Corporate Finance II

Objectives

The general objectives of the curricular unit are:

Provide students with the framework needed to decision making in the financial field domain;

Analyze the financing decision and communicate to students the content of the arguments presented by the mainstream currently existent;

Analyze dividend distribution decision and communicate to students the content of the arguments presented by the mainstream currently existent;

Provide the students with concepts inherent to the definition of cost capital and familiarize them with its computing;

Provide students with concepts inherent to the companies’ evaluation models and familiarize them with its implementation;

Provide students with introductory concepts inherent to the main sources of real options and its valuation.

Program

In short, the syllabus’ contents are:

1. Setting and Organizing the Overall Program

1.1. Introduction to Corporate Finance

1.2. The Companies’ Objective-Function in Corporate Finance

1.3. Introduction to the Valuation Themes in Finance

2. Risk/Return Relationship and Markets’ Efficiency

2.1. Estimating Discount Rates

2.2. Financial Markets Efficiency

3. Dividend Policy

3.1. Determinant Decision Factors in the Dividend Distribution

3.2. Analysis Setting of Dividend Policy

4. Financing Structure

4.1. Differences between Financing and Investment Decisions

4.2. Financing Alternatives

4.3. Theories of Financing Structures

4.4. Models and Application

5. Corporate Valuation

5.1. Overall Principles of Corporate Valuation

5.2. Relationship between Management Decisions and Corporate Valuation

Teaching Methodologies

The course will focus mainly in attendance classes, which requires an active participation of students, not only through direct questioning of the teacher, when in doubt, but also through the presentation in class on specific topics prepared in advance.

In the theoretical lessons the basic concepts are introduced, with accuracy in financial models but not always detailed, without forgetting the aspect of application whenever possible. In this sense, in the first class of each chapter is made a theme introduction, illustrated with corporate life examples. In these classes, mainly expository, we appeal to students’ participation, encouraging the discussion of models, of assumptions, and developing the criticism ability related the observed results, whenever possible (contradictory to what is expected, for instance).

Bibliography

Brealey, Richard; Myers, Stewart and Allen, Franklin, 2007, "Princípios de Finanças Empresariais", 8ª Edição, McGraw-Hill Interamericana de España.

Copeland, Thomas; E. Koller, Tim e Murrin, Jack, 2000. “Valuation”, 3rd Ed., John Wiley and Sons, New York.

Couto, Gualter, 2001, “Estimação Temporal dos Betas – Uma aplicação ao mercado de capitais português”, Série Moderna Finança 21, BVLP, Instituto Mercado de Capitais.

Couto, Gualter; Porfírio, José e Lopes, Manuel, 2004, “Avaliação de Projectos – Da Análise Tradicional às Opções Reais, Publisher Team, Lisboa.

Damodaran, Aswath, 2001, “Corporate Finance. Theory and Practice”, 2nd Ed., John Wiley and Sons, New York.

Kester, Carl; Rubach, Richard; Tufano, Peter, 2004, “Case Problems in Finance”, 12th Ed., McGraw-Hill.

Neves, João C., 2002. “Avaliação de Empresas e Negócios”, McGraw-Hill Book Co., Lisboa.

Ross, Stephen A., Westerfield, Randolph W. and Jaffee, Jeffrey F., 2006, “Corporate Finance”, 8th Ed., Irwin/McGraw-Hill Book Co.