BUSI49015: CORPORATE FINANCE (FT)

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• This elective builds on the material covered in the core module Managing Finance and primarily aims to examine how the appropriate use of financial strategy can add value to the corporation. By integrating corporate financial decisions with wider issues of corporate strategy, the module addresses the problem of conflicting objectives within the corporation and informational asymmetries between internal and external agents. The module also examines how corporate managers can take advantage of the growing sophistication of financial markets in organic internal development as well as dynamic external growth of corporations.

• Introduction to Corporate Finance: the objective(s) of firms; corporate strategy and ownership structure; finance theory and financial strategy; value-based management; managerial incentives and financial decisions; the information content of financial decisions.
• Capital Structure: corporate financing decisions and efficient capital markets; capital structure and long-term corporate strategy; limits to the use of debt; valuation and capital budgeting for the levered firm; dynamic capital structure; adjusting capital structure through share buybacks.
• Payout Policy: dividend versus share buybacks; the dividend controversy; the signalling effects of dividends; the long-term trend of dividend payouts and firm characteristics.
• Company Valuation: book value; market value and cash flow forecasts; factors affecting valuation; valuing for acquisitions; internal valuation.
• Funding Gaps and the Issue of Smaller Firms: private equity; venture capital and the role of venture capitalists; relative merits of alternative sources of funding.
• Mergers, Acquisitions and Restructuring: sources of acquisition synergies; structuring acquisitions; financing acquisitions; shareholders wealth effects; LBOs, MBOs and other forms of restructuring.

Subject-specific Knowledge:

• Upon successful completion of the module, the students will have:
• critical understanding of how lessons learned from the financial markets can be applied to the world of corporate financial management and strategy;
• advanced knowledge and critical understanding of how managers make financial decisions in a world of uncertainty and imperfect information;
• critical understanding of how the structure of organisations can influence corporate decision-making and performance;
• critical knowledge of the main methods of company valuation, their merits and disadvantages;
• critical understanding of the determinants of capital structure and payout policy, including non-financial stakeholders' interests, the costs of financial distress, and the informational content of gearing and dividends;
• critical understanding of the role of takeovers as a tool for corporate control;
• critical understanding of the financing issues associated with smaller firms.

Subject-specific Skills:

• Upon successful completion of the module, the students will have:
• demonstrated ability to learn to work independently in finance, exercising critical judgement and discrimination in the resolution of complex problematic situations;
• had the opportunity to apply their problem solving and analytical skills to issues in finance in a complex specialised context.

Key Skills:

• Understanding ambiguous and indeterminate contexts.
• Generating a strategic perspective.
• Managing the process of change.
• Building and developing teams.
• Enhancing leadership capabilities.
• Negotiating and persuading.
• Sourcing appropriate data and evaluating evidence.
• Interpreting and using numerical and financial information.
• Reflecting and synthesising from experience.
• Developing critical thinking.
• Exercising discrimination and judgement.
• Synthesising diverse perspectives.
• Developing coherent and persuasive arguments.
• Selecting appropriate modes of communication.

• Learning outcomes will be met through a combination of lectures, groupwork, case studies and discussion, supported by guided reading. The written assignment will test students' understanding of relevant concepts and their ability to apply and interpret what they have learned to the analysis of a particular issue in depth.

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