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 research questions in their empirical research.

Information

The course focuses on agency problems affecting corporate decisions at various levels. We will review theoretical models studying how firms can obtain 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.

Assessment

Written exam 70%, weekly assignments 15%, class participation 15%

Materials

Jean Tirole (2006). The Theory of Corporate Finance, Princeton University Press