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Course Name (English)
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ADVANCED CORPORATE FINANCE
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| Course Code |
FIN544 |
| Course Description |
The subject develops the “art and science” of corporate decision making by applying corporate financial theory to cases of financial policy, financial instruments and valuation. In particular, this subject considers corporate investment decisions (project valuation, acquisition) and decisions that involve financing investments (raising capital, payout policy), while focusing on related theories of corporate finance. Greater emphasis is given on the determination relevant cash flows from a project and the impact of financing these projects has on its capital structure. |
| Transferable Skills |
reflective learners |
| Teaching Methodologies |
Lectures, Tutorial, Problem Based Learning (PBL), Discussion |
| CLO |
| CLO1 |
Illustrate the corporate behavior in capital markets and the relationship of agent and principal in raising funds, allocating capital and distributing returns. |
| CLO2 |
Demonstrate information management and lifelong learning skill using discussion on firm’s financing decision in the fundamental of corporate finance. |
| CLO3 |
Demonstrate the managerial skill through the effects of information and agency conflicts on corporate financial and investment decisions. |
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| Pre-Requisite Courses |
No course recommendations |
| Topics |
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1. Goals and Governance of the Firm
1.1) 1.1 Corporate Investment and Financing Decisions
1.2) 1.2 The Role of the Financial Manager and the Opportunity Cost of Capital
1.3) 1.3 Goals of the Corporation
1.4) 1.4 Agency Problems and Corporate Governance
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2. Raising Capital
2.1) 2.1 Venture Capital
2.2) 2.2 The Initial Public Offering
2.3) 2.3 Security Sales by Public Companies
2.4) 2.4 Private Placements and Public Issues
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3. Capital Structure (Excluding Bankruptcy)
3.1) 3.1 Capital structure decision
3.2) 3.2 Determining optimal Capital structure
3.3) 3.3 Factors in Capital Structure Decision
3.4) 3.4 Value of Unlevered and Levered Firms
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4. Capital Structure: Limits to the Use of Debt
4.1) 4.1 Cost of Financial Distress
4.2) 4.2 Description of Costs
4.3) 4.3 Integration of Tax Effects and Financial Distress Costs
4.4) 4.4 Agency Cost of Equity
4.5) 4.5 Pecking Order Theory
4.6) 4.6 Signaling Hypothesis
4.7) 4.7 Factor Affecting Capital Structure
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5. Cash Flow Determination I
5.1) 5.1 Depreciation (Straight-line method)
5.2) 5.2 Taxation (Tax liability and tax shield Techniques): Top-down approach, Bottom-up approach
5.3) 5.3 Tax-shield approach
5.4) 5.5 Operating cash flows (OCF)/Cash Flows After tax (CFAT): Net Initial Cash Flow (NICF), Net Annual Cash Flow (NACF), Terminal Cash Flow (TCF)
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6. Cash Flow Determination II
6.1) 6.1 Decision Making: Evaluating cost-cutting proposal
6.2) 6.2 Setting bid price
6.3) 6.3 Projects with different lives (unequal lives)
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7. Project Analysis and Evaluation I
7.1) 7.1 Evaluating NPV estimates: Forecasting risk
7.2) 7.2 What-if analysis (Scenario analysis, Sensitivity analysis)
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8. Project Analysis and Evaluation II
8.1) 8.1 Break-even analysis (Accounting break-even, Cash break-even, Financial break-even)
8.2) 8.2 Operating leverage : Degree Of Leverage (DOL), Degree of Financial Leverage (DFL), Degree of Total Leverage (DTL)
8.3) 8.3 Definition of managerial options
8.4) 8.4 Definition of capital rationing
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9. Efficient Markets and Behavioral Finance
9.1) 9.1 What is an Efficient Market?
9.2) 9.2 The Evidence against Market Efficiency
9.3) 9.3 Behavioral Finance
9.4) 9.4 The Five Lessons of Market Efficiency
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10. Payout Policy
10.1) 10.1 How Firms Pay Dividends and Repurchase Stock
10.2) 10.2 How Do Companies Decide on Payouts
10.3) 10.3 The Payout Controversy
10.4) 10.4 Stock Dividend & Stock Split
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11. Mergers and Acquisitions I
11.1) 11.1 Forms of Takeovers
11.2) 11.2 Means of Acquisition
11.3) 11.3 Types of Acquisitions
11.4) 11.4 Accounting Treatment of Merger and Acquisition
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12. Mergers and Acquisitions II
12.1) 12.1 NPV of a merger - cash or shares
12.2) 12.2 Defensive Tactics
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| Assessment Breakdown | % |
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| Continuous Assessment | 60.00% |
| Final Assessment | 40.00% |
| Details of Continuous Assessment |
| Assessment Type |
Assessment Description |
% of Total Mark |
CLO |
| Case Study |
Case Study |
20% |
CLO3
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| Group Project |
Video Presentation |
30% |
CLO2
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| Test |
Test 1 |
10% |
CLO1
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| Reading List | | Recommended Text | - Brealey, R. A., Myers, S. C., & Allen, F. 2011, Principles of Corporate Finance (9th ed.), 9 Ed., Mcgraw-Hill [ISBN: 978-007340510]
- Ross, S. A., Westerfield, R. W., Jordan, B. D., Lim, J., & Tan, R. 2012, Fundamentals of Corporate Finance (Asia Global Edition ed.), Asia Global Edition Ed., McGraw Hill
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| Article/Paper List | This Course does not have any article/paper resources |
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| Other References | - Book Megginson, W. L., & Smart, S. B. 2009, Introduction to Corporate Finance (2nd
ed.).
, South-Western
- Book Pinto, J. E., Henry, E., Robinson, T. R., & Stowe, J. D. 2015, Equity Asset Evaluation (Third Edition
ed.)
, CFA Institute Investment Books.
- Book Damodaran, A. 2014, Applied Corporate Finance (4th ed.)., Wiley
- Book Moles, P., Parrino, R., & Kidweel, D. 2011, Corporate Finance (European ed.)., Wiley
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