Corporate Finance

General information

Type:	OB	Curs:	1	Period:	S semester
ECTS Credits:	4 ECTS

Teaching Staff:

Group	Teacher	Department	Language
Sec: A	Vicente Jose Bermejo Boixareu	Economía, Finanzas y Contabilidad	ENG

Group	Teacher	Department	Language
Sec: B	Vicente Jose Bermejo Boixareu	Economía, Finanzas y Contabilidad	ENG

Prerequisites

Accounting Principles: Financial Statements.

Time Value of Money: Basic concepts of investment selection. Present and Future Values. Net Present Value. Internal Rate of Return. Annuities and Perpetuities. Simple and compound Interest. Continuous compounding.

Valuation Techniques: Alternative methods of investment selection. Payback. Internal Rate of Return.

COURSE CONTRIBUTION TO PROGRAM

The Corporate Finance course of the MSc in International Management will prepare you to be a financial manager and equip you with the necessary tools to make accurate investment and financing decisions. In this course we focus on investment policy and project valuation ("How much is a project worth and which projects should I pick?"), capital structure theories ("How to finance a selected investment?"), pay out policy ("How should I pay investors?") and initial public offerings ("How and why does a company go public??).

Course Learning Objectives

The aim of the course is to provide a broad conceptual and practical foundation for analysing issues in Corporate Finance. The course is primarily case-based because it aims to enable you to apply the concepts you learn in practice.

Upon completing this course students should be able to:

- Analyze and value projects and companies.
- Discuss the financing decisions of corporations.
- Understand the importance of asymmetric information and signalling in capital markets and financial decisions.
- Critically discuss the dividend policy of a firm.
- Analyze different methods of issuing securities and understand the stock price reaction to issuing securities.

CONTENT

1. Principles of Finance Time value of money, valuation principles and financial analysis.
2. Financial Management Financial management analysis. Sources of corporate financing.
3. Capital Structure I Capital structure without taxes; capital budgeting without taxes; capital structure with corporate taxes.
4. Capital structure II The static trade-off theory. Financial distress and restructurings.
5. Agency Theory Conflicts of interest between managers, debtholders and equity holders.
6. Initial Public Offerings and Other Equity Issues Benefits and costs of IPOs; short-term underpricing, IPO cycles, long-run underperformance.
7. Payout Policy Payout policy in perfect capital markets. Impact of taxes on payout policy. Dividends and transaction costs. Dividends and asymmetric information.
8. Topics in Corporate Finance Pecking Order Theory. Event Studies. Corporate Governance.
9. Presentations

1. Principles of Finance

Time value of money, valuation principles and financial analysis.

2. Financial Management

Financial management analysis. Sources of corporate financing.

3. Capital Structure I

Capital structure without taxes; capital budgeting without taxes; capital structure with corporate taxes.

4. Capital structure II

The static trade-off theory. Financial distress and restructurings.

5. Agency Theory

Conflicts of interest between managers, debtholders and equity holders.

6. Initial Public Offerings and Other Equity Issues

Benefits and costs of IPOs; short-term underpricing, IPO cycles, long-run underperformance.

7. Payout Policy

Payout policy in perfect capital markets. Impact of taxes on payout policy. Dividends and transaction costs. Dividends and asymmetric information.

8. Topics in Corporate Finance

Pecking Order Theory. Event Studies. Corporate Governance.

9. Presentations

Methodology

There will be 9 sessions and a final exam.
Announcements, class material and general course information will be distributed through the intranet.
Sessions consist of lectures and cases, and will involve class discussion.

Description	%
Case Reports	20
Class Participation	10
Group Presentation	10
Final Exam	60

Assessment criteria

Important clarifications:

1.To pass the course, a minimum grade of 50% is required on the final exam. If the final exam mark is above 50%, then the weighted average of the four components listed above becomes the final grade for the course. Otherwise, the final grade for the course will be the lower mark of the two.

2. In case a retake exam is needed, the final course grade will be 100% determined by the retake exam mark. However, if program management has accepted to postpone the exam for especial reasons, the retake exam will be 60% of the final grade.

3. Class participation will be evaluated every session by the teaching assistant. Only relevant comments/questions will be valued.

4. Final exam will be in class and closed book. No cheat sheets or wireless devices are allowed in the exam, only approved financial calculators.

Bibliography

The reference textbooks will be:
- Fundamentals of Corporate Finance, by S. Ross, R. Westerfield and B. Jordan, McGraw-Hill Education (last edition).
- Corporate Finance by J.Berk and P.DeMarzo, Pearson Global Edition (last edition).
- Principles of Corporate Finance by R. Brealey, S. Myers and F. Allen, McGraw-Hill International Edition (last edition).
Several copies of these books are available at ESADE's library.
Besides these books, the students will have class slides and exercises. This material will be available through the intranet.

Timetable and sections

Group	Teacher	Department
Sec: A	Vicente Jose Bermejo Boixareu	Economía, Finanzas y Contabilidad

Timetable Sec: A

Group	Teacher	Department
Sec: B	Vicente Jose Bermejo Boixareu	Economía, Finanzas y Contabilidad

Corporate Finance (19CI35867)