Corporate Financial Management

FIE428 Corporate Financial Management

  • Topics

    Topics

    The course covers the main financial challenges facing a corporation such as financing, valuation, risk management, mergers & acquisitions and corporate governance. The aim is to provide the students with advanced knowledge of corporate finance in an applied setting. The course is relevant for students seeking a career in investment banking, high-level consultancy, and larger corporations in Norway and internationally.

    The topics are introduced by overview lectures, but much of the time is devoted to the students' group-wise presentation of assigned cases, other groups' discussion of the presentation, and general discussions in class. The lectures are supplemented by directly related guest lectures by experienced practitioners. There is also be a special lecture on improved written and spoken English.

    Lecture notes will be made available on the course webpage at the beginning of each week. Failing that, they will be made available in class. It is the student's responsibility to check the documentation on the course's webpage.

    Due to the effectiveness of class discussions, the number of students is limited to 50 and priority is given to FIE students if this limit is reached.

  • Learning outcome

    Learning outcome

    The students shall after completing the course:

    Knowledge:

    • have obtained an advanced and integrated understanding of core corporate finance issues.
    • not only obtain knowledge of the combined set of corporate finance subjects, but also their relevance when applied in a business setting.

    Skills:

    • have completed demanding casework and presentations as constructive members of students groups and under time and capacity pressure.
    • have confidence in conducting clear, written analyses and presentation of corporate finance related proposals towards top management and board of directors.
    • obtain increased competence and confidence in presenting and discussing complex corporate finance issues in English in a challenging context.

    General competence:

    • have the ability to draw on their combined financial and business knowledge to solve corporate finance challenges with appropriate respect towards real-life challenges.
    • understand the need for the substantial effort and high precision needed to excel in a demanding role as corporate finance advisor or investment banker.

  • Teaching

    Teaching

    The topics are introduced by overviewlectures, but much of the time is devoted to the students' group-wise presentation of assigned cases, other groups' discussion of the presentation and general discussions in class. The lectures are supplemented by 2 - 3 directly related guest lectures by experienced practitioners. There is also a special lecture on improved written and spoken English.

    Lecture notes will be made available on the course webpage at the beginning of each week. Failing that, they will be made available in class. It is the student's responsibility to check the documentation on the course's webpage.

    Due to the effectiveness of class discussions, the number of students is limited to 50 and priority is given to FIE students if this limit is reached.

  • Required prerequisites

    Required prerequisites

    Students taking this course are required to possess a good understanding of corporate finance, as documented through either a prior completion of the course FIE 402(E) or equivalent courses at other institutions.

  • Requirements for course approval

    Requirements for course approval

    The success of this case course depends on student participation and class attendance is crucial.

    Group work, in groups of maximum 3 people:

    • Hand in a minimum of 4 case write-ups (in addition to one introductory individual case). Please note that all groups MUST hand in case write-ups of two mandatory cases. Thus, each group is free to choose two out of the remaining four cases. A full case write-up should always include an executive summary of no more than one page. A good case write-up is concise as expected in "board-level communication".   We require that students restrict themselves to a write-up of maximum five pages and relevant appendices of no more than five pages.
    • If a group choose to not hand in a case write-up (except for the mandatory cases), the group must instead hand in a two-page executive summary. This is to make sure everyone comes to class prepared and ready to participate in the class discussion. Please note that the executive summary included in the full case write-up (of no more than one page) differs from the stand-alone two-page executive summary.
    • All assignments should be uploaded to the course page on Its learning.
    • Present at least 1 case.

     NOTE:

    • For each case, we will require that at least two groups do the case write-up.  This may act as a constraint on the available set of cases for a given group. 
    • If a group hands in more than 4 full case write-ups, only the marks from the mandatory cases along with the two highest marks from the other case write-ups will count towards the final grade on the written part.
    • Groups are allocated cases on a "first-come-first-served" basis.

    Individually: - Hand in 1 assignment  individually - Actively engage in class discussions

    Students will be notified as to the registered level of participation when the first half of the course has been completed.

  • Assessment

    Assessment

    The assessment consists of two parts graded A-F:

    1. written group assignments (50 % of total grade)
    2. individual class participation and presentation, which is comprised of class participation (approx. 60%) and presentations (approx. 40%) (50 % of total grade)

     

    The course as a whole is graded pass/fail.  There is no final exam.

  • Grading Scale

    Grading Scale

    Grading scale: sub-elements: A-F and the course as a whole: Pass/Fail

  • Computer tools

    Computer tools

    Excel, Word and relevant data-sources will suffice.

