Faculty of Management – Recanati Business School
1231.3340 Financial Management
Prof. Shmuel Kandel
Course Description and Outline
The objective of this course is to develop decision-making ability based on Corporate Finance theory. Hence, it combines lectures with case analysis. The course and the cases deal with selected topics in Corporate Finance such as valuation, capital budgeting, cost of capital, mergers and acquisitions, capital structure policy, and warrant and convertible use and valuation. The purpose of the cases is not to introduce these topics, but to further examine the theoretical concepts and models of finance and how they can be applied to reasonably realistic situations.
The prerequisite for the course is Principles of Finance (“Yesodot HaMimun”). Most of the required and recommended readings are from the book Corporate Finance: A Valuation Approach by Benninga and Sarig (McGraw Hill, 1997). Cases are provided in the bulkpack. We recommend some articles as additional, background material on some of the topics. The recommended readings are taken from The New Corporate Finance, 3rd Edition, edited by Donald H. Chew, JR. (McGraw Hill, Inc., 2001), which summarizes recent Corporate Finance research in a very accessible manner. You may also read the appropriate chapters from any good Corporate Finance book, such as Principles of Corporate Finance by Brealey and Myers (McGraw-Hill/Irwin, 7E, 2003).
The recommended readings are largely non-technical in nature and summarize the findings of academic research in corporate finance in recent past. Most of the articles are meant to be background material. They need not be cited in the case reports.
In the second meeting, on Wednesday, March 3, 2004, the class will be organized into study groups, four people in a group. Each group will write detailed reports on the six cases. Each report should include 2-4 pages of analysis (typed and double-spaced) with references to an unlimited number of tables, figures, and notes attached as appendices. The report should address the suggested questions for the study case (detailed in the bulkpack), but should not be written in the form of answers to these questions or be confined to these issues only. Rather, the report should be a complete review of the situation analyzed and address all points believed to be important for the analysis.
Eight groups may volunteer or be asked to present their analyses of the cases in class. Each presentation will be limited to 20 minutes and will be followed by a class discussion and the instructor's conclusions. Non-presenting groups may be asked, at random, to present their views of certain points raised by the case or its discussion.
Since a large part of this course is designed around case discussions in the classroom, it is imperative that students attend each class and meet with their group outside of class. The final grade will be based on a final examination (20%) and the detailed reports (80%). Each report will be graded with a total of 100% on the report. Presenting groups will be given a bonus of 20% on the case they present (total grade of 120% for the case).
In the past, students have asked me to hand out case solutions. I’ll not do it, as there are usually no absolute right solutions for study cases. Rather, the best cases are deliberately written to be ambiguous. While there are no right answers, there are good arguments and bad arguments. This course is designed to help the student learn to distinguish between sensible and weak arguments, but not to provide detailed answers to specific cases.
If you are uncomfortable with ambiguity, this class may not be for you.
Lectures, Cases, and Readings
BS - Benninga and Sarig
C - Chew
Lecture: Organization; Introduction ; Review of capital budgeting
Lectures: Review of capital budgeting – cont’d...
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