Prof Martin Oehmke

This course is compulsory on the BSc in Finance. This course is not available as an outside option nor to General Course students.

Students must have completed Principles of Finance (FM212 or FM213), Mathematical Methods (MA100) and Elementary Statistical Theory (ST102). Introduction to Econometrics, Principles of Econometrics or other statistics courses where at least linear regression models are covered are recommended but not required. Students who have not taken Principles of Finance, but have an excellent quantitative background, may be allowed to take this course at the discretion of the course leader.

This course introduces concepts and theories to critically assess major corporate financial policy decisions. The course focuses in particular on a firm's capital structure and the impact of taxes, bankruptcy costs, agency conflicts, and asymmetric information on a firm’s financing decisions. We will also discuss other major topics in corporate finance, such as the market for corporate control. In developing tools to analyze these issues, we will introduce the key concepts of corporate finance theory, including debt overhang, risk shifting, and the free-rider problem.

33 hours of seminars in the LT.

This course is taught in the interactive lecturing format. There is no distinction between lectures and classes/seminars; there are “sessions” only, and the pedagogical approach in each session is interactive.

Students will be expected to produce 10 problem sets in the LT.

Detailed course programmes and reading lists are distributed at the start of the course. Illustrative texts include: “Financial Markets and Corporate Strategy” by Hillier, Grinblatt and Titman. “Corporate Finance” by Ivo Welch, and “The Theory of Corporate Finance” by Tirole.

Exam (50%, duration: 1 hour and 30 minutes) in the summer exam period.
Coursework (40%) and class participation (10%) in the LT.