IB501Q: REAL INVESTMENTS AND CORPORATE FINANCE (2022-2023)

In this course, we investigate the problem of how the value of a collection of corporate liabilities (such as shares and bonds) are affected by corporate actions. The types of corporate actions we are concerned with include:

• Corporate “real” investment decisions, for example where the company invests in a new plant or machinery or designs a new product.
• Corporate “financing” decisions, for example where companies choose capital structure.
• Decisions and dividend payouts and debt policy.
• The impact of mergers and acquisitions on the value of the relevant corporations.

Our overriding theme is to place these corporate actions in a global context using many real-world corporate examples to enhance our knowledge and understanding of this sophisticated arena.

By the end of this course, you will: 

• Understand why it is reasonable to assume that financial securities are fairly priced.
• Be able to describe the major types of financial securities that are issued by companies.
• Be able to demonstrate knowledge of payout policy and the differences between dividend payout and stock repurchases. 
• Be able to explain the ways investors interpret information about changes to dividend payout and the reasons why companies find stock repurchases more flexible.
• Be able to demonstrate intellectual understanding of the reasons why payout policy does not affect shareholder value when financial markets are perfectly competitive and informationally efficient.
• Be able to explain why corporations merge and describe the gains and costs of mergers.
• Be able to provide an informed discussion that synthesises evidence on topics such as payout policy, debt policy, mergers and corporate governance.