Advanced Corporate Finance develops the “art and science” of optimal strategic decision-making by applying corporate financial theory to cases of financial policy, financial instruments and valuation. In particular, the following topics are studied: cost of capital and capital budgeting, discounted cash flow valuation and financial multiples, payout policy, equity and debt financing, option pricing theory and applications, corporate control and recapitalizations.
The classes are structured to maximize the synergy between theory and practice, providing students with portable, durable and marketable tools for their careers.
This class is suitable for students looking to make executive strategic financial decisions, including investment bankers, consultants, CFOs and corporate treasurers, portfolio and investment managers, and students seeking careers in private equity.
Advanced Corporate Finance should be considered a capstone course. This is an advanced course in which students are expected to perform professional level work. The class is open to both 1st and 2nd year students who have completed B8306 Capital Markets and Investments, as the material covered in B8306 is necessary throughout the course. In particular, students should be familiar with notions of options pricing including valuation using the Black-Scholes formula.
Advanced Corporate Finance builds directly upon the basic valuation tools developed in Corporate Finance and extends in the following directions: (1) The course introduces more advanced concepts into valuation (such as corporate securities beyond simple debt and equity) to equip students with the tools necessary to analyze more complex (and therefore, more realistic) capital structures and corporate transactions. (2) The course incorporates richer institutional detail into quantitative analysis, bringing students closer to real-world. (3) The course explores new topics and recent developments in corporate finance theory and practice as a means of exposing students to the ever-changing nature of the capital markets, both its terms and its practices. The more advanced tools and deeper understanding of the valuation process in this course serve the same goal stated in Corporate Finance: To improve corporate financial decision-making by executives and to provide value-creating tools of analysis for investors.
A. Barton Hepburn Professor of Economics in the Faculty of Business
Professor Hodrick is known for her ground-breaking research on corporate financial decisions, with a particular interest in corporate cash holdings and capital allocation, including share repurchases and dividends, takeovers, and equity offerings. In recognition, she has been awarded the National Science Foundation Presidential Young Investigator Award, a Smith Breeden Prize for Distinguished Paper in the Journal of Finance, the Western Finance Association's Trefftzs...