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Магистратура 2019/2020

Международный финансовый менеджмент

Лучший по критерию «Полезность курса для Вашей будущей карьеры»
Лучший по критерию «Полезность курса для расширения кругозора и разностороннего развития»
Статус: Курс по выбору (Корпоративные финансы)
Направление: 38.04.08. Финансы и кредит
Кто читает: Практико-ориентированные магистерские программы факультета экономических наук
Когда читается: 2-й курс, 1 модуль
Формат изучения: Full time
Прогр. обучения: Корпоративные финансы
Язык: английский
Кредиты: 5

Course Syllabus

Abstract

To follow the course «International Financial Management» basic courses in Accounting and Corporate Finance are a recommended prerequisite. The following methods and forms of study are used in the course: ‒ Lectures (2 hours a week on average); ‒ Classes (2 hours a week on average, in-class case studies, work in small teams, presentations, discussion); ‒ Home reading (mostly supplementary); ‒ Self-study; ‒ Exam assignment.
Learning Objectives

Learning Objectives

  • To provide the student with sufficient knowledge to understand the logic of the modern financial analysis of strategic decisions in multinational corporations including investment and financing policies
Expected Learning Outcomes

Expected Learning Outcomes

  • Know main features of multinational companies and explain why we should pay attention to international character of the company
  • Know key hedging techniques applicable to currency risk of international project
  • Know how and when to use derivatives as currency risk hedging instrument
  • Know the logic and the mechanism of raising the capital by multinational companies
  • Be able to classify the risks of multinational corporation
  • Be able to evaluate the currency risk exposure
  • Be able to apply key asset pricing models to multinational companies
  • Be able to describe the process of raising the capital by multinational companies and analyze different instruments of capital markets available for multinational companies
  • Be able to take into account the international character of the business while making equity valuation
  • Be able to value the potential investment projects of the multinational company
Course Contents

Course Contents

  • Class 1 – 2. Introduction. Risks of international corporation.
    What is multinational corporation? Key features. International operations of corporation. Corporation in global capital markets. Life cycle and decision-making process in multinational corporation. Risks of multinational corporation. Operating risks: pre-completion and post-completion risks for international project. Sovereign and institutional risks: macroeconomic risks and types of expropriation. Force majeure and world market risk. Adjustments for different types of risks.
  • Class 3 – 4. Currency risks of international corporation.
    Types of currency risk. Transaction exposure. Economic (operating) exposure. Translation (accounting) exposure. Sources of transaction exposure: operating cash flows in foreign currencies; financing cash flows in foreign currencies. Hedging strategies: to hedge or no to hedge. Forward market hedge. Money market hedge. Option market hedge. Boeing Illustration. Some words on operational techniques.
  • Class 5 – 6. Required return of an international corporation. Cost of capital for international projects.
    Cost of capital: approaches applicable for multinational corporation. Integrated and segmented markets. Market segmentation factors. Instruments lessening the negative effects of segmented capital markets. Asset pricing models for multinational corporation. Contribution of Global, National & Industry Factors to the cost of equity. Emerging markets’ efficiency. Cost of equity valuation methods: classification based on transparency and market integration level. Local CAPM. Rene Stulz 1981 IAPM. Global CAPM: O'Brien, Stulz (1999). GCAPM: limitations. Disadvantages of basic asset pricing models. Godfrey – Espinosa Model (1996). DCAPM (2000) by Estrada. Cumulative method for return estimation. Cost of debt of multinational corporation. Costs of debt across Countries.
  • Class 7. International сorporation in global capital markets 1: capital structure and debt capital markets.
    Optimal Capital Structure for multinational corporation. Going below min WACC: theory. Tradeoff amendments for multinational corporation: Availability of capital, Diversification of cash flows, Foreign exchange risk, Expectations of international portfolio investors. Value of multinationalism. When and how to go to international capital markets. Money vs. capital markets: lifecycle reasoning. Multinational corporation in international debt capital markets. Types of corporate debt financing instruments. Cost of debt depending on debt instrument. Direct vs. Intermediated debt. Bank loans and syndicated credits. Bonds with embedded options. Domestic vs. Eurobond. Financial and informational covenants. Russian companies in global debt capital markets: statistics, strategy and barriers.
  • Class 8. International corporation in global capital markets 2: equity capital markets.
    Motivations for public equity offers. Public offerings: lifecycle reasoning. IPO motives: financing investments, transferring wealth from new shareholders to existing shareholders, increasing liquidity. Growth companies’ strategy for public offerings. Secondary shares public offering as a strategic step for stable companies. Some evidence on company’s post-IPO results. Designing a strategy to source equity globally. Scheme of alternative paths for a company in global capital markets. Foreign equity listing and issuance. Alternative instruments to source equity in global markets.
  • Class 9. International projects: some valuation issues.
    Logical value creation roadmap for international project. Choice of real or nominal cash flows for valuation purpose. Valuation in countries with hyperinflation environment. Discounting foreign cash flows converted to home currency. Discounting foreign cash flows with converted cost of capital. APV and WACC methodology for international projects: theoretical view. Accounting for standard and non-standard risks. Currency beta. Currency risk influencing cost of equity in segmented markets. Country risk adjustments. Scenario analysis. Incorporating political, liquidity and familiarity risks. Country risk adjustment: Goldman model. What to do if spreads in USD are not available.
Assessment Elements

Assessment Elements

  • non-blocking Home assignments based on class work (mostly case studies)
  • non-blocking Final home exam assignment
Interim Assessment

Interim Assessment

  • Interim assessment (1 module)
    0.4 * Final home exam assignment + 0.6 * Home assignments based on class work (mostly case studies)
Bibliography

Bibliography

Recommended Core Bibliography

  • Financial markets and corporate strategy, Hillier D., Grinblatt M., 2012

Recommended Additional Bibliography

  • Corporate finance : theory and practice, Vernimmen P., Quiry P., 2005