Advanced Corporate Finance
A.Y. 2024/2025
Learning objectives
The course aims at providing students with theoretical knowledge and practical skills on selected advanced concepts in corporate finance. In the first part of the course attention will be devoted to how companies make sophisticated investment decisions based on advanced valuation techniques. Specifically, students will learn how market imperfections (such as taxes, financial distress and agency costs) influence companies' optimal capital structure, as well as advanced capital budgeting techniques adapt to different capital structures. The concept of options will be introduced and used first to price financial options and then to include real options in sophisticated capital budgeting processes. In the second part of the course, students will focus on how companies raise long term financing, including equity (initial public offerings, equity seasoned offerings, private placement etc) and debt (bonds offering and private placements, loans). Lastly, the course presents the most relevant corporate governance best practices. The course will have a strong practical components, based on numerical exercises and review of real case studies.
Expected learning outcomes
By the end of the course, the students will be able to:
·illustrate how market imperfections influence capital structure
·include different capital structures in capital budgeting decisions and in companies' valuation
·price financial options and illustrate why explain might decide to include them in their investment portfolio
·evaluate real options and include them in capital budgeting decisions
·illustrate the different fundraising options available to companies: distinguish between different types of equity and debt issues, understand their process and evaluate their costs and benefits
·justify the need for good corporate governance, illustrate challenges, best practices, and regulation for corporate governance.
·illustrate how market imperfections influence capital structure
·include different capital structures in capital budgeting decisions and in companies' valuation
·price financial options and illustrate why explain might decide to include them in their investment portfolio
·evaluate real options and include them in capital budgeting decisions
·illustrate the different fundraising options available to companies: distinguish between different types of equity and debt issues, understand their process and evaluate their costs and benefits
·justify the need for good corporate governance, illustrate challenges, best practices, and regulation for corporate governance.
Lesson period: First trimester
Assessment methods: Esame
Assessment result: voto verbalizzato in trentesimi
Single course
This course can be attended as a single course.
Course syllabus and organization
Single session
Responsible
Lesson period
First trimester
Course syllabus
A detailed structure of the course if the following:
1. Introduction to the course and recap of basic Corporate Finance: discounted cash flows, the cost of capital, CAPM.
2. Capital budgeting and capital structure: how different capital structures influence company value
3. Real options: how to account for flexibility in our capital budgeting decisions
4. Raising long-term finance: Valuation, Initial Public Offerings and Seasoned Equity Offerings, bonds and loans
5. Corporate Governance: agency costs, shareholder vs stakeholder perspective, best practices and regulation of corporate governance
6. Testimonials and group presentations
Besides theoretical frontal lectures, we will have more interactive practical lectures during which we will discuss real cases and solve numeric exercises. We will rely on some of the resources of the University library, including Refinitiv, Zephyr and Orbis, useful to carry out quantitative analyses.
1. Introduction to the course and recap of basic Corporate Finance: discounted cash flows, the cost of capital, CAPM.
2. Capital budgeting and capital structure: how different capital structures influence company value
3. Real options: how to account for flexibility in our capital budgeting decisions
4. Raising long-term finance: Valuation, Initial Public Offerings and Seasoned Equity Offerings, bonds and loans
5. Corporate Governance: agency costs, shareholder vs stakeholder perspective, best practices and regulation of corporate governance
6. Testimonials and group presentations
Besides theoretical frontal lectures, we will have more interactive practical lectures during which we will discuss real cases and solve numeric exercises. We will rely on some of the resources of the University library, including Refinitiv, Zephyr and Orbis, useful to carry out quantitative analyses.
Prerequisites for admission
There are no formal prerequisites, but taking (and passing) corporate finance class is highly recommended
Teaching methods
Lectures, valuation exercises, case-studies presentations, testimonials from practitioners (entrepreneurs, professionals in finance)
Teaching Resources
"Corporate Finance", IV edition. Jonathan Berk, Peter DeMarzo. Pearson.
The course slides and supplementary readings will be uploaded in the course website.
The course slides and supplementary readings will be uploaded in the course website.
Assessment methods and Criteria
The final grade of both attending and non attending students is based on two components:
- Final written exam (80%)
- Intermediate quizzes (20%)
Attending students can have up to 2 bonus points if they submit an optional assignment which consists in a case study on a topic relevant for the course. The assignment can be conducted in groups of maximum 2 students and will be presented to the class at the end of the course.
Non-attending students are those unable to participate in at least 80% of classes. The inability to attend class needs to be justified via email (e.g., Erasmus students, working students ). Class attendance is strongly encouraged for this course.
- Final written exam (80%)
- Intermediate quizzes (20%)
Attending students can have up to 2 bonus points if they submit an optional assignment which consists in a case study on a topic relevant for the course. The assignment can be conducted in groups of maximum 2 students and will be presented to the class at the end of the course.
Non-attending students are those unable to participate in at least 80% of classes. The inability to attend class needs to be justified via email (e.g., Erasmus students, working students ). Class attendance is strongly encouraged for this course.
Educational website(s)
Professor(s)