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Regular version of the site
Master 2017/2018

International Corporate Finance

Type: Compulsory course (Master of International Business)
Area of studies: Management
Delivered by: Магистерская программа "Международный бизнес", направление подготовки "Менеджмент"
When: 1 year, 2, 3 module
Mode of studies: Full time
Master’s programme: International Business
Language: English
ECTS credits: 5

Course Syllabus

Abstract

This course is a corporate finance course of basic level. The aim of the course is to provide the student with sufficient knowledge to understand the logic of the modern financial analysis of strategic corporate decisions and it focuses mainly on financial decision- making process in corporations including investing, financing, payout policies. The course covers basic finance topics such as principles of equity and debt valuation, cost of capital, capital structure. The course covers such topics as debt and equity valuation; estimating the risk and the cost of capital; modelling the cash flows; optimization of capital structure; payout policy; and investment decisions.
Learning Objectives

Learning Objectives

  • know main features of multinational companies and explain why we should pay attention to international character of the company;
  • know core corporate finance concepts and theories
  • know the logic and the mechanism of raising the capital by large companies
  • know the logic and the mechanisms of payout policy of large corporations
  • be able to apply key corporate finance concepts to multinational companies
  • be able to estimate the cost of capital of a public corporation
  • be able to evaluate the efficiency of an investment project
  • be able to describe the process of decision-making in multinational companies and analyze agency problems inside
  • be able to apply classical models while making equity valuation
Expected Learning Outcomes

Expected Learning Outcomes

  • know the main features of multinational companies and explain why we should pay attention to international character of the company
  • be able to apply key corporate finance concepts to multinational companies
  • be able to describe the process of decision-making in multinational companies and analyze agency problems inside
  • be able to apply classical models while making equity valuation
  • be able to estimate the cost of capital of a public corporation
  • know the logic and the mechanisms of payout policy of large corporations
  • be able to evaluate the efficiency of investment project and cash flows
Course Contents

Course Contents

  • Introduction to Corporate Finance
    What is modern financial analytical framework and how does finance contribute to corporate decision–making? Financial dimensions of the firm thru its life cycle: liquidity, risk and fundamental value. Financial dimensions of the firm: annual measures. Investment risk and hurdle rates. The types of cash flows in accounting model: cash flow from operating activity, from investing activity, from financing activity, the net cash flow. Free cash flow of the firm. Financial model of analytical framework versus accounting model of corporate decisions’ analysis. The role of CFO in the firm.
  • Measuring the Value. Debt Valuation
    Intrinsic value. Key Value drivers. Corporate valuation framework: discounted cash flows. Free cash flows. Terminal cash flow. Present value of bond’s cash flows. Valuation of fixed income security. Measuring yield–to-maturity (YTM). Types of corporate debt financing instruments and measurement of their values. Practical tasks on debt valuation.
  • Risk and Return. Capital Asset Pricing Model
    Types of risks. Systematic and specific risk. The principles of capital asset pricing theory (CAPM): how to measure expected return and required return on capital. The risk-free rate. How to measure the systematic risk of a firm: beta coefficient. Premium for risk. Country risk premium. Application of CAPM to real data.
  • Equity Valuation
    How does equity valuation differ from bond’s valuation? Discounted dividends model (DDM): the cases for permanent and stable growing dividends. Free cash flow to firm. Free cash flow to equity. Practical tasks on debt valuation
  • Capital Structure and Overall Cost of Capital
    What is capital structure of a firm and how it differs from financing structure of the firm. The cost of debt. The cost of equity. The weighted average cost of capital. The optimal capital structure of a firm. The weighted average cost of capital for the international firms.
  • Investment Decisions
    How to evaluate the efficiency of investment project? Cash flows of an investment project. Net present value concept. NPV Decision rule. Limitations of NPV. Adjusted present value. Internal Rate of Return. Discounted Payback method. Profitability Index as a complement to NPV.
  • Payout Policy
    Payout policy irrelevance. Dividend and Capital Gains Tax Rates. Market imperfections and dividend payouts. Cash dividend payout vs. stock repurchase. Clientele hypothesis. Signaling with payout policy.
Assessment Elements

Assessment Elements

  • non-blocking Final exam in form of a case study
  • non-blocking work & home assignments
Interim Assessment

Interim Assessment

  • Interim assessment (3 module)
    0.4 * Final exam in form of a case study + 0.6 * work & home assignments
Bibliography

Bibliography

Recommended Core Bibliography

  • Berk, J., DeMarzo, P., & Harford, J. V. T. (2014). Fundamentals of Corporate Finance, Global Edition (Vol. Third edition). Harlow: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1419502
  • Butler, K. C. (2016). Multinational Finance : Evaluating the Opportunities, Costs, and Risks of Multinational Operations (Vol. Sixth edition). Hoboken, New Jersey: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1221493
  • Damodaran, A. (2012). Investment Valuation : Tools and Techniques for Determining the Value of Any Asset (Vol. 3rd ed). Hoboken, New Jersey: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=442924
  • Principles of corporate finance, Brealey R. A., Myers S. C., 2017

Recommended Additional Bibliography

  • Corporate Finance : Theory and Practice Vernimmen, Pierre; Quiry, Pascal;and more John Wiley & Sons, Incorporated 2014 ISBN: ISBN number:9781118849330, ISBN number:9781118849323