Craig Chapman

Chapman, Craig. 2010. Jimmy Fu and Moog, Inc.: Understanding Shareholder's Equity. Boston, MA: Harvard Business Publishing.

Jimmy Fu is interviewing for a job at Moog, Inc., a worldwide designer, manufacturer, and integrator of precision motion and fluid controls and systems. He learns that a job offer from Moog typically includes stock options and restricted stock in the compensation package. The vesting and termination language for the stock plan leads Jimmy to investigate the Shareholders' Equity section of the Moog balance sheet, where he finds more activity than he expected. The case introduces students to the concepts of employee stock options, stock-splits and buybacks, multiple share classes, and the basics of equity investment and diversification. Students must complete a quantitative analysis of the financial transactions related to Shareholders' Equity. Primary Objective is to introduce students to the different components of the Shareholders' Equity section of the Balance Sheet, to understand employee stock options, multiple share classes, and certain basics of equity investment, risk, and diversification.

Chapman, Craig, Sharon M Bruns, William E Bruns and Susan Harmeling. 2008. Teaching Note for Merrimack Tractors and Mowers, Inc.: LIFO or FIFO. Boston: Harvard Business Publishing.

In 2008 Merrimack Tractors and Mowers finds itself in a situation where product manufacturing costs are increasing faster than competitors’ costs, and as a result earnings are likely to fall below those reported in 2007. The company president and the company controller have discussed this problem, and the controller has mentioned the idea that if the company changed from LIFO to FIFO it might be possible to maintain earnings growth in 2008. He prepared a memo to the president explaining how inventory flow assumptions work and provides pro-forma income statements that show that for one product (reel mower units) adopting FIFO would allow Merrimack to report higher income in 2008 than it did in 2007, but higher income taxes would have to be paid. The case is designed to be used in an introductory financial accounting course to explore the differential effects of LIFO and FIFO accounting on inventory valuation. Discussions can also explore the ethical questions which may arise as managers consider changes in accounting policies.

Chapman, Craig. 2009. Biovail Corporation’s Truck Accident: Revenue Recognition and FOB Sales Accounting. Boston, MA: Harvard Business Publishing.

Biovail Corporation, a major Canadian pharmaceutical company listed on the New York Stock Exchange, announces that it will miss its quarterly earnings target by $25 to $45 million, blaming $10 to $15 million of the shortfall on a truck accident involving a shipment that left its facility on the last day of the quarter. The case was ultimately prosecuted by the U.S. Securities and Exchange Commission (SEC). The case is centered on the question of revenue recognition and how the company should have accounted for the sales (FOB company or FOB destination). However, it also provides a rich setting permitting exploration of peripheral topics around the ethics of earnings management. For example, the case discusses stock analysts' reactions to the announcement; questions how much product was actually in the truck; questions how aggressively the company responds against the analysts who downgrade the stock; and highlights the role of the SEC in enforcement. The primary objective is to explore the concepts of revenue recognition. Secondary points of interest include management of information flows to the capital markets, relationships with analysts and the enforcement role of the SEC

Chapman, Craig. 2010. Teaching Note for Jimmy Fu and Moog, Inc.: Understanding Shareholder's Equity. Boston, MA: Harvard Business Publishing.

Jimmy Fu is interviewing for a job at Moog, Inc., a worldwide designer, manufacturer, and integrator of precision motion and fluid controls and systems. He learns that a job offer from Moog typically includes stock options and restricted stock in the compensation package. The vesting and termination language for the stock plan leads Jimmy to investigate the Shareholders' Equity section of the Moog balance sheet, where he finds more activity than he expected. The case introduces students to the concepts of employee stock options, stock-splits and buybacks, multiple share classes, and the basics of equity investment and diversification. Students must complete a quantitative analysis of the financial transactions related to Shareholders' Equity. Primary Objective is to introduce students to the different components of the Shareholders' Equity section of the Balance Sheet, to understand employee stock options, multiple share classes, and certain basics of equity investment, risk, and diversification.

Chapman, Craig. 2009. Teaching Note for Biovail Corporation’s Truck Accident: Revenue Recognition and FOB Sales Accounting. Boston, MA: Harvard Business Publishing.

Biovail Corporation, a major Canadian pharmaceutical company listed on the New York Stock Exchange, announces that it will miss its quarterly earnings target by $25 to $45 million, blaming $10 to $15 million of the shortfall on a truck accident involving a shipment that left its facility on the last day of the quarter. The case was ultimately prosecuted by the U.S. Securities and Exchange Commission (SEC). The case is centered on the question of revenue recognition and how the company should have accounted for the sales (FOB company or FOB destination). However, it also provides a rich setting permitting exploration of peripheral topics around the ethics of earnings management. For example, the case discusses stock analysts' reactions to the announcement; questions how much product was actually in the truck; questions how aggressively the company responds against the analysts who downgrade the stock; and highlights the role of the SEC in enforcement. The primary objective is to explore the concepts of revenue recognition. Secondary points of interest include management of information flows to the capital markets, relationships with analysts and the enforcement role of the SEC

Chapman, Craig. 2011. Dragon Soup and Earnings Management (B). Case 5-211-251(B) (KEL575).

In the (B) Case, Ben Kerr, Chief Investment Officer at one of Dragon’s main competitors, considers the financial statements produced by Dragon to unravel any earnings management behavior and establish a true value for the company.
Although the case can be focused on the accounting consequences of real decisions, a richer discussion is obtained when considering the ethical angles of the decision process. In particular, how much ‘earnings management’ should be pursued and what types of behaviors are simply going to be unraveled by investors?

Chapman, Craig. 2011. Dragon Soup and Earnings Management (A). Case 5-211-251(A) (KEL574).

In the (A) Case, Jason Phillips, Chief Financial Officer of a soup manufacturing business, is given the task of maximizing the value of the firm twelve months after the case is set. Although he does not want to break any legal rules, Jason is interested to see whether accounting and real action choices can be used to enhance the company’s financial position and increase its perceived value to investors. The case permits him to select from a menu of options, including decisions on product pricing, inventory levels, accounts receivables, leasing or purchasing a new machine and valuation or sale of securities. These choices are fed into an Excel spreadsheet which adjusts financial projections and accounting disclosures accordingly.