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Бакалавриат 2019/2020

Корпоративные финансы

Направление: 38.03.01. Экономика
Кто читает: Школа финансов
Когда читается: 3-й курс, 3, 4 модуль
Формат изучения: без онлайн-курса
Язык: английский
Кредиты: 6

Course Syllabus

Abstract

The main objective of the course is to present the modern approach to the financial analysis of a company and to teach the principles and techniques of evaluating the most important corporate decisions. The core of the course is the analysis of investment (capital budgeting) and financing (capital structure) decisions of a firm. We will first discuss the principles and techniques of selecting investment projects. Secondly, we will examine the determinants of the capital structure choices by firms as well as the notion of the optimal capital structure. We will then discuss how to value a company, taking into account its capital structure. We will also analyze how firms decide on their payouts to shareholders and what the optimal payout policy should be. Finally, we will briefly cover initial public offerings, corporate governance and mergers and acquisitions (time permitting).
Learning Objectives

Learning Objectives

  • To present the modern approach to the financial analysis of a company
  • To teach the principles and techniques of evaluating the most important corporate decisions
  • Understanding of factors/forces that affect firm value
  • Ability to analyze and evaluate financial decisions of a firm
  • Fundamental valuation skills
Expected Learning Outcomes

Expected Learning Outcomes

  • Understanding of the concept of real options, knowledge of techniques of real option valuation
  • Understanding of the basic principles and concepts of accounting
  • Understanding of firms’ motives to go public, IPO mechanisms, IPO pricing and performance.
  • Comprehension of various approaches to assess the value of a company, ability to compare these approaches.
  • Ability to build valuation models.
  • Understanding of the payout policy choices of firms, ability to evaluate payout policies
  • Understanding of the key corporate governance mechanisms and their effect on the cost of external capital and value of companies
  • Understanding the motives, sources of value creation/destruction, and negotiation aspects of M&A transactions.
Course Contents

Course Contents

  • Introduction to corporate finance. Notion of corporation, financial statements and financial ratios
  • 2. Fundamentals of capital budgeting
    2.1. Refresher on time value of money, discounting, stocks and bonds valuation, risk and return, CAPM 2.2. Basic investment decision rules (NPV, IRR, payback period, etc.) 2.3. Projects with unequal lives: matching cycle, Equivalent Annual Cost (Benefit) method, replacement problem 2.4. Evaluating a project: forecasting earnings, determining cash flows, computing NPV 2.5. Sensitivity analysis, scenario analysis
  • Advanced capital budgeting: real options
    3.1. Financial options: notion, properties, pricing (binomial model, Black and Scholes formula, Monte-Carlo simulations) 3.2. Real options: types and examples, valuation of projects with real options
  • Capital structure
    4.1. Sources of long-term financing, types of equity and debt financing 4.2. Capital structure in a perfect market (Modigliani-Miller propositions) 4.3. Impact of taxes and costs of financial distress 4.4. Impact of agency costs of equity and debt 4.5. Impact of information asymmetries 4.6. Firms’ choices of capital structure: empirical evidence
  • Initial public offerings
    5.1. Motives for going public 5.2. Short- and long-run performance of IPOs
  • Capital budgeting and valuation with leverage
    6.1. Establishing required rates of return. WACC, APV and FTE (ER) methods 6.2. Valuing a firm: building the financial model, estimating the cost of capital, using DCF to value the firm 6.3. Valuation by comparables (multiples)
  • Payout policy (dividends and stock repurchases)
    7.1. Payout policy in a perfect market 7.2. Effects of taxes, agency problems and information asymmetries on payout policy
  • Corporate governance
  • Mergers and Acquisitions
    9.1. Motives for M&A 9.2. Hostile and friendly takeovers, takeover defenses, bidding strategies 9.3. Announcement returns and long-run performance of M&A
Assessment Elements

Assessment Elements

  • non-blocking Problem sets
  • non-blocking Cases
    4-5 problem sets to be solved individually. 4 cases to be solved in groups of 3 to 5 people, with subsequent student presentations in class. Cases are real-life situations in which you will have to put yourselves in the shoes of managers taking real-life decisions.
  • non-blocking Midterm test
  • non-blocking Final test
    There will be online proctoring during the exam at ZOOM platform. The conference will be recorded. When suspicions of a violation of academic ethics arise, the administration reserves the right to review the video to decide if any action is necessary. Before the exam you need to prepare 2 devices. One device with the camera and ZOOM conference, and the second one you will use to read the test.Before entering the conference, install the device with the camera so that the camera captures you at the desk where you will be writing answers on paper, and the screen of the device from which you will be reading the tasks. Attention! At the beginning of your final test please type the following statement: I, YOUR NAME, hereby confirm that I have carefully studied and understood the rules of the exam and that I shall comply with them. Please date the statement. Without the statement, no score would be given to the test. Common rules • Upon entering ZOOM, please type your full name. • Switch off notifications of all messengers and social networks on the device that will be used during the test. Pop-up notifications can be qualified as an attempt to communicate. • Switch on the microphone on the device used for ZOOM. Switch off all loud devices (TVs, alarm clocks etc.) and make sure there are no other noise sources in the room where you are taking the exam. • Questions can be asked through Google Form - the link will be sent to you before the exam. If you have a question, raise your hand, and after the proctor’s permission you can type your question into the form. The proctor will inform you when you can see the answer. Questions and answers will be deleted after the student sees his/her answer. Do not: • Use any materials except blank sheets of paper for your draft and pocket calculator • Have outsiders in or out of the camera view • Communicate with other people, except the proctor • Leave the camera view during the exam • Switch off the camera and microphone during the exam • Have books or other documents on the desk, except for draft sheets and the final copy • Open any windows or screens on the device from which you are reading the task, except for the task itself and the Google Form for questions to the proctor • Use headphones and smartwatch Proctor • There will be a proctor in each virtual room • Before the exam you need to show to the proctor your room, desk, paper pads, and other materials, if any, that are allowed during the exam • The proctor may invite you to show your paper pad, the draft, or the screen of the device with the task at any time during the exam, calling you by the name via his/her microphone • You must open the task only when the proctor instructs you to do so. After that you will have 120 minutes for the test. • The proctor will keep you informed of the remaining time How to upload the test • After the proctor announces the end for the exam, you will have 5 minutes to save and download your test to my.nes. At this point it is not allowed to leave the ZOOM conference. • Tests not uploaded within the 5-minute slot won’t be evaluated. • If you have technical problems with uploading the test to my.nes, please email your work to esantonova@hse.ru or lmedvedeva@nes.ru within the same time limit. • Your test must be saved as Last Name_Name (e.g. Ivanova_Anna).
Interim Assessment

Interim Assessment

  • Interim assessment (4 module)
    0.16 * Cases + 0.45 * Final test + 0.23 * Midterm test + 0.16 * Problem sets
Bibliography

Bibliography

Recommended Core Bibliography

  • Corporate finance, Berk, J., DeMarzo, P., 2014

Recommended Additional Bibliography

  • Financial markets and corporate strategy, Hillier, D., Grinblatt, M., 2012
  • Financial theory and corporate policy, Copeland, T. E., Weston, J. F., 2005