This class exists in these courses :
• IÉSEG > MSc in Accounting, Audit & Control > Semester 1 > 2,00 ECTS

Prerequisites

None. But students should be comfortable with algebra and have basic knowledge in accounting.

Learning outcomes

At the end of the course, the student should be able to :
1. explain how corporate governance and compensation incentives affect the process of value creation for shareholders;
2. differentiate between business risk and financial risk and explain how these risks affect the firm's performance;
3. explain the Modigliani - Miller capital structure propositions and list factors an analyst should consider in evaluating the effect of long-term financial policy on valuation;
4. describe and apply the common techniques in working capital management;
5. evaluate various dividend payout policies and their impact on shareholders' value.
6. examine how firms can structure their capital to finance their daily and longer-term activities (learning objective AACSB)

Course description

This course examines several areas of corporate finance that directly affect value creation for shareholders, as advocated by the CFA Institute. We will start with a discussion of the corporate governance system. Next, the significance of long term capital structure will be thoroughly explored in light of Modigliani and Miller's fundemantal research. In a modern corporation a significant amount of money is tied up in working capital, the lectures will also examine short term financial policies. Finally, the course will discuss various dividend theories and policies in relation to their likely impact on the company's share price.

Class type

Class structure

Teaching methods

• Case study
• Interactive class
• Seminar

Assessment

Each student's final course grade is determined by two assignments that must be completed after class during the course and a mini-case report to be emailed to me 10 days after completing the course.

Recommended reading

• Corporate Finance by Ross, Westerfield and Jaffe, 10th ed. (2013), McGrawHill (in class materials and slides are based on this book). -

• Intermediate Financial Management by Brigham and Daves, 11th ed. (2013), Cengage. -

• Applied Corporate Finance by Aswath Demodaran, 4th ed. (2014), Wiley. -

Internet resources

• IESEG Online

  Slides will be posted on intranet one week before class.