Course: Theory of Corporate Finance ECN5355 L, Pech Gerald Bernd

Topic outline

Welcome to the Class "Theory of Corporate Finance"
Here is the link to my Zoom sessions:

https://www.zoom.us/my/geraldpech

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Communication

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The Instructor of This Course

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Lecture 1: Introduction, 21 September
- What is Corporate Finance?
- Why do we need a theory of Corporate Finance?
- Slides for Lecture 1 File
Lecture 2 Corporate Finance and Corporate Governance, 21 September
- Why do financial goals determine governance?
- How does governance affect financial objectives?
Lithograph by Escher

Materials for Lecture 2
- Slides for Lecture 2 File
- Tirole, chpt 1 Page
  
  This is an exerpt of chapter 1 of Jean Tirole, The Theory of Corporate Finance. There are 10 also copies in the library.
- Background: CEO Compensation and Managerial Power Theory File
  L.A. Bebchuk and J. M. Fried, Executive Compensation as an Agency Problem, Journal of Economic Perspectives 17, 2003, pp. 71–92
- Douma Schreuder URL
  Economic Approaches to Organizations, Pearson
- Review Questions for Lecture 2 and 3 File
Lecture 3 Modigliani-Miller and the Financial Structure Puzzle, 21 September
- When are financing decisions without consequence for the value of the firm and why?
- When have financing decisions consequences for the value of the firm and which are they?
Materials for Lecture 3
- Slides for Lecture 3 File
  Updated on 27 September 2023
- Tirole, chpt 2 Page
  This is an exerpt of chapter 2 of Jean Tirole, Theory of Corporate Finance.
  There are 10 copies in the library. If they turn out to be inaccessible, here is the go-to resource.
- Background: The Modigliani-Miller Theorem File
  Franco Modigliani and Merton H. Miller, The Cost of Capital, Corporation Finance and the Theory of Investment, The American Economic Review, Vol. 48, No. 3 (Jun., 1958), pp. 261-297
- Assignment for 24 September
- Tirole Chpts 2.4 - 2.5 Page
Lecture 4: Financing Capacity, 28 September 2023
- Why does my bank not give me a 100% loan on my house?
Zoom Lecture

https://www.zoom.us/my/geraldpech

Materials for Lecture 4
Midterm on 11 October - On Campus
- Guideline Answer for the Midterm Exam File
Lecture 5: Determinants of Borrowing Capacity
Slightly Different Answers to Old Questions:
- Why Not Put All Eggs into One Basket?
- But What if Agents are Risk Neutral?
- And Why Does Microfinance Work?
Zoom Lecture Alternative

https://www.zoom.us/my/geraldpech

Course Materials
- Slides for Lecture 5 File
  updated on 3rd November
- Homework for Lecture 5 Assignment
- Review Questions for Lecture 5 File
- Guideline Answer Homework for Lecture 5 File
Lecture 6: Liquidity and Risk Management
Asking New Questions about Old Instruments:
- How Can Liquidity Planning Force the Management to Maximize Investor Welfare?
- How Can Short-term Debt Be Used as a Disciplining Device for Management?
Zoom Lecture Alternative

https://www.zoom.us/my/geraldpech

Course Materials
- Slides for Lecture 6 File
  Updated on 10 November, edits of some unclear formulas (definitions of rho_N and rho_P)
- Review Questions for Lecture 6 File
- Guideline Answer Review Questions for Lecture 6 File
- Homework for Lecture 6 and 7 (both parts) Assignment
  Due date: 10 December
Lecture 7: Corporate Finance under Asymmetric Information
Puzzles about Behavior:
- Why Does Using Equity Finance Often Result in a Decrease in Share Prices beyond Mechanical Adjustment?
- Why Do Corporations Prefer Internal Finance over Debt Finance over Equity Finance?
Zoom Lecture for 7 December

https://www.zoom.us/my/geraldpech

Course Materials
- Slides for Lecture 7 File
  Updated 8 December
- Review Questions Lecture 7 File