Panel Member Replaced

The Commerce Commission is replacing one of the members of the panel appointed to review its Draft Guidelines on Estimating the Cost of Capital

On 15 September 2006 the Commerce Commission announced the appointment of a panel of three experts Professor Bradford Cornell, Professor Julian Franks, and Dr. Martin Lally.

Following the Commission's announcement of the panel, CRA International, who advises a number of businesses in New Zealand on cost of capital matters, raised objections to Professor Cornell's appointment, on the grounds that his involvement might raise actual or perceived conflicts of interest with its clients. Professor Cornell is a senior consultant with CRA. Following discussions with CRA the Commission agreed that Professor Cornell would step down.

The Commission then moved to find a replacement for Professor Cornell on the panel, and this process has resulted in the appointment of Professor Stewart Myers, another leading expert on cost of capital issues.

Professor Stewart Myers is the Gordon Y Billard Professor of Finance at the MIT Sloan School of Management. He is past President of the American Finance Association, a Research Associate at the National Bureau of Economic Research, and a director of the Cambridge Endowment for Research in Finance. Professor Myers has published extensively in scholarly finance journals and is co-author of, among other books, Principles of Corporate Finance, a leading graduate-level corporate finance text. His research interests include the valuation of investments in R&D, risk management, the allocation of capital in diversified firms, and the theory of corporate governance. Professor Myers is also active as a financial consultant, advising major corporations on mergers and acquisitions, capital investment decisions, methods of financing, measurement of the cost of capital, and valuation.

Due to the delays arising from the changes in the composition of the panel, it is now expected that the panel will provide a report outlining its final advice to the Commission by mid-April 2007. The Commission will then consider the panel's recommendations and formulate its Guidelines on the Cost of Capital.

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