CORPFIN 3500 - Corporate Finance Theory III

North Terrace Campus - Semester 2 - 2014

This course looks at theoretical issues in corporate finance and their practical application. Topics include capital structure and the preferences for debt or equity as suggested by agency models, including leases, pecking order theory and timing models; dividend policy; applications of option pricing theory including real options, convertible securities and executive compensation; initial public offerings; internal capital markets and diversification.

  • General Course Information
    Course Details
    Course Code CORPFIN 3500
    Course Corporate Finance Theory III
    Coordinating Unit Business School
    Term Semester 2
    Level Undergraduate
    Location/s North Terrace Campus
    Units 3
    Contact Up to 3 hours per week
    Prerequisites CORPFIN 2500 & CORPFIN 2502
    Assumed Knowledge SACE Stage 2 Mathematical Studies & ACCTING 1002 & ECON 2508
    Course Description This course looks at theoretical issues in corporate finance and their practical application. Topics include capital structure and the preferences for debt or equity as suggested by agency models, including leases, pecking order theory and timing models; dividend policy; applications of option pricing theory including real options, convertible securities and executive compensation; initial public offerings; internal capital markets and diversification.
    Course Staff

    Course Coordinator: Dr Jean Canil

    Course Timetable

    The full timetable of all activities for this course can be accessed from Course Planner.

  • Learning Outcomes
    Course Learning Outcomes
    By the end of this course students should be able to:
    1. Explain and interpret conceptual models and arguments in corporate finance
    2. Recognize the model appropriate for structuring a given financial problem
    3. Understanding the data requirements of a chosen model
    4. Understanding how outputs are sensitive to changed data or assumptions
    5. Interpreting the results consistent with the model structure
    University Graduate Attributes

    This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

    University Graduate Attribute Course Learning Outcome(s)
    Knowledge and understanding of the content and techniques of a chosen discipline at advanced levels that are internationally recognised. 1-5
    The ability to locate, analyse, evaluate and synthesise information from a wide variety of sources in a planned and timely manner. 1-5
    An ability to apply effective, creative and innovative solutions, both independently and cooperatively, to current and future problems. 1-5
    Skills of a high order in interpersonal understanding, teamwork and communication. 1-5
    A proficiency in the appropriate use of contemporary technologies. 1-5
    A commitment to continuous learning and the capacity to maintain intellectual curiosity throughout life. 1-5
    A commitment to the highest standards of professional endeavour and the ability to take a leadership role in the community. 1-5
    An awareness of ethical, social and cultural issues within a global context and their importance in the exercise of professional skills and responsibilities. 1-5
  • Learning Resources
    Required Resources
    The textbook for the course is Allen, F., R. A. Brealey, and S. C. Myers, Principles of Corporate Finance 11th edition McGraw Hill, 2013. (ABM). You must acquire the 11h edition as material is covered not contained in the 10th edition.
  • Learning & Teaching Activities
    Learning & Teaching Modes

    No information currently available.

    Workload

    The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

    The University expects full-time students (i.e. those taking 12 units per semester) to devote a total of 48 hours per week to their studies. This means that you are expected to commit approximately 9 hours for a three-unit course or 13 hours for a four-unit course, of private study outside of your regular classes.

    Students in this course are expected to attend all lectures throughout the semester plus one tutorial class each week.
    Learning Activities Summary
    Lecture dates Topic
    1 Aug 1 Does debt policy matter? Ch 17 + Titman.pdf
    8 Aug 2 How much should a firm borrow? Ch 18 pp.448-467
    15 Aug 3 The pecking order and Stulz (1990) Ch 18 pp. 467-478 + Lakshmi.pdf, Frank.pdf + additional readings
    22 Aug 4 Leases Ch 25 + distributed readings
    29 Aug 5 Convertibles Ch 24 pp.617-623 + Mayer.pdf
    5 Sept Class test starting at 9am and to be held in Scott Theatre 
    No tutorials this week
    12 Sept 6 Payout policy Ch 16 + LaPorta.pdf, Brandon.pdf
    19 Sept 7 Equity and debt issues including IPOs Ch 15 (excluding p.389 dealing with rights issues) + Loughran and Ritter.pdf
    Mid-semester break
    10 Oct Class test starting at 9.00am and to be held in Scott Theatre
    No tutorials this week
    17 Oct 8 Executive compensation Ch 12 pp.295-304 + Core et al.pdf
    24 Oct 9 Internal capital markets Gertner.pdf +Stein.pdf + additional reading
    31 Oct Review Lecture and Tutorials for Topic 9
  • Assessment

    The University's policy on Assessment for Coursework Programs is based on the following four principles:

    1. Assessment must encourage and reinforce learning.
    2. Assessment must enable robust and fair judgements about student performance.
    3. Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
    4. Assessment must maintain academic standards.

    Assessment Summary
    Assessment Date and time Weighting Topics covered Related learning outcome
    Class Test 1: 50 minutes 5 Sept starting at 9.00am – in Scott Theatre 15 % 1-3 All
    Class Test 2: 50 minutes 10 October starting at 9.00am – in Scott Theatre 20% 4-6 All
    Final Exam: 3 hours, Closed-book Exam week beginning 8 November 65% All All

    To pass this subject, 50% overall is required. Neither test is redeemable.

    Assessment Detail

    No information currently available.

    Submission

    No information currently available.

    Course Grading

    Grades for your performance in this course will be awarded in accordance with the following scheme:

    M10 (Coursework Mark Scheme)
    Grade Mark Description
    FNS   Fail No Submission
    F 1-49 Fail
    P 50-64 Pass
    C 65-74 Credit
    D 75-84 Distinction
    HD 85-100 High Distinction
    CN   Continuing
    NFE   No Formal Examination
    RP   Result Pending

    Further details of the grades/results can be obtained from Examinations.

    Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

    Final results for this course will be made available through Access Adelaide.

  • Student Feedback

    The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

    SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.

  • Student Support
  • Policies & Guidelines
  • Fraud Awareness

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