Delivered at:: School of Finance

Course type:: Elective course

When:: 3 year, 3 module

Instructors

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Abstract

This intermediate course in corporate finance focuses on theoretical issues and core concepts in modern corporate finance. The goal of the course is to make students familiar with key theories and how they can be used to solve real world challenges. It also aims at developing the analytical skills for making corporate investment decisions. The major themes of the course will cover such topics as firm's capital structure, pay-out decision, capital budgeting and M&A. The major activities of the course include lectures, classes, quizzes, groupwork project and self-study.

Learning Objectives

1) Understand and apply principles of modern financial analysis
2) Be able to discuss different stakeholders’ goals as a source of agency conflicts
3) Understand and apply capital budgeting techniques when making investment decisions
4) Be able to discuss the logic of capital structure decisions and understand how market imperfections influence capital structure decisions
5) Understand corporate payout decisions and be able to discuss market reaction to dividend payout
6) Be able to discuss logic of risk management decisions and sources to increase company value
7) Be able to discuss M&A motives and value creation via restructuring

Expected Learning Outcomes

- Evaluate different projects using NPV rule, IRR, payback period and PI index, and make investment decisions
- Derive and discuss the Modigliani-Miller theorem - Analyze the impact of taxes on Modigliani-Miller proposition - Explain the role of tax shield in firm valuation and be able to calculate its value - Understand and be able to calculate WACC and levered and unlevered beta
- Discuss the major theories of capital structure and role in the decision making process - Explain the impact of market imperfections and agency cost on cost of financial distress and managers' incentives - Understand and be able to deal with debt overhang and risk-shifting problems
- Show that dividend policy is irrelevant to firm valuation under Modigliani-Miller propositions - Discuss the stylised facts of dividend policy as provided by Lintner - Present the clientele model of dividends - Explain the effect of asymmetric information and agency cost on dividend policy
- Understand and be able to apply different major methods used in capital budgeting (WACC, APV, FTE) - Calculate the project-based cost of capital - Differentiate between different methods and be able to make the choice appropriately - Be able to adjust calculation in case of changing leverage and periodically adjusted debt

Course Contents

I. Finance and Financing Decisions
II. Investment Decisions
III. The choice of capital structure
IV. The optimal capital structure, agency cost and asymmetric information
VII. Dividends and Payout Policies
VI. Capital Budgeting Policies with Leverage
VII. Valuation and risk management policy
VIII. Mergers & Acquisitions and corporate restructuring

Assessment Elements

Final exam
Team Project
A mini case to be developed and presented by a group of 3-4 students related to course topics
Quizzes
Can contain multiple choice questions and essay type open ended questions

Interim Assessment

2024/2025 3rd module
0.55 * Final exam + 0.25 * Quizzes + 0.2 * Team Project

Bibliography

Recommended Core Bibliography

Berk, J. B., & DeMarzo, P. M. (2017). Corporate Finance: The Core, Global Edition: Vol. Fourth edition. Pearson.
Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann Le Fur, & Antonio Salvi. (2018). Corporate Finance : Theory and Practice. Post-Print. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.hal.journl.hal.02298273

Recommended Additional Bibliography

Principles of corporate finance, Brealey, R. A., 2020

Authors

Виноградова Вероника Сергеевна
Pirogov Nikita Konstantinovich

Bachelor’s Programme 'Economics and Data Science'

Address

Corporate Finance