This module aims to build on the theoretical and practical knowledge gained in Financial Management 1 and 2 and give students an appreciation of the key strategic issues affecting company finance and governance. It will provide a framework for the nature and scope of corporate finance and will develop the use of practical decision making skills used in this area. The module will encompass key subject areas such as efficient market hypothesis, portfolio theory, the implications of dividend policy, merger and takeover activity and risk management. The module also aims to provide students with a detailed insight into the field of corporate governance. The module will encompass key areas in the field of corporate governance such as the processes, policies, customs, laws and institutions affecting the way companies are directed, administered and controlled.
The nature & scope of Corporate Finance and Governance
The nature & scope of financial objectives of multi-nationals, private, public & not-for-profit organisations; corporate social responsibility towards shareholders and society; financial considerations and their impact on business planning and decision-making.
Corporate Governance
Meaning of corporate governance; patterns of share ownership; agency theory; transaction costs theory; stakeholder theory; governance, risk and financial stability; potential consequences of poor corporate governance; governance and ethics; corporate ethics and corporate codes of ethics; professional ethics. Key issues in corporate governance: role and composition of the board; remuneration of directors and senior executives; accounting and audit; relations with shareholders and of other stakeholders; best practice in governance; voluntary and regulatory approaches; governance problems for global companies and groups; legal and regulatory aspects of governance; codes of corporate governance practice and reports on governance; developments in corporate governance.
Efficient Market Hypothesis, Portfolio theory and The Capital Asset Pricing Model
Risk and return trade-offs over time; estimating total risk and return for Capital Market efficiency; perfect and efficient markets; different forms of market efficiency; implications of the efficient market hypothesis. Individual assets; estimating total risk and return for portfolios; unique and market risk; valuation using beta; applying CAPM to capital structure and portfolios.
Mergers, Acquisitions and Corporate Reorganisations
Justifications for acquisitions; trends in takeover activity; target company valuation; financing of acquisitions; strategic and tactical issues; divestment; empirical research.
Dividend Policy
Theories of dividend policy; implications of dividend policy for share prices and real world factors influencing dividend policy: clientele effect; signalling effect; dividend policies; alternatives to cash dividends.
Risk Management
Sources of risk; interest rate and exchange rate risk terminologies: translation, transaction and economic risks; risk exposure and risk reduction; internal risk management techniques; external risk management techniques: FRAs; collars; caps; futures; options; swaps; hedges; issues in exchange risk management.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Other Assessment(s) | 40 |
| Formal Examination | 60 |