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Course Syllabus

Master 2020/2021

Corporate Finance

Category 'Best Course for Career Development'
Category 'Best Course for Broadening Horizons and Diversity of Knowledge and Skills'
Type: Compulsory course (Finance)
Area of studies: Finance and Credit
Delivered by: Department of Finance
Where: St.Petersburg School of Economics and Management
When: 1 year, 1-3 module
Mode of studies: offline
Instructors: Varvara Nazarova
Master’s programme: Finance
Language: English
ECTS credits: 6
Contact hours: 80

Course Syllabus

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Abstract

The key aim of the course is to provide students with knowledge and skills in taking corporate financial and investment decisions, develop analytic instruments to assess the effectiveness and efficiency of such decisions, elaborate models of corporate finance and financial strategy.
Learning Objectives

Learning Objectives

  • To make clear the principles of financial management.
  • To provide tools for analysis of a company’s business environment and its impact at investments and financial decisions.
  • To create the knowledge and understanding of key corporate finance concepts.
  • To develop the skills in investment and financial decisions assessment and toolkit for their evaluation.
  • To develop the understanding of the impact of financial decisions at corporate efficiency.
Expected Learning Outcomes

Expected Learning Outcomes

  • Students understand principles of corporate goals and strategy forming, corporate financial policy, the role of financial manager at capital markets, principles of corporate investment and financial decision-taking.
  • Students understand principles of cash flows analysis, financial modeling; the concept of corporate sustainable growth.
  • Students are able to define the sustainable growth rate of a corporation, to calculate the corporate need for external funding.
  • Students understand how to consider capital budgeting constraints at project analysis.
  • Students are able to develop capital budget.
  • Students understand pinciples of portfolio approach, derivation of CAPM, its constraints; alternative models principles, principles of stock valuation, principles of bonds valuation.
  • Students are able to apply CAPM to estimate cost of equity in different frameworks; to calculate the value of stock using DDM; to calculate the cost of debt; to evaluate different types of bonds; to assess the corporate debt; to calculate value of convertible bond and common shares.
  • Students understand the concept of WACC and its role as a barrier cost of capital.
  • Students are able to calculate WACC for a corporation and an investment project.
  • Students understand capital structure theories, make decisions on capital structure.
  • Students understand principles of dividend decisions, the relationship between payouts and companies’ value.
  • Students are able to define the FCFE and amount of dividends, to be paid, to optimize the payout policy.
  • Students understand to consider strategic intents in financial decisions.
  • Students are able to implement principles of value-based management in financial decisions.
  • Students know basic concepts of corporate finance, key financial and non-financial stakeholders, the role of financial and non-financial institutions in a company’s funding, models of asset pricing, capital structure decisions and payout decisions.
  • Students are able to analyze principles of decision-making, to determine the key interests of major stakeholders, to analyse the structure of assets, liabilities and cash flows of a company, to evaluate the efficiency of financial decisions.
  • Students have skills to match financial decisions and a company’s strategy, to analyse investments, to set financial objectives, to apply tools of working capital management; to be prepared for taking ethical and reasonable, data-driven financial and investment decisions, timely and in a persuasive manner.
Course Contents

Course Contents

  • Goals and Government of the Firm
    Corporate investment and financing decisions; The role of the financial manager and the opportunity cost of capital; Goals of the corporation; Agency problems and corporate governance.
  • Financial analysis and financial modeling. Growth management
    Cash flows, financial ratios and determinants of corporate growth. Principles of financial modeling. Corporate growth strategies and their modeling.
  • Investment Decision Taking
    Project analysis and capital budgeting.
  • Risk and return
    Portfolio theory. Risk and return. CAPM. Stock valuation principles. Alternative approaches to the analysis of costs of equity: APT, BUM; Fama-French model. Dividends discounted model (DDM).
  • Calculation of cost of capital
    WACC
  • Capital Structure Decisions
    Capital structure concepts. Operating and financial leverages and their relationship with capital structure. Capital structure theories. Modigliani and Miller approach to capital structure optimisation. Signalling models of capital structure optimization.
  • Payout policy
    Dividend decisions. Forms of payouts to shareholders. Dividend policies.
  • Value-based management and strategic financial decisions
    Principles of value-based management. Strategic decisions and their relationships with companies’ value.
  • Strategic financial decisions and their reflection in companies’ efficiency (business game)
Assessment Elements

Assessment Elements

  • non-blocking Midterm Test
    Form: exam; Length: 90 minutes; Format: in-class, closed-book; Structure: Test (closed-choice) on theoretical material - 10 tasks; Problems solving - 3 tasks. Subject to the successful completion of course control forms, it is possible to submit preliminary final work. The structure of the final work includes tasks on all topics of the 2nd part of the course. If the final work is successfully written, its mark can be counted as an examination mark. Midterm Test is carried out at the seminar. The text of the work and the rules for performing the work are sent to the corporate mail of each student. The period for performing the work is determined. The student has the opportunity to complete the test in the sent file or print the document, write the solution and send the scanned work. The time for performing the work is assigned before starting work. Work solutions must be laid out in a special folder created in the LMS, no later than the time suggested at the beginning of the test
  • non-blocking Home Assignments
    Small groups, homework based on a real-life task, with follow-up presentation and discussion.
  • non-blocking In-class Tests
    Individual assignment, in-class, close-book.
  • non-blocking In-class Activities
    Individual participation in discussions and problem-solving.
  • non-blocking Final Exam
    The exam is to be held in written form on the MS Team (Общий - Corporate finance- exam <6adec186.edu.hse.ru@emea.teams.ms> / LMS platform. Preliminary, a task is sent to corporate mail, which before the specified time must be placed in the LMS projects section It is necessary to login 10 minutes before the exam is due to begin. (Emphasize the opportunity to try the platform/digital service if such opportunity exists). Student’s computer should meet the following requirements: Word, Exel. To participate in the exam, student is obliged to: to consult with other students, use the Internet, communicate on the phone with colleagues. During the exam, students are allowed to: use lecture notes and presentations placed in the LMS system, conduct calculations using the Exel program. A short-term communication disruption during the exam is considered 5 minutes. Long-term communication failure during the exam is considered more than 10 minutes. In case of a long-term communication disruption, the student cannot continue to participate in the exam.The retake procedure is identical to the exam procedure
  • non-blocking Bussiness game
    Presentation of the results of companies’ efficiency evaluation, small groups, open-book.
Interim Assessment

Interim Assessment

  • Interim assessment (3 module)
    0.4 * Final Exam + 0.2 * Home Assignments + 0.1 * In-class Activities + 0.1 * In-class Tests + 0.2 * Midterm Test
Bibliography

Bibliography

Recommended Core Bibliography

  • Vernimmen, P. (2017). Corporate Finance : Theory and Practice (Vol. Fifth edition). Hoboken: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1606902

Recommended Additional Bibliography

  • Jensen, M. C. (2010). Value Maximization, Stakeholder Theory, and the Corporate Objective Function. Journal of Applied Corporate Finance, 22(1), 32–42. https://doi.org/10.1111/j.1745-6622.2010.00259.x