Council of Institutional Investors

Event Calendar

Monday, June 8, 2020

Webinar: Why Companies with Stock Compensation (and Finance Leases) are Overvalued

Start Date: 6/8/2020 1:00 PM EDT
End Date: 6/8/2020 2:00 PM EDT


This webinar will focus on a recent research paper by Professor Sanjeev Bhojraj of the Johnson Graduate School of Management at Cornell University. The paper concludes that companies that pay their management with stock are overvalued because stock compensation is added back to the company’s operating cash flow under generally accepted accounting principles. The "add-back" is an oversight that investors are willing to overlook, and the result is an overstatement of “cash from operations” and “free cash flow;” both important metrics that the managers use in assessing the performance of the business and market participants use when making investment decisions. The paper also identifies a similar issue with the use of finance leases. Professor Bhojraj will be joined on the webinar by noted accounting analyst and the former publisher of The Analyst's Accounting Observer Weekly Reader, Jack Ciesielski. Mr. Ciesielski will provide his analysis and views on the implications of Professor Bhojraj’s findings for CII member funds. The moderator for the webinar will be CII’s General Counsel Jeff Mahoney.