An ongoing appreciation for Barbarians at the Gate

I like to show the movie Barbarians at the Gate in finance class because it is such a strong illustration of corporation finance: decisions about introducing a new product (the ill-fated Premier cigarette) and reinvesting in the bakery business; dealing with sunk costs (Premier); valuing cash flows; agency problems with management and shareholders; decisions about capital structure; and what happens when a management team gets fat and happy. The fact that involves a company that makes a product that everyone knows about makes it even better.

In essence, it’s all you need to know about corporation finance, minus the equations. And it’s a fun movie.

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