This course builds on Principles of Finance and examines important issues in corporate finance from the perspective of financial managers who are responsible for making significant financing and investment decisions. You will learn how investment and financing decisions interact to affect the value of the firm and how management can evaluate operating decisions, taking into account taxes, transaction costs, principal agent problems and information asymmetry.

There are two building blocks: In part 1, you will learn important foundations of valuation and capital structure. In part 2, we investigate the effects of financial distress, principal agent problems and information asymmetry. Throughout the course we apply the learned theory on real world problems.

After completing this course the student will have the ability to:

• understand the most important determinants of a firm's financial structure
• understand how the market value of a firm will be affected by financial decisions
• incorporate the effects of time, uncertainty, taxes, and incentives on the present value of firm cash flows

Moreover, the course contributes to students' ability to:

• demonstrate effective team skills in order to contribute appropriately to the production of a group output
• work and communicate effectively alone and in a team situation and to function as a valuable and cooperative team member
• structure complex problems

Full attendance is compulsory. This means that students have to take part in all 4 projects and all 4 tests. Students have to attend at least 80% of all lectures, at most one lecture can be missed without excuse.

Corporate Finance builds on the course Principles of Finance. In the first class we will give an introduction to Financial Statement Analyses needed for business valuation.

With the knowledge from the course Principles of Finance (CAPM, Fama-French 3-Factor-model, No-arbitrage) we will discuss one of the most influencing papers in Finance: Modigliani-Miller 1958. Furthermore we will learn how taxes, transaction costs, principal agent problems or information asymmetry could influence the capital structure or the dividend policy of firms.

An important part of the course is to apply what we learned. I will form teams in which you analyze a given firm out of a given industry. This analysis will be divided into 4 projects.

For all projects each team has to prepare a presentation. Findings and presentations have to be uploaded in time @Canvas. In class randomly chosen teams will present their findings.

In addition, the course is accompanied by 4 short individual tests in class.

Grades will be based on:

• Case study (=analyzing a company) divided into 4 projects (4 times 15 points)
• 4 online tests (4 times 10p)
• positive grades: (1) >= 87.5p, (2) >= 75p, (3) >= 62.5p,  (4) >= 50p
• negative grade: (5) <50p or missing attendence requirements

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stefan.bogner@wu.ac.at

Meeting by appointment via email.