluation Methods (Payback Period, Discounted Payback) (CFA Level 1): Payback Period Basics, Payback Period Formula, and Discounted Payback Period. Key definitions, formulas, and exam tips.
  • Capital Rationing and Hurdle Rate Determination
    Capital Rationing and Hurdle Rate Determination (CFA Level 1): Understanding Capital Rationing, Internal vs. External Constraints, and Why Ration?. Key definitions, formulas, and exam tips.
  • Sensitivity and Scenario Analysis in Capital Budgeting
    Sensitivity and Scenario Analysis in Capital Budgeting (CFA Level 1): Foundations of Risk Assessment in Capital Budgeting, Sensitivity Analysis, and What Is Sensitivity Analysis?. Key definitions, formulas, and exam tips.
  • Post-Audit Reviews of Capital Investments
    Post-Audit Reviews of Capital Investments (CFA Level 1): Purpose of Post-Audit Reviews, Key Concepts to Remember, and Importance of Variance Analysis. Key definitions, formulas, and exam tips.
• Chapter 6: Capital Structure
  Chapter 6: Capital Structure (CFA Level 1): Key concepts, definitions, and exam tips with practical examples. Use it to reinforce intuition and avoid common pitfalls.
  • Weighted-Average Cost of Capital (WACC)
    Weighted-Average Cost of Capital (WACC) (CFA Level 1): Formula and Interpretation, Why the Tax Shield?, and Components of WACC. Key definitions, formulas, and exam tips.
  • Capital Structure Theories (Modigliani–Miller, Trade-Off Theory)
    Capital Structure Theories (Modigliani–Miller, Trade-Off Theory) (CFA Level 1): Modigliani–Miller Proposition I (No Taxes), Key Implications, and Quick Personal Anecdote. Key definitions, formulas, and exam tips.
  • Target Capital Structure and Factors Affecting It
    Target Capital Structure and Factors Affecting It (CFA Level 1): Definition of Target Capital Structure, Factors Influencing Target Capital Structure, and Business Risk. Key definitions, formulas, and exam tips.
  • Leverage and Financial Risk
    Leverage and Financial Risk (CFA Level 1): Leverage Defined, Operating Leverage vs. Financial Leverage, and Measuring Financial Leverage. Key definitions, formulas, and exam tips.
  • Cost of Equity, Cost of Debt, and Preferred Stock
    Cost of Equity, Cost of Debt, and Preferred Stock (CFA Level 1): Cost of Equity, Capital Asset Pricing Model (CAPM), and Dividend Discount Model (DDM). Key definitions, formulas, and exam tips.
  • Debt Covenants and Covenant Analysis
    Debt Covenants and Covenant Analysis (CFA Level 1): Definition of Covenants, Types of Covenants, and Positive (Affirmative) Covenants. Key definitions, formulas, and exam tips.
  • Convertible Bonds, Warrants, and Other Hybrid Instruments
    Convertible Bonds, Warrants, and Other Hybrid Instruments (CFA Level 1): Convertible Bonds, Defining Convertible Bonds, and Interest Rates and the Bond Floor. Key definitions, formulas, and exam tips.
  • Pecking Order Theory and Security Issuance Decisions
    Pecking Order Theory and Security Issuance Decisions (CFA Level 1): Key Principles of Pecking Order Theory, Background and Hierarchy, and Information Asymmetry and Signaling. Key definitions, formulas, and exam tips.
  • Recapitalization Strategies (Equity for Debt Swaps)
    Recapitalization Strategies (Equity for Debt Swaps) (CFA Level 1): What Is Recapitalization?, Equity-for-Debt Swaps: The Basics, and Typical Steps in an Equity-for-Debt Swap. Key definitions, formulas, and exam tips.
  • Legal/Tax Implications for Capital Structure in Different Jurisdictions
    Legal/Tax Implications for Capital Structure in Different Jurisdictions (CFA Level 1): Tax Regimes and Interest Deductibility, Debt Tax Shield, and Thin Capitalization Rules. Key definitions, formulas, and exam tips.
• Chapter 7: Business Models
  Chapter 7: Business Models (CFA Level 1): Key concepts, definitions, and exam tips with practical examples. Use it to reinforce intuition and avoid common pitfalls.
