Department of Finance

B400 Advanced Corporate Finance I Capital Structure

Lecturer: Prof. Dr. Christian Koziol
Language: English
Recommended for:

1st year M.Sc

  • Accounting and Finance (Compulsory Module Finance, Specialization Studies)
  • Economics and Finance (Specialization Module Finance, Elective Module Finance)
  • European Economics (Elective Module Finance)
  • European Management (Compulsory Studies Focus 3)
  • General Management (Compulsory Studies Focus 3)
  • International Economics (Elective Module Finance)
  • Managerial Economics (Elective Studies)
  • Quantitative Economics (Elective Module Finance)
  • PhD Studies (not suitable)
  • [expiring International Economics and Finance (Major Module Finance)]
Course type and number of hours: 2 hours lecture + 2 hours exercise session
ECTS credits: 9 ECTS
Type of exam: written exam
Time and place:

Lecture: Monday, 4:15 PM – 5:45 PM, Kupferbau HS 24

Exercise sessions:Monday, 2:15 PM – 3:45 PM, Kupferbau HS 24

 

Goals

This course focuses on the fundamental question of corporate finance "what is the optimal capital structure of a firm?". The aim of the course is to introduce the students to the major practical and theoretical factors that drive the optimal capital structure and to provide an advanced model framework with that the classical solutions for the corporate financing problems are derived.

Content:

  • Introduction to financing decisions
  • A structural firm value model (Merton, 1974)
  • Tradeoff theory (Leland, 1994)
  • Problems between claim holders
  • Problems from asymmetric information
  • Further aspects of capital structure

Literature:

  • Grinblatt, Mark and Sheridan Titman (2002): Financial Markets and Corporate Strategy, 2nd ed., Boston, McGraw-Hill.
  • Merton, Robert C. (1974): On the Pricing of Corporate Debt: The Risk Structure of Interest Rates, Journal of Finance 29, p. 449-470.
  • Leland, Hayne E. (1994): Corporate Debt Value, Bond Covenants, and Optimal Capital Structure, Journal of Finance 49, p. 1213-1252.