This subject bridges the gap between financial theory and practice through an in-depth examination of an organisation’s three key financial decisions -- the investment (i.e., capital budgeting), the financing (i.e., capital structure) and the payout (i.e., dividend). This is undertaken within the context of responsible corporate governance, supported by appropriate quantitative models and applied through contemporary case studies focusing on boardroom decisions.
Academic unit: Bond Business School Subject code: FINC71-601 Subject title: FINC71-601: Corporate Finance Subject level: Postgraduate Semester/Year: January 2020 Credit points: 10.000
Delivery & attendance
Timetable: https://bond.edu.au/timetable Delivery mode: Standard Workload items:
- Seminar: x12 () - Seminar 1
- Seminar: x12 () - Seminar 2
- Personal Study Hours: x12 () - Recommended study time & reviewing materials
Attendance and learning activities: Attendance at all class sessions is expected. Students are expected to notify the instructor of any absences with as much advance notice as possible.
- Jonathan Berk,Peter DeMarzo (2017). Corporate Finance, Global Edition. 4th Global Editionth, England Pearson
[email protected] & Email: [email protected] is the online learning environment at Bond University and is used to provide access to subject materials, lecture recordings and detailed subject information regarding the subject curriculum, assessment and timing. Both iLearn and the Student Email facility are used to provide important subject notifications. Additionally, official correspondence from the University will be forwarded to students’ Bond email account and must be monitored by the student.
To access these services, log on to the Student Portal from the Bond University website as www.bond.edu.au
|Academic unit:||Bond Business School|
|Subject title:||FINC71-601: Corporate Finance|
|Attendance and learning activities:|
|[email protected] & Email:||[email protected] is the online learning environment at Bond University and is used to provide access to subject materials, lecture recordings and detailed subject information regarding the subject curriculum, assessment and timing. Both iLearn and the Student Email facility are used to provide important subject notifications. Additionally, official correspondence from the University will be forwarded to students’ Bond email account and must be monitored by the student.
Assumed knowledge is the minimum level of knowledge of a subject area that students are assumed to have acquired through previous study. It is the responsibility of students to ensure they meet the assumed knowledge expectations of the subject. Students who do not possess this prior knowledge are strongly recommended against enrolling and do so at their own risk. No concessions will be made for students’ lack of prior knowledge.
Assumed Prior Learning (or equivalent):
Assurance of learning
Assurance of Learning means that universities take responsibility for creating, monitoring and updating curriculum, teaching and assessment so that students graduate with the knowledge, skills and attributes they need for employability and/or further study.
At Bond University, we carefully develop subject and program outcomes to ensure that student learning in each subject contributes to the whole student experience. Students are encouraged to carefully read and consider subject and program outcomes as combined elements.
Program Learning Outcomes (PLOs)
Program Learning Outcomes provide a broad and measurable set of standards that incorporate a range of knowledge and skills that will be achieved on completion of the program. If you are undertaking this subject as part of a degree program, you should refer to the relevant degree program outcomes and graduate attributes as they relate to this subject.
Subject Learning Outcomes (SLOs)
On successful completion of this subject the learner will be able to:
- Apply corporate finance concepts, principles and theories to the financial decision making of the firm.
- Apply critical thinking and professional judgment to investment, financing and payout decisions while recognising stakeholder interests.
- Identify and analyse a range of financial decisions as a corporate finance advisor using industry standard technology.
- Critically evaluate key elements of good corporate governance and recommend ethical and sustainable firm-specific strategies that reduce agency conflicts.
- Prepare a professional written report analysing a complex corporate finance issue relating to a specific company
- Demonstrate the ability to work as an effective member of a financial consulting team to prepare a set of clear recommendations supported by appropriate financial analysis and modelling.
- Show reflective ability in their written consulting reports by incorporating feedback and board member insights following from their presentations
Type Task % Timing Outcomes assessed Paper-based Examination (Closed) A comprehensive examination of both theory-related short essay questions and quantitative questions. 35% Final Examination Period 1,2,3,4 Paper-based Examination (Closed) A combination of both theory-related short essay questions and quantitative questions. 35% Week 7 (Mid-Semester Examination Period) 1,2 *Class Participation Active participation in class demonstrating expected preparation. 10% Ongoing 1,2,3,4 Case Presentation Teams of 3-4 students work as financial consultants to prepare and present a set of clear recommendations supported by appropriate financial analysis. A peer evaluation system will be used to assess the performance of each group member. 20% In Consultation 1,2,3,4,5,6,7
High Distinction 85-100 Outstanding or exemplary performance in the following areas: interpretative ability; intellectual initiative in response to questions; mastery of the skills required by the subject, general levels of knowledge and analytic ability or clear thinking. Distinction 75-84 Usually awarded to students whose performance goes well beyond the minimum requirements set for tasks required in assessment, and who perform well in most of the above areas. Credit 65-74 Usually awarded to students whose performance is considered to go beyond the minimum requirements for work set for assessment. Assessable work is typically characterised by a strong performance in some of the capacities listed above. Pass 50-64 Usually awarded to students whose performance meets the requirements set for work provided for assessment. Fail 0-49 Usually awarded to students whose performance is not considered to meet the minimum requirements set for particular tasks. The fail grade may be a result of insufficient preparation, of inattention to assignment guidelines or lack of academic ability. A frequent cause of failure is lack of attention to subject or assignment guidelines.
