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Advanced Corporate Finance (DLMBCFIE01)

Course No.:

DLMBCFIE01

Course Title:

Advanced Corporate Finance

Hours Total:

150 h

Credit Points:

5 ECTS

Course Type: Wahlpflicht

Course Availability: WS, SS

Course Duration: 1 Semester

Admission Requirements:

None

Course Coordinator / Instructor:

See current list of tutors in the Learning Management System

References to Other Modules:

Please see module description

Course Description:

The last decade has seen fundamental changes in financial markets and financial instruments. Both the theory and practice of corporate finance have been moving ahead with uncommon speed. Participants will be guided through the main areas of modern financial theory, including the pricing of assets and derivatives, corporate financial policy, and corporate control. The course emphasizes the modern fundamentals of the theory of finance and brings the theory to life with contemporary examples.

Course Objectives and Outcome:

Upon completion of this course, student will be able to:

  • Identify methods of issuing corporate debt and equity securities, and understand the role of financial intermediaries.
  • Discuss dividend policy and corporate capital structure in perfect markets vis-à-vis imperfect markets.
  • Utilize a range of tools for valuing different kinds of debt.
  • Describe various financing options and their different forms of application in the context of corporate finance.
  • Discuss mergers and takeovers and the role of different parties involved in the transaction process.

Upon completion of this course, the participants will have developed an enhanced understanding and insight into the modern elements of the theory of finance and its application in the corporate context. Their analytical skills will be trained and they will be equipped with advanced tools and techniques for making financial decisions. Thus they will be qualified for taking responsibility as a financial manager in a corporation operating internationally.

Teaching Methods:

A variety of learning materials are offered to students: depending on the course, these include printed and online course books, vodcasts, podcasts, online tutorials, case studies, and online knowledge tests. This range of learning materials is offered to students so they can study at a time, place, and pace that best suits their circumstances and individual learning style.

Course Content:

1 Financing Decisions and Issuing Securities

1.1 Types of Corporate Financing

1.2 Corporations and Issuing Shares

1.3 Corporations and Issuing Debt Securities

2 Dividend Policy and Capital Structure

2.1 Dividend Payout Policy, Dividends and Stock Repurchases, the Irrelevance of Dividends in Perfect Capital Markets

2.2 The Role of Debt Policy

2.3 Weighted Average Cost of Capital

2.4 Corporate and Personal Taxes

2.5 Theories of the Capital Structure: Trade-off Theory, Pecking Order Theory, Market Timing Theory

3 Debt Financing and Leasing

3.1 Valuing Debt

3.2 Ratings

3.3 Different Kinds of Debt and Hybrid Securities

3.4 Leasing, Operating Leases and Financial Leases

4 Options and Futures

4.1 Derivative Financial Instruments, Options and Futures

4.2 Valuing Options, the Binomial Model, the Black-Scholes Formula

4.3 Real Options

5 Takeovers, Corporate Control, and Governance

5.1 Mergers and Acquisitions

5.2 Going Private, Leveraged Buyouts, and Management Buyouts

5.3 Private Equity

5.4 Empirical Tests of the Success of Takeovers

5.5 Governance and Corporate Control

6 Unsolved Issues and the Future of Finance

6.1 What We Do and Do Not Know about Finance

6.2 Solved and Unsolved Issues

Literature:

• Lintner, J. (1969). The valuation of risk assets and the selection of risky investments in stock portfolios and capital budgets. The Review of Economics and Statistics, 47(1), 13–37.
• Copeland, T. E., Weston, J. F., & Shastri, K. (2013). Financial theory and corporate policy (4th ed.). Reading, MA: Addison-Wesley.
• Damodaran, A. (2001). Corporate finance: Theory and practice (4th ed.). New York City, NY: Wiley Ross.
• Hillier, D. (2013). Corporate finance (2nd ed., European edition). Maidenhead, Berkshire: McGraw-Hill.
• Hull, J. (2011). Options, futures, and other derivatives (8th ed.). Upper Saddle River, NJ: Prentice Hall.
• Smart, S. B., Megginson, W. L., & Gitman, L. J. (2008). Corporate finance (2nd ed.). Boston, MA: Cengage Learning.
• Weston, F. J., Mitchell, M. L., & Mulherin, H. J. (2004). Takeovers, restructuring and corporate governance. Upper Saddle River, NJ: Prentice Hall.

Prerequisites to Qualify for Assessment:

• Depending on the course: Completion of online knowledge tests (approx. 15 minutes per unit, pass / not pass)
• Course evaluation

Assessment:

Exam, 90 min.

Student Workload (in hours): 150

Self-study: 90
Self-testing: 30
Tutorials: 30