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Corporate Finance

  • Module code: BA7554
  • Year: 2018/9
  • Level: 7
  • Credits: 15
  • Pre-requisites: None
  • Co-requisites: None

Summary

This Corporate Finance module is an elective available to course members of the MBA programme, both full-time and executive versions. The module has been designed and developed to provide course members with an opportunity to explore the theory and practice of corporate financial strategy and the link with corporate strategy. A blended learning strategy will be utilised, involving a combination of classroom based learning, independent and group study, together with tutor-student and student-student interaction via Canvas. Where and when possible, corporate finance practitioners will lead one or more session, offering course members the opportunity to explore at first-hand how analytical frameworks and models are applied in the practice of financial strategy and decision making.

Aims

  • Examine the interaction of firms and capital markets in raising capital, using the financial resources and distributing corporate profits
  • Investigate the role of financial strategy and corporate decision policies in creating corporate and shareholder value
  • Explore the theoretical foundations of corporate finance and the empirical evidence on the validity and robustness of the developed theories and employed models in corporate life

Learning outcomes

On successful completion of the module, students will be able to:

  • Demonstrate a working knowledge and understanding of the theoretical frameworks, models and associated empirical evidence of the corporate finance literature and the implications of that literature for strategic decision making.
  • Apply theoretical frameworks and models to the analysis of corporate finance decisions.
  • Demonstrate an awareness of the robustness and validity issues associated with theoretical frameworks and models and the limitations involved in their application.
  • Collect, critically evaluate and analyse real life corporate financial data, investigate real life problems and questions and draw inferences on the implications of the findings.

Curriculum content

  • Investment decisions under risk and uncertainty
  • Security markets and security trading: stocks and equity markets; bond markets and valuing bonds
  • Risk and returns: capital markets and the pricing of risk; optimal portfolio choice and the Capital Asset Pricing Model
  • Capital structure and the cost of capital: Capital structure theories, Modigliani and Miller, CAPM, capital structure and WACC
  • Agency theory and corporate governance: principal-agent model; signalling and capital structure
  • Distribution Decisions: dividend policy; share re-purchases; principal-agent model; signalling; empirical evidence on distribution decisions; implications for corporate strategy
  • Mergers and Acquisitions: corporate finance models of M&A versus corporate strategy models; empirical evidence on the shareholder wealth impacts of M&A
  • Derivatives and risk management: options; options and corporate finance; risk management

Teaching and learning strategy

A blended learning strategy will be employed that will consist of various elements: Tutor-led presentations and face-to-face classroom discussion; directed learning in the form of student reading, related exercises and case analysis and preparation; self-directed learning by students on empirical issues investigation and applications; and cohort and tutor interaction via defined class discussions and presentations.

Teaching and learning in classroom sessions will be driven by of a series of case studies, discussion of the academic literature and empirical applications.

Breakdown of Teaching and Learning Hours

Definitive UNISTATS Category Indicative Description Hours
Scheduled learning and teaching 32
Guided independent study 118
Total (number of credits x 10) 150

Assessment strategy

Every session will provide ample opportunities for practice and formative feedback. Course members will be expected to complete a number of formative assessment tasks associated with discussion threads. These will be driven with the use of additional materials such as case studies and practical applications, requiring course members utilise the theoretical and analytical frameworks outlined during the class contact sessions.

The assessment consists of two major elements: (i) a practical exam in the form of a group presentation, and (ii) coursework in the form of an individual assignment. The group presentation involves students researching and critically evaluating major trends affecting corporate finance. The individual written assignment is designed to provide course members with an opportunity to demonstrate that they have achieved the learning outcomes set out above. (See the grid below.)

Mapping of Learning Outcomes to Assessment Strategy (Indicative)

Learning Outcome Assessment Strategy
1) Demonstrate a working knowledge and understanding of the theoretical frameworks, models and associated empirical evidence of the corporate finance literature and the implications of that literature for strategic decision making. Both the group and individual assignments will assess the scale and scope of students' learning activities in terms of their ability to reach judgements about the applicability of their learning.
2) Apply theoretical frameworks and models to the analysis of corporate finance decisions. Both the group and individual assignments will assess the scale and scope of students' learning activities in terms of their ability to reach judgements about the applicability of their learning.
3) Demonstrate an awareness of the robustness and validity issues associated with theoretical frameworks and models and the limitations involved in their application. Both the group and individual assignments will require students to explore the potential limitations of analytical models and frameworks when applied to real live corporate contexts.
4) Collect, critically evaluate and analyse real life corporate financial data, investigate real life problems and questions and draw inferences on the implications of the findings Both the group and individual assignments will require students to draw on the financial data from markets and firms, utilise that data in a meaningful way, and test the robustness and validity of the data.

Elements of Assessment

Description of Assessment Definitive UNISTATS Categories Percentage
Group Presentation Practical exam 30%
Individual assignment Coursework 70%
Total (to equal 100%) 100%

Achieving a pass

It IS NOT a requirement that any element of assessment is passed separately in order to achieve an overall pass for the module.

Bibliography core texts

Berk J. and P. DeMarzo. Corporate Finance. Latest edition, Pearson.

Plus: the "MyFinanceLab" for this textbook.

Bibliography recommended reading

Arnold, G. (2012) Corporate Financial Management. 5th edition. FT Pearson.

Megginson, W. and Smart, S. (2011) Introduction to Corporate Finance. 4th edition. Thomson:South-Western.

Brealey, R. and Myers, S. (2014) Principles of Corporate Finance. 11th edition.  McGraw-Hill.

Copeland, T., Weston, J. F. and Shastri, K. (2005) Financial Theory and Corporate Policy. 4th edition. Addison-Wesley.

Copeland, T., Koller, T. and Murrin, J. (2010) Valuation: Measuring and managing the Value of Companies. 5th edition. McKinsey & Company: John Wiley & Sons.

Elton, E., Gruber, M. and Brown, S. (2010) Modern Portfolio Theory and Investment Analysis. 8th edition. Wiley & Sons.

Pilbeam, (2010) Finance and Financial Markets. 3rd edition. Macmillan.

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