Advanced Corporate Finance

BMAN30111A Advanced Corporate Finance 20 Semester 1 Undergraduate Level 3 Maria-Teresa Marchica Unit coordinator Amedeo De Cesari Unit coordinator Alliance Manchester Business School 1 FHEQ level (Framework for Higher Education Qualifications) ' Last part of a Bachelors ' European Credit Transfer & Accumulation System Rating : 10.0 Capital raising: - Theories and evidence of initial public offering (IPO) & seasoned equity offering (SEO) anomalies - Valuation of IPO companies Corporate Governance: - Agency costs of Equity - Corporate Governance mechanisms (applied also to IPO cases) Capital structure theories with symmetric information: - The Modigliani-Miller (MM) irrelevance theorem - Capital structure with taxes and financial distress costs - Valuation of debt tax shields - The trade-off theory Capital structure theories with asymmetric information and agency considerations: - Adverse selection and signalling models - Pecking order theory - Agency theories (agency costs of debt and equity) Issuance and valuation of: - Debt, including both straight and convertible debt•       Practitioner’s lecture (provisional TBC) Capital raising: - Theories and evidence of initial public offering (IPO) & seasoned equity offering (SEO) anomalies - Valuation of IPO companies Corporate Governance: - Agency costs of Equity - Corporate Governance mechanisms (applied also to IPO cases) Capital structure theories with symmetric information: - The Modigliani-Miller (MM) irrelevance theorem - Capital structure with taxes and financial distress costs - Valuation of debt tax shields - The trade-off theory Capital structure theories with asymmetric information and agency considerations: - Adverse selection and signalling models - Pecking order theory - Agency theories (agency costs of debt and equity) Issuance and valuation of: - Debt, including both straight and convertible debt•       Practitioner’s lecture (provisional TBC) The course unit aims to present students with an intermediate/advanced analytical treatment of corporate finance, building on first and second-year finance courses, in particular the second part of BMAN23000 on corporate finance. Where appropriate, there will be some revision of concepts covered in BMAN23000. The approach is analytical rather than mathematical, and the intuition behind theoretical concepts is emphasised throughout. The course unit focuses on the theory of corporate finance and corporate financial policy. Its aim is to provide an understanding (from both a theoretical and an empirical standpoint) of some of the central decision problems in corporate finance: capital raising, capital structure decisions, the effects of conflicts between different types of stakeholders within the firm and corporate ownership and governance issues. This module will help students to apply theoretical concepts to real case scenarios and develop their analytical skills in analysing and discussing case studies of real companies. On completion of this course successful students will be able to: • Understand how the following factors influence the decisions of companies on capital structure 1. Taxation 2. Information asymmetries 3. Agency costs of debt4. Agency costs of equity • Understand the ownership and control structure of firms 1. Impact of agency costs of equity both on IPO process and capital structure decisions; 2. Corporate governance mechanisms • Understand some of the methods used to value 1. Equity (in Initial Public Offering) 2. Debt (both straight and convertible) • Discuss and interpret a few case studies in corporate finance• Grasp the perspective of a private equity fund in evaluating a firm/project.   Lecture Hours: 18 Practical Lectures Hours: 14 Private Study Hours: 168 Total study hours: 200 Please note there will be a several weeks with 4 hours of teaching - 2 hours of lectures and 2 hours of practical lectures. Informal Contact Methods 1. Office Hours 2. Online Learning Activities (blogs, discussions, self assessment questions) 3. Other : Practical lectures/sessions. 0 Other 100% Unseen 3 hour examination at the end of the semester (100% )     - Informal advice and discussion during lectures and seminars. - Responses to student emails and questions from a member of staff including feedback provided to a group via an online discussion forum. - Specific course related feedback sessions. - Generic feedback posted on Blackboard regarding overall examination performance.  BMAN23000 Foundations of Finance A Pre-Requisite Compulsory BMAN23000B Foundations of Finance B Pre-Requisite Compulsory BMAN23000C Foundations of Finance C Pre-Requisite Compulsory BMAN 23000 is a Pre-Requisite of BMAN 30111A/B.Pre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated within this course outline. If the pre-requisite unit is defined as a compulsory course unit within your programme of study (Maths with Finance, IBFE, Accounting, BA Econ pathways for example) then progression onto the dependent unit is permitted as long as you have gained the appropriate amount of credit to progress on to the following year of your registered undergraduate programme.   N Core texts:The following texts cover (most of) the material taught in this course unit. Students are recommended to purchase one of them.Hillier, D., Grinblatt, M. and S. Titman (2008), Financial Markets and Corporate Strategy: European Edition, 1st Edition, Irwin/McGraw-Hill. ORHillier, D., Grinblatt, M. and S. Titman (2012), Financial Markets and Corporate Strategy: European Edition, 2nd Edition, Irwin/McGraw-Hill.Grinblatt, M. and S. Titman, 2002, Financial Markets & Corporate Strategy, Irwin/McGraw-Hill, 2nd ed. (the 1st edition of this book was published in 1998).Berk, J., and P. DeMarzo, (2007). Corporate Finance, Pearson International Edition ORBerk, J., DeMarzo, P., (2010). Corporate Finance. Pearson Global Edition. ORBerk, J., DeMarzo, P., (2013). Corporate Finance. Pearson Global Edition (3 edition).Brealey, R. A.., S. C. Myers and F. Allen, 2006, Principles of Corporate Finance, 8th ed., London: McGraw-Hill. OR<s Assessment written exam 2.5 Lectures 18 Practical classes & workshops 14 0 165.5 Length of course: 11 weeksPre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated within this course outline. If the pre-requisite unit is defined as a compulsory course unit within your programme of study (Maths with Finance, IBFE, Accounting, BA Econ pathways for example) then progression onto the dependent unit is permitted as long as you have gained the appropriate amount of credit to progress on to the following year of your registered undergraduate programme. Pre-requisites: BMAN23000(A) or (B) Foundations of FinanceCo-requisites: NoneDependent course units: NoneProgramme Restrictions: There are no programme restrictions for this course providing the pre-requisites listed below are met. BMAN30111 is available to study abroad and exchange students admitted through the University of Manchester International Programmes Office.