Economics of Corporate Finance
| Module title | Economics of Corporate Finance |
|---|---|
| Module code | BEEM117 |
| Academic year | 2024/5 |
| Credits | 15 |
| Module staff | Dr Simone Meraglia (Convenor) |
| Duration: Term | 1 | 2 | 3 |
|---|---|---|---|
| Duration: Weeks | 11 |
| Number students taking module (anticipated) | 53 |
|---|
Module description
Summary:
This module aims to introduce you to recent developments in corporate finance. It presents the economics of information and discusses applications to corporate finance and corporate governance. It is intended that you will develop an appreciation of the application of financial economics to a range of problems and an understanding of its relevance in a variety of contexts. The module will equip you with appropriate tools of analysis to tackle issues and problems of corporate finance, and an ability to construct simplifying frameworks for studying the real world.
Additional Information: Internationalisation
The main focus of this module is on the theory of how companies finance themselves, which is applicable in an international environment.
Sustainability
All of the resources for this module are available on the ELE (Exeter Learning Environment).
Employability
In this module students acquire an understanding of how financial systems work and a theoretical perspective of managing teams, as well as improving their analytical and numerical skills.
Module aims - intentions of the module
To introduce students to recent developments in corporate finance. The module presents the economics of information and discusses its applications to corporate finance and corporate governance.
Intended Learning Outcomes (ILOs)
ILO: Module-specific skills
On successfully completing the module you will be able to...
- 1. an understanding of key concepts of moral hazard and adverse selection, their impact on firms and financial markets
- 2. the choice between debt and equity financing
- 3. how financial decisions are affected by asymmetric information
- 4. applications to corporate governance and takeovers
- 5. how firm financing decisions are affected in a global contest
ILO: Discipline-specific skills
On successfully completing the module you will be able to...
- 6. an understanding of the causes and consequences of moral hazard and adverse selection in financial markets
ILO: Personal and key skills
On successfully completing the module you will be able to...
- 7. an ability to think analytically about financial markets and firms
- 8. formal modelling of decisions and financial markets
- 9. an ability to study a range of teaching and research material and to work independently
Syllabus plan
Part 1: Corporate Financing
• Modigliani-Miller
• Agency Costs of Financing
• Credit Rationing
• Pecking Order Hypothesis
Part 2: Executive Compensation and Group Lending
• Management Entrenchment
• Group Lending
Part 3: Takeovers
• Takeovers
Learning activities and teaching methods (given in hours of study time)
| Scheduled Learning and Teaching Activities | Guided independent study | Placement / study abroad |
|---|---|---|
| 20 | 130 | 0 |
Details of learning activities and teaching methods
| Category | Hours of study time | Description |
|---|---|---|
| Contact hours | 20 | Lectures |
Formative assessment
| Form of assessment | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|
| In-class Q&A | 15 minutes | 1-6 | Correct answers in-class |
Summative assessment (% of credit)
| Coursework | Written exams | Practical exams |
|---|---|---|
| 0 | 100 | 0 |
Details of summative assessment
| Form of assessment | % of credit | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|---|
| Examination | 80 | 2 hours | 1-9 | Written or verbal feedback |
| Midterm | 20 | 50 minutes | 1-9 | Written or verbal feedback |
Details of re-assessment (where required by referral or deferral)
| Original form of assessment | Form of re-assessment | ILOs re-assessed | Timescale for re-assessment |
|---|---|---|---|
| Examination (80%) | Examination (80%) (2 hours) | 1-9 | Standard re-assessment period |
| Mid-term (20%) | Mid-term (20%) (50 minutes) | 1-9 | Standard re-assessment period |
Indicative learning resources - Basic reading
Basic reading:
Tirole, T. (2005)The Theory of Corporate Finance, Princeton: MIT Press
| Credit value | 15 |
|---|---|
| Module ECTS | 7.5 |
| Module pre-requisites | None |
| Module co-requisites | BEEM100 or BEEM101 |
| NQF level (module) | 7 |
| Available as distance learning? | No |
| Origin date | 16/07/2014 |
| Last revision date | 23/09/2021 |
