The paper reading part aims to enhance the ability of students to read and review finance papers critically as well as to make them acquainted with some modeling practices in selected areas. In the writing part, the students are expected to attend the PhD Research Seminar to learn about and discuss research in various stages and to present their master thesis proposal.

After this course students:

• will be able to grasp, analyze and discuss current scientific publications in the field of finance,
• will be prepared to research, write and present academic papers,
• will be prepared to further deepen and broaden their specialized knowledge in a relevant PhD program.

 

Moreover, this course will contribute to the students’ ability to:

• engage in a scientific discussion and make an appropriate contribution,
• onfidently organize and integrate ideas and information,
• present (in an oral and written form) findings appropriate to an audience.

This course consists of two major parts: The paper reading part aims to enhance the ability of students to read and review finance papers critically as well as to make them acquainted with some modeling practices in selected areas. In the writing part, the students are expected to attend the PhD Research Seminar to learn about and discuss research in various stages and to present their master thesis proposal. These two parts together are expected to prepare the students for doing a high-quality independent research in their thesis. In the reading part, we will meet six times during the semester. At each session one or two key paper of a selected area will be discussed. Students should read all papers carefully and in detail and then share their understanding of those papers with the group. To facilitate the process, at the beginning of each session a full presentation of one paper will be presented by one student (for approximately 50-60 minutes in total). The presentations will be followed by group discussions. The course instructors will be available before and during the sessions to assist students understanding the technical details of the papers. The first session will be a training session, where the students will learn in a workshop how to read scientific papers. For the workshop the students are required to read the introductions of two papers. These introductions will be sent to the students by email. The six main papers will be assigned during the first session.The writing part will be held jointly with VGSF PhD Research Seminar. Therefore, masters students have the opportunity of being involved in the process of presenting and discussing papers by PhD students and to present their master thesis proposal. The proposal presentations are scheduled in the last seminar at the end of January 25th, 2012.Reading Part In the reading part, the students are expected to: - Read the papers assigned for each session thoroughly - Present twice during the semester (using the slide format supplemented by the blackboard) - Actively participate in group discussions Moreover, the students are strongly encouraged to read other papers related to the selected topic and back their comments by referring to the literature. Showing such an effort will earn some extra credit. Writing Part The students have to attend the PhD Research Seminar presentations. Additionally, each student has to present one proposal for her/his thesis. A maximum of 45 minutes is reserved for the presentation and 15 minutes for the general discussion. This presentation offers the opportunity to receive feedback from the faculty, PhD and master students. A tentative title and a short abstract of the proposal must be communicated to Rainer Jankowitsch by January 8, 2012. Guideline to Analyze and Present Papers (Reading Part) Think of the following issues while reading the paper and/or preparing your presentation: 1) The major empirical question, observation or puzzle that the paper aims to address 2) The background literature and previous results 3) Key assumptions of the model 4) Foundations of theoretical model - Type of the model (general equilibrium, partial equilibrium, game, …) - Key players or agents, their objective functions - Major variables - Time-line of events or moves - Equilibrium / solution concept - Results and comparative statics 5) for empirical papers: Identification and estimation strategy including the tactics to overcome misspecification problems 6) Possible challenges or shortcomings of the model or estimation method 7) Possible extensions of the paper

Course Evaluation The grade will be based entirely on in-class activities. There will be no final exam. The final grade will be a weighted average of reading (60%) and writing (40%) sections grades. Reading Part: Paper presentation 40% Active class participation 60%, absence in one session is allowed. Writing Part Class room participation 30% Proposal presentation 70%

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Johann Reindl, VGSF, johann.reindl[]wu.ac.at Alexander Schandlbauer, VGSF, alexander.schandlbauer[]wu.ac.at Rainer Jankowitsch WU/VGSF, rainer.jankowitsch[]wu.ac.at

Session 1: Trade-off: Leland (1994). Corporate debtvalue, bond covenants, and optimal capital structure. Pecking-order: Myers& Majluf 1984, Corporate financing and investment decisions when firms haveinformation that investors do not have Session 2: Mehra & Prescott (1985)."The Equity Premium: A Puzzle". Bansal & Yaron (2004). „Risks forthe Long Run: A Potential Resolution of Asset Pricing Puzzles” Session 3: Jarrow& Turnbull, "Pricing Derivatives on Financial Securities Subject toCredit Risk". Merton (1974), “On the Pricing of Corporate Debt: The RiskStructure of Interest Rates” Session 4: Brander & Lewis, 1988."Bankruptcy Costs and the Theory of Oligopoly". Chevalier (1995),"Do LBO Supermarkets Charge More? An Empirical Analysis of the Effects ofLBOs on Supermarket Pricing". Session 5: : Fama & French (1993)."Common Risk Factors in the Returns on Stocks and Bonds". Lettau,Ludvigson "Consumption, Aggregate Wealth and Expected Stock Returns."Session 6: Chava & Roberts (2008). “How Does Financing Impact Investment?The Role of Debt Covenants” Lemmon, Roberts & Zender (2008): “Back to thebeginning: Persistence and the cross-section of corporate capital structure”

Reading Part

Do, 04.10.2012 10:00-12:00 MR I (H46): Kick-Off Meeting

Do, 18.10.2012 10:00-12:00 MR I (H46): S1

Do, 25.10.2012 10:00-12:00 MR I (H46): S2

Do, 08.11.2012 10:00-12:00 MR I (H46): S3

Do, 22.11.2012 10:00-12:00 MR I (H46): S4

Do, 06.12.2012 10:00-12:00 MR I (H46): S5 (Group Discussion)

Do, 13.12.2012 10:00-12:00 MR I (H46): S6 (Group Discussion)

Writing Part

Wed, 24.10.2012 H46@S2 3:00 pm – 6:00 pm

Wed 07.11.2012 H46@S3 3:00 pm – 6:00 pm

Wed 21.11.2012 H46@S3 3:00 pm – 6:00 pm

Wed 05.12.2012 H46@S4 3:00 pm – 6:00 pm

Wed 19.12.2012 H46@S3 3:00 pm – 6:00 pm

Wed 16.01.2013 H46@S3 3:00 pm – 6:00 pm (presentations of master students)

Wed 30.01.2013 H46@S3 3:00 pm – 6:00 pm (presentations of master students)