For the purposes of quality assurance, Bond University conducts an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.
|Paper-based Examination (Closed)||A comprehensive examination of both theory-related short essay questions and quantitative questions.||35%||Final Examination Period||1,2,3,4|
|Paper-based Examination (Closed)||A combination of both theory-related short essay questions and quantitative questions.||35%||Week 7 (Mid-Semester Examination Period)||1,2|
|*Class Participation||Active participation in class demonstrating expected preparation.||10%||Ongoing||1,2,3,4|
|Case Presentation||Teams of 3-4 students work as financial consultants to prepare and present a set of clear recommendations supported by appropriate financial analysis. A peer evaluation system will be used to assess the performance of each group member.||20%||In Consultation||1,2,3,4,5,6,7|
Students must check the [email protected] subject site for detailed assessment information and submission procedures.
Policy on late submission and extensions
A late penalty will be applied to all overdue assessment tasks unless an extension is granted by the subject coordinator. The standard penalty will be 10% of marks awarded to that assessment per day late with no assessment to be accepted seven days after the due date. Where a student is granted an extension, the penalty of 10% per day late starts from the new due date.
Policy on plagiarism
University’s Academic Integrity Policy defines plagiarism as the act of misrepresenting as one’s own original work: another’s ideas, interpretations, words, or creative works; and/or one’s own previous ideas, interpretations, words, or creative work without acknowledging that it was used previously (i.e., self-plagiarism). The University considers the act of plagiarising to be a breach of the Student Conduct Code and, therefore, subject to the Discipline Regulations which provide for a range of penalties including the reduction of marks or grades, fines and suspension from the University.
Feedback on assessment
Feedback on assessment will be provided to students within two weeks of the assessment submission due date, as per the Assessment Policy.
Accessibility and Inclusion Support
If you have a disability, illness, injury or health condition that impacts your capacity to complete studies, exams or assessment tasks, it is important you let us know your special requirements, early in the semester. Students will need to make an application for support and submit it with recent, comprehensive documentation at an appointment with a Disability Officer. Students with a disability are encouraged to contact the Disability Office at the earliest possible time, to meet staff and learn about the services available to meet your specific needs. Please note that late notification or failure to disclose your disability can be to your disadvantage as the University cannot guarantee support under such circumstances.
Additional subject information
A peer-evaluation system will be used in this subject to help determine the individual marks for all group assessments. As part of the requirements for Business School quality accreditation, the Bond Business School employs an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.
Introduction to Corporate Finance and Ethics in Finance
A review of the three fundamental principles that underlie corporate finance—the investment, capital structure, and payout principles. The analysis of the interrelationships between these three corporate financial decisions is made with the objective of maximising firm value within the context of arbitrage and the law of one price. This discussion is framed within the ethics in the operation of the financial markets and the professional conduct of those charged with governance.
Capital Budgeting Extensions
The value drivers of the firm are analysed using appropriate capital-budgeting-evaluation techniques with extension to encompass uncertainties in cash flows and required rates of return. Models are evaluated within the context of agency theory and the incentives of management to use uncertainty for personal advantage at the cost of the shareholders.
Valuation and Financial Modelling
Fundamental analysis of a firm’s performance using standard industry ratios and DuPont analysis are identified and applied to contemporary case studies to determine the business drivers and analysis of weaknesses and strengths of firms. These ratios are the first step in valuation modelling and provide a basis for forecasting future cash flows, earnings and dividends for use in subsequent analysis on equity and enterprise valuation.
Financing - Debt, Equity
The returns to sources of funds from debt and equity are modelled with respect to the firm's risk parameters and relate these to required returns. Alternate source of financing for firm’s projects and operations are examined. The process and cost associated with the issuance of debt and equity with a focus on issuance of equity via an initial public offering (IPO) are analysed and applied to current market upcoming listings.
Cost of Capital
Methods for estimating the component parts of the firm's weighted average cost of capital, using various industry databases explore the practical details of identifying the market portfolio and estimating equity betas. Estimating a project’s cost of capital based on the unlevered cost of capital of comparable firms followed by the application of the weighted-average cost of capital as a tool for evaluating levered projects and investments are applied to contemporary case studies.
Capital Structure I
Considerations that guide the decision of when and how firms issue new securities to maximise value are considered. The firm’s capital structure decision is explored in the setting of perfect capital markets in which all securities are fairly priced, there are no taxes or transactions costs, to provide a benchmark and framework of decision making.
Capital Structure II
The factors that lead to large and systematic variations in the typical capital structure of different industries due to market imperfections are analysed. The decision making involving the trade-off of these market imperfections are applied to maximise firm value in the context of currently listed securities.
The choices in payout versus retention for firm’s free cash flow are explored. Factors that affect a firm’s payout policy such as taxes, agency costs, transaction costs, and asymmetric information between managers and investors are analysed to determine the optimal payout policy including share-buy backs for individual firms.
Mergers and Acquisitions
Mergers and acquisitions are examined from the view of the market’s reaction to takeovers, the motivations and drivers of acquisitions. Focus is applied to the valuation of takeover offers and exchange ratio values to maximise the success of the deal. Possible takeover defences the board can instigate are explored within the relevant legal jurisdiction.
The framework and principles of good corporate governance are explored in detail. A range of issues from executive packages that align managerss incentives with the firm, risk management and appropriate structure of board compositions to maximise firm performance in a dynamically changing world are discussed.