Corporate Finance Project Harvard Case Solution & Analysis

Portion of the company is owned by insiders

The portion of the company owned by insiders in case of Good Year and Car Max is very low. The percentage of the insiders in both companies is less than 1%, therefore it is expected that the percentage of insider shareholders in both companies is almost zero.

On the other hand,the percentage of insiders in Cooper Tire & Rubber Co, which is a similar company to Good Year Tire & Rubber Company, is 1%, while the percentage of insiders at an Auto Nation company, which is a similar company to Car Max, is 34%. There could be many reasons behind this difference, but the common reason is that Good Year and Car Max have not issued shares to the employees as their competitors have issued. The data of related companies is taken from the following links.

The portion of the Shares is Held by Financial Institutions 

The portion of shares held by the financial institutions in Goodyear and Car Max Company is very significant. The holding of financial institutions in Good Year Tire & Rubber Company is approximately 84% and the case of Car Max’s holding of financial institutions is approximately 100%, which means the major holding of both companies is acquired by the financial institutions.

However,in the case of related companies the shares held by the financial institutions in Copper Tire & Rubber Company is 91% and it is a similar company to Good Year Tire & Rubber Company. In the case of Good Year and Copper Tire and Rubber Company, the shares held by the financial institutions are of large amount.

In case of Car Max, the shares held by the financial institutions are 100%, how ever in case of its related company like Auto Nation; the shares held by the financial institutions are about 3% which is very low as compared to the Car Max. The data about related industries is taken from following link.

(Financials, 2014)

Top institutional owners

The top institution owners in case of Good Year Tire & Rubber Company are mutual fund owners. The percentage of top mutual fund owners among the 34.71% of top financial institution owners is 12.27%.

In the case of Car Max, the top institutional owners are also mutual fund owners. The percentage of top mutual fund owners among the 51.55% of top financial institution owners is 20.26%. The data about the major institutional owners is also taken from the same source through which the data of financial institutional owners have been taken.

(Yahoo Finacne)

Individual Owners

The individual shareholders who held the number of shares equal to any of financial institutions are also present. In the case of Good Year Kramer, Richard J holds about 205,684 numbers of shares. However,the percentage of his holding is very low as compared to the overall ownership of the company. In the case of the CarMax, Folliard Thomas J holds the 536,690 number of shares. The percentage of holding of Thomas is also low as compared to other owners of the company, therefore it is expected that these individuals don’t have power to hedge funds.

Owners of the Company Power to Exert Pressure

The owners of the companies having significant percentage of the company’s holding can exert pressure on the board.In case of the Good Year Tire & Rubber Company the major shareholders are financial institutions, so the financial institutions have the withholding support of the directors, therefore they can put pressure on the board of the company if the company is not performing well.

Similarly, in the case of the CarMax, the major shareholders are financial institutions.As a result,the financial institutions have the withholding support of the directors; therefore they can also put pressure on the board of CarMax if the company is not performing well.CORPORATE FINANCE PROJECT Case Solution

(Major Holders, 2014)

Independent Directors and their Profession

Directors of Good Year Tire & Rubber Company

William J. A county is a Retired Senior Vice President of the Human Resources department of General Electric Company.

James A. Firestone is the Executive Vice President and President of the department of Corporate Strategy and Asia Operations of Xerox Corporation.

Werner Geisslayer is a Retired Vice Chairman of the department of Global Operations   from the company Procter & Gamble.

Peter S. Hellman is a Retired President of Nordson Corporation.

Laurette T. The cleaner is a Retired President of Boeing International...............................

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