Corporate Finance

Lecturer: Dr. Jianyu YU

Office Hours: Make an appointment
Teaching assistants:
TD
Course Description

The purpose of this course is to gi!e stu"ents a thorough un"erstan"ing of #asic financia$ theory an" too$s
necessary for financia$ "ecision making. The course %i$$ #e an e&tension of Financia$ Management. 't %i$$
$ook in more "etai$ at a range of topics in financing( inc$u"ing capita$ structure an" "i!i"en" po$icy(
raising e)uity an" '*Os. 't %i$$ in!estigate the issue of the management of short+term finance. Fina$$y( it
%i$$ co!er some issues of corporate go!ernance( inc$u"ing topics of merger( ac)uisitions an" corporate
contro$.

After the course:
,tu"ents %i$$ gain a "eep un"erstan"ing on ho% firm managers make financia$ "ecisions( %hat issues they
ha!e to face or %hat are the right )uestions they ha!e to ask. 'n summary( it he$ps stu"ents to un"erstan"
%hat financia$ managers "o an" %hy.

TEXTBOOK(S):
-oss( .esterfie$"( an" Jaffe( Corporate Finance( the /
th
0"ition( 'nternationa$ 0"ition( Mc1ra%+Hi$$.
-ichar" rea$ey( ,te%art Myers( an" Frank$in 2$$en( *rincip$es of Corporate Finance( Mc1ra% Hi$$ 3th
e"ition.
Recommend reading:
Lecture notes of 2s%ath Damo"aran( http:44%%%.stern.nyu.e"u45a"amo"ar4
Real world reading:
.a$$ ,treet Journa$( Financia$ Times( Fortune



Structure of the course:
The course %i$$ first start #y intro"ucing the capita$ structure( main$y the composition of "e#t an" e)uity
an" ho% they affect the !a$ue of a firm. Then %e sha$$ $earn the "ifferent $ong+term measures that the firm
gets the financia$ sources( specifica$$y( the "e#t financing an" e)uity financing. These financia$ sources
%i$$ #e repai" to the shareho$"ers un"er certain po$icies. Hence( %e %i$$ #rief$y ana$y6e the firm7s payout
po$icies an" see ho% "ifferent po$icies %i$$ affect the firm7s !a$ue an" in!estor7s incenti!es. 8e&t( %e
$ook at the short+term finance to see ho% a firm manages its net %orking capita$ that may a$so affect the
firm7s !a$ue. 2fter $earning the firm7s financing strategies( %e can e&ercise some financia$ ana$ysis on the
e&isting companies. 2 series of presentations %i$$ #e organi6e" an" e!a$uate". Fina$$y( %e sha$$ intro"uce
some interesting an" specia$ topics such as the merger an" ac)uisition.


*art ook
chapters
Topic 9s: .eek no.
'. O!er!ie% 'ntro"uction ;
''. Capita$
structure
-.J: Ch ;<
M2: Ch ;=
Capita$ structure: asic
MM proposition ' an" ''( Ta&es
>
?
-.J: Ch ;=
M2: ch ;3
Limits to the Use of De#t: ankruptcy cost
Direct cost( 'n"irect cost an" agency cost
@
9home%ork:
-.J: Ch ;3
M2: ch ;/
Aa$uation an" Capita$ u"geting for the Le!ere" Firm ''
92*A FT0 an" .2CC:
This %i$$ affect the stock prices
B

'''. Long+
term
Financing
M2: ch >?(
>@.
-.J: ch ;B
De#t financing <
-.J: Ch >C
M2: ch ;B
'ssuing ,ecurities to the *u#$ic =
'A. *ayout
po$icy
-.J:Ch ;/
M2: ch ;<
Di!i"en"s an" Other *ayouts 3
/
9home%ork:
A. ,hort+term
Finance
-.J. Ch ><
M2. Ch >/.
,hort+term Finance an" *$anning ;C
-.J. Ch >=
M2. Ch ?C
Cash management ;;
A'. Financia$
ana$ysis
M2:>3 Financia$ ana$ysis ;>
9home%ork:
A''. ,pecia$
topic
-.J. Ch >/
M2.Ch ?;
Merger an" ac)uisition ;?
*roDect *resentation ;@
re!ie% ;B
Grades:

Home%ork ?CE
Case ,tu"y *resentation ?CE
Final exam 40%