Corporate Finance Theory
Aims
Students will acquire a solid understanding of the most important ideas and concepts put forward in Corporate Finance Theory. This will enable them to better formulate and motivate the research questions in their empirical research.
Information
The course focuses on agency problems affecting the choices of corporations at various levels, which represent the core of modern corporate finance theory. We will review theoretical models studying how firms can obtain the necessary outside financing in the presence of information asymmetry and conflicts of interest. We will study problems of credit rationing, the optimal maturity structure of debt, the determinants of borrowing capacity of firms, and pecking order theories. In the second part of the course, we will discuss the optimal allocation of control rights within the firm. Here we will investigate the role of blockholders, debtors, and takeovers. The course concludes with a session on structural models and structural estimation in corporate finance.
Assessment
Assessment: Written exam 60%, weekly assignments 20%, class participation 20%
Materials
Jean Tirole (2006). The Theory of Corporate Finance, Princeton University Press
