ECO554 - Corporate Finance (2022-2023)

The course is organised in two parts. The first one presents corporate finance concepts and provides practical tools for financial decisions and valuation. It is structured around principles that comprise corporate finance and focuses on decision making: analysis of financial statements, concept of NPV, valuation of assets, etc… The course enhances the student’s ability to understand the concepts and the behaviour of investors. It includes case studies and exercises in order to highlight how basic corporate finance concepts have to be applied in practice. The focus of the second part is on the difficulty for firms of raising external finance and what kinds of market friction prevent firms from using outside financing (debt or equity). These market frictions are associated with taxation and also with asymmetry of information, under the form of moral hazard or adverse selection. The course also considers the liquidity shortage problem and why firms should hedge their financial risks.

2. Content

Part 1 – Franck Bancel

  1. Understanding investors’ expectations
  2. Essentials in financial accounting
  3. Essentials in financial analysis
  4. Essentials in valuation techniques
  5. Investment analysis and decision

 

Part 2 – Olivier Gossner

  1. Modigliani-Miller and the financial structure puzzle
  2. Two influential theories of debt
  3. Hedging risks
  4. Credit rationing and moral hazard
  5. Liquidity and risk management


The course is organised in two parts. The first one presents corporate finance concepts and provides practical tools for financial decisions and valuation. It is structured around principles that comprise corporate finance and focuses on decision making: analysis of financial statements, concept of NPV, valuation of assets, etc… The course enhances the student’s ability to understand the concepts and the behaviour of investors. It includes case studies and exercises in order to highlight how basic corporate finance concepts have to be applied in practice. The focus of the second part is on the difficulty for firms of raising external finance and what kinds of market friction prevent firms from using outside financing (debt or equity). These market frictions are associated with taxation and also with asymmetry of information, under the form of moral hazard or adverse selection. The course also considers the liquidity shortage problem and why firms should hedge their financial risks.

2. Content

Part 1 – Franck Bancel

  1. Understanding investors’ expectations
  2. Essentials in financial accounting
  3. Essentials in financial analysis
  4. Essentials in valuation techniques
  5. Investment analysis and decision

 

Part 2 – Pierre Picard

  1. Modigliani-Miller and the financial structure puzzle
  2. Two influential theories of debt
  3. Hedging risks
  4. Credit rationing and moral hazard
  5. Liquidity and risk management