UNIVERSITY of DELAWARE
College of Business and Economics
DEPARTMENT OF FINANCE
Finance 851 - Corporate Financial Analysis
Spring 1998
Class Time:
Location: |
5:30-6:45 M,W
125 MBNA |
Office: Purnell 320
Phone: 831-1812
finance dept: 831-1015
e-mail: delid@college.be.udel.edu
Office hours: 6:00-7:00 Tues.
|
Overview / Objectives
Finance 851 is the second corporate
finance class for MBAs. The course is intended to give you a framework
for understanding the determinants of corporate investment, financing,
leasing, insurance, and dividend policies. As such, my focus will tend
not be on the memorization of institutional detail or results from academic
research, but rather, on developing your ability to think critically about
issues related to corporate financial policy.
Required Text
-
Smith, The Modern Theory of Corporate
Finance, 2nd Ed., McGraw-Hill, New York, NY (1990).
-
Chew, The New Corporate Finance:
Where Theory Meets Practice, McGraw-Hill, New York, NY (1993).
Grading / Exams
Your grade will be determined as
follows:
Class
Participation |
10% |
Midterm |
40% |
Final |
50% |
|
100% |
Class Participation
Grading:
Active class participation
is an important part of Finance 851. The goal of class participation
is not to see who can "come up with the answer the teacher is looking for,"
but rather, to learn from one another. We each bring different experiences
and backgrounds to the class. We each have different ways of thinking
about the sorts of issues we'll be addressing. My goal, as I said
above, is to expose you to a particular framework for thinking about those
issues. It is not "bad" for you to subscribe to a different way of
thinking (i.e., you wont be graded down). The only "bad" outcome
is if a lack of participation leads us to miss an opportunity to learn
from one another.
TOPICS
INTRODUCTION
-
Hand and Hughes (1993) "The
Motives and Consequences of Debt-Equity Swaps and Defeasances: More Evidence
That it Does Not Pay to Manipulate Earnings" in Chew
-
Smith (1990) "The Theory of
Corporate Finance: A Historical Overview," in Smith
-
Stern (1993) "Market Myths,"
in Chew
CAPITAL STRUCTURE WITH FIXED INVESTMENT POLICY
-
Brealey/Myers, Chapters 17, 18,
20, 23
-
DeAngelo/Masulis (1980) "Optimal
Capital Structure Under Corporate and Personal Taxation," Journal of
Financial Economics, 3-29 (reprinted in Smith)
-
Fama (1978) "The Effects of
a Firm's Investment and Financing Decisions on the Welfare of Its Security
Holders," American Economic Review, 272-284, (reprinted in Smith)
-
Smith (1979) "Applications of
Option Pricing Analysis," in Handbook of Financial Economics edited
by J. Bicksler (North-Holland: Amsterdam), 79-121 (reprinted in Smith)
-
Warner (1977) "Bankruptcy Costs:
Some Evidence," Journal of Finance, 337-347 (reprinted in Smith)
THEORY OF AGENCY WITH CAPITAL STRUCTURE APPLICATIONS
-
Brealey/Myers, Chapters 19,24
-
Brennan and Schwartz (1993)
"The Case For Convertibles" in Chew
-
Fama (1980) "Agency Problems
and the Theory of the Firm," Journal of Political Economy, 288-307
(reprinted in Smith)
-
James and Wier (1993) "Are Bank
Loans Different?: Some Evidence From the Stock Market" in Chew
-
Jensen and Meckling (1976) "Theory
of the Firm: Managerial Behavior, Agency Costs and Ownership Structure,"
Journal of Financial Economics, 305-360 (reprinted in Smith)
-
Kraus (1993) "An Analysis of
Call Provisions and the Corporate Refunding Decision" in Chew
-
Myers (1977) "The Determinants
of Corporate Borrowing," Journal of Financial Economics, 147-175
(reprinted in Smith)
-
Myers (1993) "The Search for
Optimal Capital Structure," in Chew
-
Smith and Warner (1979) "On
Financial Contracting: An Analysis of Bond Covenants," Journal of Financial
Economics, 117-161 (reprinted in Smith)
CORPORATE LEASING POLICY
-
Klein/Crawford/Alchian (1978)
"Vertical Integration, Appropriable Rents, and the Competitive Contracting
Process," Journal of Law and Economics, 297-326
-
Smith/Wakeman (1984) "Determinants
of Corporate Leasing Policy," Journal of Finance 40, 895-908 (reprinted
in Smith)
CORPORATE HEDGING POLICY
-
Mayers and Smith (1987) "Corporate
Insurance and the Underinvestment Problem," Journal of Risk and Insurance,
(March), 45-54.
-
Mayers and Smith (1993) "The
Corporate Insurance Decision," in Chew
-
Rawls and Smithson (1993) "Strategic
Risk Management," in Chew
-
Smith and Stulz (1985) "Determinants
of Firm's Hedging Policies," Journal of Financial and Quantitative Analysis
20, 391-405
-
Smith, Smithson, and Wakeman (1993)
"The Evolving Market for SWAPS," in Chew
-
Smith, Smithson, and Wilford (1993)
"Managing Financial Risk," in Chew
-
Smithson and Chew (1993) "The
Uses of Hybrid Debt in Managing Corporate Risk," in Chew
CORPORATE DIVIDEND POLICY
-
Black (1976) "The Dividend Puzzle,"
Journal of Portfolio Management, 5-8 (reprinted in Smith)
-
Brealey/Myers, Chapter 16
-
Brickley (1983) "Shareholder
Wealth, Information Signaling and the Specially Designated Dividend: An
Empirical Study," Journal of Financial Economics, 187-209 (reprinted
in Smith)
-
Dann (1981) "Common Stock Repurchases:
An Analysis of Returns to Bondholders and Stockholders," Journal of
Financial Economics 9, 113-138 (reprinted in Smith)
-
Easterbrook (1984) "Two Agency-Cost
Explanations of Dividends," American Economic Review, 650-659 (reprinted
in Smith)
-
Kalay (1982) "Stockholder-Bondholder
Conflict and Dividend Constraints," Journal of Financial Economics,
211-233 (reprinted in Smith)
-
Miller (1982) "Can Management
Use Dividends to Influence the Value of the Firm?" Chase Financial Quarterly,
8-18
CORPORATE FINANCING
-
Cornell and Shapiro (1993) "Financing
Corporate Growth," in Chew
-
Finnerty (1993) "An Overview
of Corporate Securities Innovation" in Chew
-
Ibbotson, Sindelar, and Ritter (1993)
"Initial Public Offerings" in Chew
-
Jurin (1993) "Raising Equity
in an Efficient Market" in Chew
-
Kensinger and Martin (1993)
"Project Finance: Raising Money the Old-Fashioned Way," in Chew
-
McConnell and Schwartz (1993)
"The Origin of LYONs: A Case Study in Financial Innovation" in Chew
-
Myers/Majluf (1984) "Corporate
Financing and Investment Decisions When Firms Have Information That Investors
Do Not Have," Journal of Financial Economics 13, 187-221 (reprinted
in Smith)
-
Smith (1986) "Investment Banking
and the Capital Acquisition Process," Journal of Financial Economics
15, 3-29 (reprinted in Smith)
-
Smith (1993) "Raising Capital:
Theory and Evidence," in Chew