TripAdvisor 2013 Annual Report Download - page 41

Moreover, we rely heavily on the representations and warranties provided to us by the sellers of acquired
companies, including as they relate to creation, ownership and rights in intellectual property and compliance with
laws and contractual requirements. Our failure to address these risks or other problems encountered in connection
with past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of such
acquisitions or investments, incur unanticipated liabilities and harm our business generally.
We are currently relying on the “controlled company” exemption under NASDAQ Stock Market Listing
Rules, pursuant to which “controlled companies” are exempt from certain corporate governance requirements
otherwise applicable under NASDAQ listing rules.
The NASDAQ Stock Market Listing Rules exempt “controlled companies,” or companies of which more
than 50% of the voting power is held by an individual, a group or another company, from certain corporate
governance requirements, including those requirements that:
• A majority of the Board of Directors consist of independent directors;
• Compensation of officers be determined or recommended to the Board of Directors by a majority of its
independent directors or by a compensation committee comprised solely of independent directors; and
• Director nominees be selected or recommended to the Board of Directors by a majority of its
independent directors or by a nominating committee that is composed entirely of independent directors.
We currently rely on the controlled company exemption from the above requirements. Accordingly, our
stockholders will not be afforded the same protections generally as stockholders of other NASDAQ-listed
companies with respect to corporate governance for so long as we rely on these exemptions from the corporate
governance requirements.
If we are unable to successfully maintain effective internal control over financial reporting, investors may lose
confidence in our reported financial information and our stock price and business may be adversely impacted.
As a public company, we are required to maintain internal control over financial reporting and our
management is required to evaluate the effectiveness of our internal control over financial reporting as of the end
of each fiscal year. Additionally, we are required to disclose in our Annual Reports on Form 10-K our
management’s assessment of the effectiveness of our internal control over financial reporting and a registered
public accounting firm’s attestation report on this assessment. If we are not successful in maintaining effective
internal control over financial reporting, there could be inaccuracies or omissions in the consolidated financial
information we are required to file with the SEC. Additionally, even if there are no inaccuracies or omissions, we
could be required to publicly disclose the conclusion of our management that our internal control over financial
reporting or disclosure controls and procedures are not effective. These events could cause investors to lose
confidence in our reported financial information, adversely impact our stock price, result in increased costs to
remediate any deficiencies, attract regulatory scrutiny or lawsuits that could be costly to resolve and distract
management’s attention, limit our ability to access the capital markets or cause our stock to be delisted from The
NASDAQ Global Select Market or any other securities exchange on which we are then listed.
The market price and trading volume of our common stock may be volatile and may face negative pressure.
Our stock price has experienced, and could continue to experience in the future, substantial volatility. The
market price of our common stock is affected by a number of factors, including the risk factors described in this
section and other factors beyond our control. Factors affecting the trading price of our common stock could
include:
• Quarterly variations in our or our competitors’ results of operations;
• Changes in earnings estimates or recommendations by securities analysts;
• Failure to meet market expectations;
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