  • Key Elements of a Business Model
    Key Elements of a Business Model (CFA Level 1): Value Proposition, Customer Segmentation, and Channels of Distribution and Communication. Key definitions, formulas, and exam tips.
  • Revenue Drivers and Pricing Strategies
    Revenue Drivers and Pricing Strategies (CFA Level 1): Understanding Revenue Drivers and Pricing Strategies, Core Revenue Drivers, and Pricing Approaches. Key definitions, formulas, and exam tips.
  • Cost Structures and Scalability
    Cost Structures and Scalability (CFA Level 1): Fixed vs. Variable Costs, Economies of Scale, and Operating Leverage. Key definitions, formulas, and exam tips.
  • Identifying Competitive Advantages
    Identifying Competitive Advantages (CFA Level 1): Differentiation and Cost Leadership, Balancing Both Approaches, and Sustainable Advantage. Key definitions, formulas, and exam tips.
  • Innovations and Disruption in Business Models
    Innovations and Disruption in Business Models (CFA Level 1): Disruptive Innovation, Incremental vs. Radical Innovation, and Technological Leaps. Key definitions, formulas, and exam tips.
  • Behavioral Aspects of Management Decisions
    Behavioral Aspects of Management Decisions (CFA Level 1): Cognitive Biases in Managerial Decision-Making, Groupthink vs. Diverse Teams, and Risk Appetite. Key definitions, formulas, and exam tips.
  • Platform and Subscription-Based Models
    Platform and Subscription-Based Models (CFA Level 1): Defining Platform Business Models, Network Effects, and Subscription Revenue Streams. Key definitions, formulas, and exam tips.
  • Network Effects and Competitive Moats
    Network Effects and Competitive Moats (CFA Level 1): Direct Network Effects, Indirect Network Effects, and Competitive Moats. Key definitions, formulas, and exam tips.
  • Partnerships and Strategic Alliances
    Partnerships and Strategic Alliances (CFA Level 1): Defining Partnerships and Strategic Alliances, Key Differences: Joint Ventures vs. Strategic Alliances, and Motivations for Partnerships and Alliances. Key definitions, formulas, and exam tips.
  • Corporate Reputation and Brand Value
    Corporate Reputation and Brand Value (CFA Level 1): Reputation as a Strategic Asset, Building Brand Equity, and Crisis Management and Recovery. Key definitions, formulas, and exam tips.
  • Cybersecurity and Technology Risk
    Cybersecurity and Technology Risk (CFA Level 1): Understanding the Evolving Cyber Threat Landscape, Data Protection and Encryption as Core Defenses, and Operational Resilience: Ensuring Business Continuity. Key definitions, formulas, and exam tips.
• Chapter 1: Dividends and Share Repurchases
  Chapter 1: Dividends and Share Repurchases (CFA Level 1): Key concepts, definitions, and exam tips with practical examples. Use it to reinforce intuition and avoid common pitfalls.
  • Dividend Policies (Stable, Residual, Hybrid)
    Dividend Policies (Stable, Residual, Hybrid) (CFA Level 1): Rationale and Theoretical Underpinnings, Stable Dividend Policy, and Key Considerations. Key definitions, formulas, and exam tips.
  • Theories of Dividends (Miller–Modigliani, Bird-in-the-Hand, Tax Preferences)
    Theories of Dividends (Miller–Modigliani, Bird-in-the-Hand, Tax Preferences) (CFA Level 1): Miller–Modigliani Dividend Irrelevance Theory, Limitations and Real-World Adjustments, and Bird-in-the-Hand Theory. Key definitions, formulas, and exam tips.
  • Share Buybacks and Their Impact on Shareholder Value
    Share Buybacks and Their Impact on Shareholder Value (CFA Level 1): Understanding Share Buybacks, Methods of Execution, and Motivations for Share Buybacks. Key definitions, formulas, and exam tips.
  • Dividend Reinvestment Plans and Stock Splits
    Dividend Reinvestment Plans and Stock Splits (CFA Level 1): Dividend Reinvestment Plans (DRIPs), Key Characteristics and Benefits, and Practical Considerations and Tax Implications. Key definitions, formulas, and exam tips.
