Spring 2004

Advanced Corporate Finance

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Enrollment by permission only

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Thursday, 1:00-3:30
meets in 202 Skinner
 

Satya J. Gabriel
Professor of Economics
e-mail: sgabriel@mtholyoke.edu
FAX: 413-538-2323


Course Description:
 

The course is a continuation of Economics 215, Corporate Finance.  Some of the topics will be familiar from that earlier course, such as modern portfolio theory, efficient market theory, the Modigliani-Miller propositions, and the capital asset pricing model, all of which will be further elaborated in the seminar.  Behavioral finance, which was only mentioned in 215, will be discussed in detail in the advanced course and students will have an opportunity to explore selected topics in behavioral finance in detail (such as noise trader risk, market overreaction, forward discount bias, and the hubris hypothesis of corporate takeovers).  The basic course provided students with the skills necessary to performing valuation of firms, securities, and other assets.  The seminar provides an opportunity to enhance those skills by the application of appropriate valuation techniques to specific firms:  students are expected to perform a net present value analysis of at least one publicly traded firm and present their findings to the seminar.

Behavioral finance will be a major focus of the seminar and students are expected to complete a semester paper that demonstrates their understanding of that literature.  In this regard, students who complete the seminar will gain a better understanding of the role of psychology, asymmetric information, and agency costs in the determination of firm value and the short-run movements of equity prices. Expect to hear statements that are blasphemous, from the standpoint of economic orthodoxy: the notion that markets are machine like manifestations of rational (robotic) agents will be challenged (with appropriate evidence from the real world).

As with EC 215, the advanced seminar will make extensive use of case studies (some of which will be constructed by student participants during the semester based on new developments in the corporate world).  The case studies will allow students to come as close as possible, within the context of a classroom, to the experience of real world decision makers in corporations and investment banks, to recognize the uncertainty and ambiguity that is present in every such decision, and to strengthen skills at group brainstorming.  As in the case of all seminars,  students should be prepared, from the very first class and every class, to actively engage in discussions.
 

Course Objectives:
 
 


Syllabus

Spring 2004

  • Text and Other Course Materials:
  • Stern and Chew, ed., The Revolution in Corporate Finance , Fourth Edition, Blackwell Publishing
  • Richard H. Thaler, Advances in Behavioral Finance, Russell Sage Foundation
  • Web Case Studies & Essays 
  • Supplemental: Westin, Siu and Johnson. Takeovers, Restructuring and Corporate Governance, 3rd edition. Prentice Hall.
  • Grading policy 
  • Course grades will be based on the following: 
  • presentation of a valuation analysis (1/3rd of grade)
  • leading class discussion on selected topics (1/3rd of grade)
  • semester research paper (1/3rd of grade)
  • Course calendar

    Jan. 29 Introduction, assignments, clarifications
    Feb. 5 1-2:20: The Corporate Investment Decision, Part II of Stern and Chew
    Discussion Leaders: Nadia Addae, Radoslava Angelova, Anna-Lisa Baksmaty, and Phoebe Ndoro
    ***Click Here to Download Questions (in Word format)***

    2:30-3:50: The Financing Decision I: Capital Structure, Part III of Stern and Chew
    Discussion Leaders: Marc Russell and Lee Wei Kai
    ***Click Here to Download Discussion Questions (in Word format)***
    Feb. 12 1-2:20: The Financing Decision II: The Finance Vehicles, Part IV of Stern and Chew
    Discussion Leaders: Elena Zapryanova, Emily Clark, and Mirijana Ujkic
    ***Click Here to Download Discussion Questions (in Word format)***
    ***Click Here for Additional Questions (in Word format)***

    2:30-3:50: Risk Management, Part V of Stern and Chew
    Discussion Leaders: Sengdeune Khammoungkhoune, Denica Koycheva, and Jin Zhen
    ***Click Here to Download Discussion Questions (in Word format)***
    Feb. 19 1-2:20: International Finance, Part VI of Stern and Chew
    Discussion Leaders: Sun Taoran, Mihaela Krasteva, Asantewa Donkor, and Sylwia Wasiak
    ***Download Discussion Questions (Word Format)***
    ***Download Additional Discussion Questions (Word format)***

    2:30-3:50: International Corporate Governance, Part VII of Stern and Chew
    Discussion Leaders: Kesi Gibson, Tan Wan Yuan, and Julia Berazneva
    ***Download Powerpoint Presentation***
    Feb. 26 1-2:20:  Noise, Part I of Thaler
    Discussion Leaders: Mihaela Krasteva, Radoslava Angelova, Anna-Lisa Baksmaty, and Phoebe Ndoro
    ***Download Discussion Questions (in Word format)***

    2:30-3:50:  Volatility, Part II of Thaler
    Discussion Leaders: Marc Russell, Sylwia Wasiak, and Lee Wei Kai
    ***Download Discussion Questions (in Word format)*** ***Download Powerpoint Presentation***
    March 4 1-2:20:  Overreaction, Part III of Thaler 
    Discussion Leaders: Nadia Addae, Elena Zapryanova, and Mirijana Ujkic

    2:30-3:50:  International Markets, Part IV of Thaler
    Discussion Leaders: Sengdeune Khammoungkhoune, Denica Koycheva, and Jin Zhen
    ***Download Discussion Questions (in Word format)***
    ***Download PowerPoint Presentation***
    March 11 1-2:20:  Corporate Finance, Part V of Thaler
    Discussion Leaders: Sun Taoran, Emily Clark, Asantewa Donkor

    2:30-3:50:  Individual Behavior, Part VI of Thaler
    Discussion Leaders: Kesi Gibson, Tan Wan Yuan, and Julia Berazneva
    April 1 Student Presentations I
    Mihaela Krasteva, Radoslava Angelova, Anna Lisa Baksmaty, and Phoebe Ndoro
    April 8 Student Presentations II
    Marc Russell, Sylwia Wasiak, and Julia Berazneva
    April 15 Student Presentations III
    Nadia Addae, Elena Zapryanova, Mirijana Ujkic, and Zhen Jin
    April 22 Student Presentations IV
    Sengdeune Khammoungkhoune, Denica Koycheva, Sun Taoran, and Asantewa Donkor
    April 29 Student Presentations V
    Tan Wan Yuan (Sherri), Wei Kai Lee, Kesi Gibson, and Emily Clark
    May 10 Semester Research Paper Due Date for Graduating Seniors.
    Absolutely no extensions will be granted beyond this date
    May 16 Semester Research Paper Due Date (for non-seniors).
    Absolutely no extensions will be granted beyond this date

    DISCUSSION FORUM


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