Mod­ern Fin­ance and Cor­por­ate Fin­ance

Course content

The development of a modern theory of corporate finance has evolved since around 1950, relating to three major areas of corporate financial policy: Capital budgeting, which relates to how firms make investment decisions; capital structure, which relates to how firms finance their investments; and dividend policy, which relates to how firms distribute the return on their investments.  

One aim of the course is to provide students with a solid knowledge of these theories and models, and to practice related analytical skills, so that they are able to both understand and evaluate financial problems using state of the art knowledge and techniques. At the same time, another aim of the course is to facilitate a reflexive discussion about the complexities of these problems in their context, related to the development of financial markets, institutions, corporate governance, and calls to consider environmental and other societal aspects.  

Another important mechanism that has become increasingly important in modern finance, partly driven by innovations in the financial market (in light of the necessity to analyze a growing range of information originating from a riskier and more uncertain environment), as well as globalization and deregulation, is mergers and acquisitions and the reengineering of corporations that follows from this. This topic will also be an important part of the course. It is also a topic representative of the fact that the development of modern finance reflects the issues and challenges of its time. Over time, it has incorporated many concepts from other disciplines, making corporate finance increasingly relevant for our students: aspects of human psychology and neuroscience, sociology, and ethics, amongst others.  

By now, as the result of a historical process, one may state that the role of modern corporate financial policy is to maximize shareholder value by means of investment, funding, and dividend policies, with constant evaluation of risk–return factors, capital costs, and balance in the company’s relationship with its investors and, increasingly, other stakeholders, within the context of corporate governance, as well as corporate social and environmental responsibility.