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Nissan has been at the heart of one of the biggest automotive financial scandals to date....

Nissan has been at the heart of one of the biggest automotive financial scandals to date. From executives under-reporting wages, to misreporting earnings, and even corporate espionage charges. For Project 1 you're job is to approximate the financial loss that this scandal has cost the company.

For this project you are going to be wearing your financial analyst hat. As an analyst it's your job to objectively evaluate the financial sustainability of a firm and offer your recommendation to current or potential shareholders.

In an executive summary (that is no more than two pages, 12pt font, 1.5 spaced) I want you to site major events in the scandal and use available financial information (stock prices, publicly available company financial statements, etc) to approximate the financial loss the company sustained.

Your writing this executive summary to the current and prospective shareholders so your conclusion must include your recommendation. Should investors buy, hold, or sell this stock? Is there any weight to the news around Nissan's new direction? Do you believe Nissan can recover from the financial and reputation damages?

You may include an appendix beyond the two page executive summary to include relevant links/citations to news articles, financial statements, stock charts, your own original Excel models etc. used to support your analysis.

Solutions

Expert Solution

To The Stakeholders of Nissan Motors

  • Nissan filed $91 million lawsuit in Japanese court against former CEO Carlos Ghosn
  • Company claimed this amount as recovery of years of misconducts in Nissan.
  • Nissan said in court fillings that it faced heavy penalties in US and Japan as well as a sharp drop in Sales and Earnings.
  • Case mainly relates to overpayment to Ghosn and false disclosures in annual report.
  • Special Committee has been formed by Nissan for improving Board's governance.
  • Long Internal inquiries was setup for investigating this huge scandal.
  • Nissan is controlled by Renault with its stake and do their accounting using equity method that is clubbing of financials.
  • Renault share prices were also impacted by this scandal.
  • Net Revenue and earnings declined sharply from 2018 when this scandal got detected.
  • Share prices have saw a decline of around 55% in last 2 years after this scandal.
  • When share price start falling,we cannot say it cannot go below this. Buying at any prices in a week company isn't worth it.
  • Company may or may not recover from the reputational loss which may highly depend on their new projects and press dealings.Currently,No big projects seems to be in pipeline.
  • Recommendation: Investors are recommended to sell the stock as it has turned too weak.If the company operations didn't see a boom especially now it hitted a pandemic.A weak company hitting recession may result in insolvency of the company.

Please upvote.Thanks.

jeff jeffy answered 2 years ago
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