  • Semester

    Semester

    Spring

  • Literature

    Literature

    The Harvard cases may be purchased online by the students using this link: http://cb.hbsp.harvard.edu/cbmp/access/58469879 The other cases will be made available on Its learning.

    There is no textbook and the success at the course is subject to solving cases, not completing exams based on textbook readings. However, useful references include:

    • Berk/DeMarzo(BDM): Corporate Finance, 3rd edition, 2014.
    • Koller/Goedhart/Wessels (KGW), Valuation, 6th edition, McKinsey & Co, 2015

    Background Readings for Valuation BDM, Chapters 2, 3, 7,18 KGW, Chapters 2, 8, 11-14 Tergeson, "The Ins and Outs of Cash Flow", Business Week, 22. January 2001, pp. 102-104. Chadda, McNish and Rehm, "All P/Es are not created equal"; McKinsey on Finance, spring 2004, pp. 12-15. Dobbs and Koller, "Measuring long-term performance"; The McKinsey Quarterly, 2005 Special edition, pp. 17-27.Background Readings for Capital Structure (American Home Products Case) BDM, Chapters 14 -16 Franks, Nyborg, and Torous, "A Comparison of US, UK, and German Insolvency Codes", Financial Management, 1996, 81-101. Myers, 2001, "Capital Structure",  Journal of Economic Perspectives 15, 81-102.Background Readings for M & A (Cooper case) BDM, Chapter 28 KGW, Chapter 27 Bruner, "Where M&A Strays and Where it Pays: A survey of the research", Journal of Applied Corporate Finance, Fall 2004, pp. 63-76. Holmstrom and Kaplan, 2001, "Corporate Governance and Merger Activity in the United States: Making Sense of the 1980's and 1990's", Journal of Economic Perspectives 15, 121-144. "University of Rochester Roundtable on Corporate M&A and Shareholder Value", Journal of Applied Corporate Finance, Fall 2005, pp. 64-84. Dobbs, Nand and Rehm, "Merger Valuation", The McKinsey Quarterly, 2005 Special edition, pp. 67-73. Rappaport and Sirover, "Stock or Cash", Harvard Business Review, Nov-Dec 1999, pp. 147-158.Background Readings for Market Financing (Blue Arrow case) BDM, Chapter 23 Nyborg, 1997: How to price Convertible Bonds and why they are issued. Marsh, 1998: Subunderwriting of rights issues: A failure of competition? Eckbo, 2008: "Equity issues and the disappearing rights offer phenomenon", Journal of Applied Corporate Finance, Vol. 20, No. 4, Fall 2008.

    Background Readings for Debt financing and distress (Navigator Gas case) BDM, Chapters 6, 16, 24 Rauh and Sufi: "Capital structure and Debt structure", Working Paper 2010. Hotchkiss, John, Mooradian, and Thorburn: "Bankruptcy and the Resolution of Financial Distress" (Ch. 14) in Eckbo, B. Espen (ed.), 2008, Handbook of Corporate Finance: Empirical Corporate Finance, Volume 2, (Elsevier/North-Holland Handbook of Finance Series).

    Kiff, Kisser and Schumacher: "Rating Through-The-Cycle: What does the Concept imply for Rating Stability and Accuracy", IMF Research Bulletin, December 2013.

     

    Background Readings for Valuation given corporate and investor taxes (RJR Nabisco Case) BDM, Chapters 15, 17.4, 29 Miller, 1977, "Debt and Taxes", Journal of Finance 32, 261-276. Taggart, 1991, "Consistent Valuation and Cost of Capital Expressions with Corporate and Personal Taxes", Financial Management 20, 8-20. Inselbag and Kaufold, 1989, "How to Value Recapitalizations and Leveraged Buyouts", Journal of Applied Corporate Finance 2, 87-96. Miles and Ezzell, 1980, "The Weighted Average Cost of Capital, Perfect Capital Markets and Project Life: A Clarification," Journal of Financial and Quantitative Analysis 15, 719-730. Jensen, 1986, "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers" American Economic Review 76, 323-329. Jensen,1989, "Eclipse of the Public Corporation", Harvard Business Review (September-October issue), pp. 61-74. Kohlberg Kravis Roberts & Co (with Deloitte Haskins & Sells), 1989, "Leveraged Buy-Outs," Journal of Applied Corporate Finance 2, 64-70. Thaler, 1992, "The Winner's Curse," Across the Board (September issue), pp. 30-33.  

    Additional literature may be added

Overview

ECTS Credits
7.5
Teaching language
English
Semester
Spring

Course responsible

Aksel Mjøs, Department of Finance