CORPFIN 3503 - Corporate Investment & Strategy

North Terrace Campus - Semester 2 - 2021

This course examines techniques and issues in corporate finance with a focus on corporate investment decisions. The course covers both internal and external corporate growth strategies: advanced capital budgeting techniques, risk management strategies, valuation of capital projects as real options, merger and acquisition strategies, corporate diversification and divestitures. Further topics include stock valuation along with recognition of growth opportunities, relation between growth opportunities and free cash flow and agency cost of free cash flow, incentive-aligning compensation including executive stock options, corporate governance and ethical principles in finance industry.

  • General Course Information
    Course Details
    Course Code CORPFIN 3503
    Course Corporate Investment & Strategy
    Coordinating Unit Adelaide Business School
    Term Semester 2
    Level Undergraduate
    Location/s North Terrace Campus
    Units 3
    Contact Up to 3 hours per week
    Available for Study Abroad and Exchange Y
    Prerequisites CORPFIN 2502
    Assumed Knowledge SACE Stage 2 Mathematical Studies
    Course Description This course examines techniques and issues in corporate finance with a focus on corporate investment decisions. The course covers both internal and external corporate growth strategies: advanced capital budgeting techniques, risk management strategies, valuation of capital projects as real options, merger and acquisition strategies, corporate diversification and divestitures. Further topics include stock valuation along with recognition of growth opportunities, relation between growth opportunities and free cash flow and agency cost of free cash flow, incentive-aligning compensation including executive stock options, corporate governance and ethical principles in finance industry.
    Course Staff

    Course Coordinator: Dr Jane Luo

    Lecturer-in-charge: Name: Dr Jane Luo
    Location:
    Email:

    Room 12.06, Nexus 10 Building
    jane.luo@adelaide.edu.au

    Course Timetable

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

  • Learning Outcomes
    Course Learning Outcomes
    On successful completion of this course, students will be able to:

    1. Understand the relationship between financial policy and growth
    2. Measure growth opportunities using formulas and pricing models
    3. Employ various capital budgeting techniques and risk analysis in making investment decisions
    4. Apply option pricing models, including real options methods, to evaluate corporate investments
    5. Utilise leading techniques in valuation of merger and acquisition strategies
    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)
    Deep discipline knowledge
    • informed and infused by cutting edge research, scaffolded throughout their program of studies
    • acquired from personal interaction with research active educators, from year 1
    • accredited or validated against national or international standards (for relevant programs)
    1-5
    Critical thinking and problem solving
    • steeped in research methods and rigor
    • based on empirical evidence and the scientific approach to knowledge development
    • demonstrated through appropriate and relevant assessment
    1-5
    Teamwork and communication skills
    • developed from, with, and via the SGDE
    • honed through assessment and practice throughout the program of studies
    • encouraged and valued in all aspects of learning
    1-5
    Career and leadership readiness
    • technology savvy
    • professional and, where relevant, fully accredited
    • forward thinking and well informed
    • tested and validated by work based experiences
    1-5
    Intercultural and ethical competency
    • adept at operating in other cultures
    • comfortable with different nationalities and social contexts
    • able to determine and contribute to desirable social outcomes
    • demonstrated by study abroad or with an understanding of indigenous knowledges
    1-5
    Self-awareness and emotional intelligence
    • a capacity for self-reflection and a willingness to engage in self-appraisal
    • open to objective and constructive feedback from supervisors and peers
    • able to negotiate difficult social situations, defuse conflict and engage positively in purposeful debate
    1-5
  • Learning Resources
    Required Resources
    The text book for the course is Ross, S., R. Westerfield, J. Jaffe and B. Jordan, Corporate Finance, 11e, McGraw-Hill International, 2016. (NOTE: Newer editions e.g., 12e & 13e are suitable).
    Recommended Resources
    A. Damodaran, Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, 3rd Edition,John Wiley & Sons, 2012
    Online Learning
    All materials are available on Canvas.
  • Learning & Teaching Activities
    Learning & Teaching Modes
    Lectures supported by problem-solving tutorials developing material covered in lectures.
    Workload

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

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

    Students in this course are expected to attend all lectures throughout the semester plus one tutorial class each week

    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. As CORPFIN 3503 is a 3 unit course, each week you are expected to commit approximately 9 hours of private study, in addition to the 3 hours attending your lecture and tutorial.
    Learning Activities Summary
    Semester Week Topic # Topic Required Reading
    1 1 Financial policy and growth Ross Ch.3
    2 2 Valuing growth opportunities
    Tutorials start this week
    Ross Ch. 9
    EVA.pdf
    Jones.pdf
    Jensen.pdf
    3 3 Advanced capital budgeting and risk analysis Ross Ch.4 - Ch.7
    4 4 Options & corporate finance: basic concepts and pricing models Ross Ch. 22
    5 1-3 Review of Topics 1-3, Online Test #1
    6 5 Applications of options in Corporate Finance Ross Ch.22
    Ross Ch.23
    7 6 Real options Ross Ch. 23
    8 7 Mergers & acquisitions strategies Ross Ch. 29  
    Damodaran Ch.25 
    Mitchell.pdf
    Mid-semester break
    Mid-semester Break
    9 4-6 Review of Topics 4-6, Online Test #2
    10 7,8 Mergers & acquisitions strategies (Continued); Acquisition valuation Ross Ch. 29
    Damodaran Ch.25
    Mitchell.pdf
    11 8,9 Acquisition valuation(Continued); Financial distress, Investments
    in other firms & Cross-shareholding
    Damodaran Ch.25
    Damodaran Ch.30
    12 9 Financial distress, Investments in other firms & Cross-shareholding(Continued); Review lecture   Damodaran Ch.30

    Note: Reading may be varied during the semester. All .pdf files are uploaded to Canvas.
  • 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
    Online Test 1

    Week 5 20% 1,2, & 3 All
    Online Test 2

    Week 9 20% 4,5 & 6 All
    Final Exam

    See semester 2 exam timetable, when released, for details 60% All All
                             
    Total 100%
    Assessment Related Requirements
    To pass this course, 50% overall is required (this subject is not 'double pass').
    Assessment Detail
    Online Test 1:  covers topics 1-3

    Online Test 2:  covers topics 4-6

    Final examination: covers all the topics.

    More details will be provided closer to the dates.
    Submission
    Both online tests must be completed within the scheduled time frame.

    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

    Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student’s disciplinary procedures.

The University of Adelaide is committed to regular reviews of the courses and programs it offers to students. The University of Adelaide therefore reserves the right to discontinue or vary programs and courses without notice. Please read the important information contained in the disclaimer.