Department of Finance

B400 Advanced Corporate Finance

Person responsible:Prof. Dr. Christian Koziol
Lecturer:Tilo Treuter, M.Sc.
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, 2:15 PM – 3:45 PM, Kupferbau, HS 24

Practice course: Monday, 4:00 PM – 5:30 PM, Kupferbau, HS 24


Goals

This module focuses on two fundamental question of corporate finance: (1) What is the optimal capital structure of a firm? (2) What drives the value of a firm? The aim of the module is to introduce students to practical and theoretical factors driving capital structure decisions as well as firm values. Within advanced model frameworks students will be enabled to analyze the effects of corporate decisions on issued claims and develop solutions for classical incentive problems in corporate financing.

Content:

  • Introduction to financing decisions
  • A structural firm value model (Merton, 1974)
  • Tradeoff theory (Leland, 1994)
  • Problems between claim holders
  • Cost of Capital
  • Firm valuation using WACC and APV
  • WACC valuation for default risk

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.