Volume 28 CONTENTS Spring 2002
#1 - SERVICE LEARNING IN FINANCE
James Philipot and Margaret Wright
This paper discusses service learning, an increasingly popular teaching approach whereby students conduct community service projects related to the subject matter taught in a course. We develop and test the educational efficacy of a community service project related to time value of money concepts. Students who complete the service-learning project show markedly greater improvement in concept mastery versus a lecture-only group. Also, the service-learning students show significant change in response to some indicators of social outlook.
#2 - EXPLORING CAREERS IN FINANCIAL SERVICES ON THE INTERNET: A PROFESSOR'S GUIDE
Todd Shank and Joel Jankowki
This paper provides a comprehensive guide for a professor to conduct a one-class discussion and demonstration of career planning for Finance students on the Internet. The session is divided into three parts covering the list of career choices in finance, professional licenses and professional designations available in the field, and how to pursue specific job openings with financial service firms. Use of the Internet allows professors to provide a wealth of career information in a relatively short class period. The Appendix contains a list of web sites pertaining to each of the three facets of the demonstration, minimizing necessary preparation time.
#3 - CURRENT TRENDS IN CORPORATE CASH HOLDINGS: A SURVEY OF U.S. CERTIFIED CASH MANAGERS
Erika W. Gilbert and Esmeralda O. Lyn
We conducted a survey of certified cash managers to identify the reasons behind the shifts that have occurred in corporate cash management. The survey focused on how companies have adapted cash balance strategies to the rapidly changing conditions in information and funds transfers. Our survey findings regarding current cash holding practices suggest that, despite low interest rates and easy funds availability, firms try to use cash sparingly while increasing efficiencies. The results reveal that a significant number of firms have decreased their transactionary cash holdings and the most frequently given reason is that automated clearing (ACH) and electronic transfer checks (ETC) allow for greater predictability of cash flows than checks. The results also indicate that a majority of the respondents’ firms no longer maintain compensating balances with their banks, and for those who do, the reason is mainly bank service compensation. The small number of firms which maintain precautionary balances do so chiefly because of corporate policy. Furthermore, most of the respondents believed that it is uncommon in their industry to hold speculative balances because of the availability of other venues where the desired results can be equally well achieved.
#4 - FACULTY USE OF COMPUTER, GROUP WORK, WRITING ASSIGNMENTS
AND PRESENTATIONS IN THE INTRODUCTORY FINANCE COURSE
Kent T. Saunders
This paper examines faculty use of computers, group work, writing assignments and presentations in the undergraduate introductory finance course. The data was collected from a national survey sent out in the spring of 2000 and is an extension of the findings reported in Saunders . Most finance faculty use computers as an in-class teaching method and for out-of-class assignments. Approximately half of finance faculty use group work and writing assignments. Fewer than half of finance faculty use student presentations in their courses. Kruskal-Wallis tests and Logistic regression indicate that gender and academic rank are not associated with the use of computers, group work, writing assignments and presentations; however, classroom type and class size do have a significant association with teaching methods, out-of class assignments, and grade determinants.
#5 - INTERNET APPLICATIONS IN INVESTMENT BANKING: IMPLICATIONS AND SIGNIFICANCE
George J. Papaioannou
This paper discusses how investment banks utilize the internet as well as the motivation and implications of these early internet applications for the conduct of investment banking activities. Focus, in particular, is on the significance of e-commerce applications for the management of relationships with clients, the expansion into the retail investor market, and the re-engineering of the underwriting process. The paper offers some critical perspectives as to whether internet-based operations are likely to transform the intermediary services of underwriting firms in the securities issuance process.
#6 - AN EASIER, MORE ACCURATE WAY TO DEAL WITH MACRS DEPRECIATION TAX SHIELDS IN NPV ANALYSIS
Wm R McDaniel
The capital investment reduction factor, as developed here, simplifies the cash flow analysis for net present value calculations regarding assets subject to the MACRS. I suggest applications for valuations, for the opportunity cost of using idle capacity and for making risk adjustments. The last application increases the accuracy of net present value estimates.
#7 - OCEAN SPRAY CRANBERRIES, INC.
Wesley Marple, Jr., Donald J. Harding and assisted by Elisabeth R. Hatfield
This case addresses long-term capital structure and financial strategy decisions in the context of an unusual type of U.S. corporation. An agricultural cooperative, Ocean Spray distributes most of its net proceeds to its members and thus finds it difficult to retain earnings to grow. At the time of the case, Merrill-Lynch had proposed that the company re-capitalize, substituting preferred stock for debt, in order to establish a base for expected future growth. The proposed re-capitalization might be facilitated by the use of Ocean Spray’s Foreign Sales Corporation. Ocean Spray management faced thorny issues of tax and other laws governing cooperatives as well as cost of capital concerns.