cases in corporate finance

Program / Bachelor in Management
Instructor: / MattiSuominen, Ph.D.(University of Pennsylvania), Professor, Department of Finance, Aalto University School of Economics (Helsinki),
Course status / Elective
Concentration / Financial Management
Year / 4th year
Term / Fall – 2011
Workload: / 3 ECTS, 45 hours of classes
Prerequisites: / Financial Management
Course abstract, aim and objectives / This case course is designed to provide students with an opportunity to apply and extend the concepts and tools they have learned in other courses. Its main theme is the creation of shareholder value. Topics covered include financial analysis, capital budgeting, company valuation, the cost of capital, mergers and acquisitions, leveraged buyouts, capital structure decision, initial equity offerings and dividend policy. Given that the course largely applies material from previous courses, I do not distribute any new reading material in advance. However, to prepare for the course I will ask you to briefly review all the material related to (investment and company) valuation and capital structure choice from your previous courses and your course books. You may also refresh your memory by reading the relevant chapters from Brealey, R., Myers, S. and Allen, F., Principles of Corporate Finance, McGraw-Hill or any other corporate finance text book.
Coursecontent: / PART 1. FINANCIAL ANALYSIS AND COMPANY VALUATION
Topic 1. Financial analysis
Topic 2. Company Valuation
Topic 3. Costs of Capital
PART 2. CORPORATE FINANCIAL POLICY AND M&A
Topic 4. Capital Structure Decision
Topic 5. Leveraged Buyouts
Topic 6. Initial Public Offerings
Topic 7. Payout Policy
Topic 8. Mergers and Acquisitions
TeachingMethods: / Lectures, seminars, case work, group work, exercises, home and class assignments.
GradingPolicy: / Final grade consists of the following elements:
Element / Weight
1. Exam test / 60 % / 60 % / 100 %
3. Class participation / 20 % / 40%
4. Group project: Part 1 / 10 %
5. Group project: Part 2 / 10 %
Required reading: / Several cases, most of which are printed in a book called "Cases in Corporate Finance," by Kestner, Ruback and Tufano, 12th ed., Harvard Press. Other cases are distributed in class.
Optional readings / To solve the cases you will most probably find it helpful to refresh your memory by reading the relevant chapters from:
  • Brealey, Myers and Allen, Principles of Corporate Finance, 8th Edition (or newer), McGraw-Hill, or
  • Ross, Westerfield and Jaffe, Corporate Finance, McGraw-Hill, 6th Edition (or newer) and
  • Your class notes from earlier finance courses.
Additional reading material that you may find helpful and interesting include:
  • Koller, Goedhart, and Wessels, “Valuation” (4rd Ed), 2005, John Wiley & Sons, Inc, NY.
  • AswathDamodaran’s “Corporate Finance,” Wiley, Inc., 2nd Edition, 2003 (or newer).
  • Hawawini and Viallet: “Finance for Executives: Managing for Value Creation,” South-Western College Publishing, 4th Edition, 2011, which covers well especially financial analysis and valuation.
To better understand how shareholder value is created in leveraged buyouts, participants are strongly encouraged to read the following (fascinating) book: G.P. Baker and G.D. Smith: "The New Financial Capitalists: KKR and the Creation of Corporate Value," Cambridge University Press, 1998.
Students may also find it interesting to look at current and past issues of the Journal of Applied Corporate Finance, which incorporate many papers that are both deeply rooted in the academic literature and understandable by practitioners.