  • Signaling Effect of Dividends
    Signaling Effect of Dividends (CFA Level 1): Understanding the Signaling Theory, Why the Market Reacts Strongly, and Dilemma of Unsustainable Dividends. Key definitions, formulas, and exam tips.
  • Employee Share Ownership Plans and Stock Compensation
    Employee Share Ownership Plans and Stock Compensation (CFA Level 1): Why Employee Ownership Matters, Understanding ESOPs, and Corporate Governance and ESOPs. Key definitions, formulas, and exam tips.
  • Clientele Effect of Dividends
    Clientele Effect of Dividends (CFA Level 1): Defining the Clientele Effect, How It Connects to Chapter Concepts, and Key Theoretical Underpinnings. Key definitions, formulas, and exam tips.
  • Payout Ratios and Sustainable Growth
    Payout Ratios and Sustainable Growth (CFA Level 1): Understanding Payout Ratios, Why It Matters, and Retention Ratio (Plowback Ratio). Key definitions, formulas, and exam tips.
• Chapter 9: Corporate Combinations, Restructuring, and Other Actions
  Chapter 9: Corporate Combinations, Restructuring, and Other Actions (CFA Level 1): Key concepts explained with clear definitions, formulas, and exam-focused examples.
  • Mergers, Acquisitions, and Takeovers
    Mergers, Acquisitions, and Takeovers (CFA Level 1): Types of Deals: Mergers, Acquisitions, and Takeovers, Strategic Rationale, and Synergy Assessment. Key definitions, formulas, and exam tips.
  • Corporate Restructuring (Spin-Offs, Divestitures)
    Corporate Restructuring (Spin-Offs, Divestitures) (CFA Level 1): Understanding Corporate Restructuring, Defining “Restructuring” in a Corporate Sense, and Value Drivers in Corporate Restructuring. Key definitions, formulas, and exam tips.
  • Leveraged Buyouts and Management Buyouts
    Leveraged Buyouts and Management Buyouts (CFA Level 1): Key Motivations and Structure of an LBO, Financing Structures in an LBO, and Management Buyouts (MBOs). Key definitions, formulas, and exam tips.
  • Insolvency and Reorganization Processes
    Insolvency and Reorganization Processes (CFA Level 1): Legal Framework and Bankruptcy Filings, Automatic Stay, and Debtor in Possession (DIP) Financing. Key definitions, formulas, and exam tips.
  • Reverse Mergers and SPACs (Special Purpose Acquisition Companies)
    Reverse Mergers and SPACs (Special Purpose Acquisition Companies) (CFA Level 1): Understanding Reverse Mergers, Key Steps in a Reverse Merger, and Potential Advantages of a Reverse Merger. Key definitions, formulas, and exam tips.
  • Anti-Takeover Provisions and Defenses
    Anti-Takeover Provisions and Defenses (CFA Level 1): Rationale Behind Anti-Takeover Defenses, Common Anti-Takeover Strategies, and Poison Pill (Shareholder Rights Plan). Key definitions, formulas, and exam tips.
  • Synergies and Cross-Border Mergers
    Synergies and Cross-Border Mergers (CFA Level 1): Test Your Knowledge: Synergies and Cross-Border Mergers and Which of the following best describes "cost synergy". Key definitions, formulas, and exam tips.
  • Post-Merger Integration
    Post-Merger Integration (CFA Level 1): Key Components of an Effective PMI, Organizational Structure Alignment, and IT Systems and Data Integration. Key definitions, formulas, and exam tips.
  • Regulatory Approvals and Cross-Border Complexity in M&A
    Regulatory Approvals and Cross-Border Complexity in M&A (CFA Level 1): Key Regulators and Their Roles, M&A Approval Process, and Cross-Border Complexity. Key definitions, formulas, and exam tips.
  • Earnouts and Contingent Payments in M&A
    Earnouts and Contingent Payments in M&A (CFA Level 1): Rationale for Earnouts and Contingent Payments, Common Structures and Key Terms, and Defining Performance Goals. Key definitions, formulas, and exam tips.
  • Hostile Takeovers
    Hostile Takeovers (CFA Level 1): Key Characteristics of a Hostile Takeover, Why Hostile Takeovers Happen, and Hostile Takeover Tactics. Key definitions, formulas, and exam tips.