Cancelled Corporate Finance Theory (F)
Course content
Corporate Finance Theory builds on the investigation into firm capital structure from the third-year course Financial Decision Making. We take for granted that course participants have already received a full introduction to the principles of corporate finance.
We now go into the details of some of these arguments, by using game-theoretic tools to delve deeper into a variety of topics from the textbook and from articles in academic finance journals.
Some of the central issues in Finance relate to the financing decisions of firms, in particular the relative use of debt and equity financing. Key aspects of this capital-structure decision include the tax advantages of debt, costly bankruptcy, and signaling to the market. We also consider the market for corporate control, with leveraged buyouts as well as mergers and acquisitions.
When looking at financing decisions, we will pay particular attention to how conflicts of interest between managers, shareholders, and creditors can affect firm behavior.
Amongst other issues, we will consider how conflicts between firm insiders and outsiders relate to credit rationing, liquidity management, sponsor reputation, and the ability to honor long-run agreements, while also touching on shareholder activism as a tool for corporate governance.
The course will not be offered in Autumn 2025
The course will be offered in Autumn 2026
MSc programme in Economics – elective course
The course is part of the MSc programme in Economics, Financial line, symbolized by ‘F’.
The PhD Programme in Economics at the Department of Economics:
- The course is an elective course with research module. In order to register for the research module and to be able to write the research assignment, the PhD students must contact the study administration AND the lecturer.
The course is open to:
- Exchange and Guest students from abroad
- Credit students from Danish Universities
- Open University students
After completing the course the student is expected to be able to:
Knowledge:
- Identify and summarize key theoretical concepts and results from academic articles (intuition).
- Identify and evaluate key modeling assumptions in an advanced, mathematically-specified theoretical framework (formal modeling).
- Account for the economic mechanism underlying given theoretical results and discuss their interpretation (intuition).
Skills:
- Assess whether various modeling assumptions are realistic in particular real-life settings (application to case).
- Derive and analyze formal results within an advanced, mathematically-specified theoretical framework (formal modeling).
- Argue whether theoretical insights from various articles can shed light on given real-life cases (application to case).
Competencies:
- Compare and contrast theoretical concepts from different articles, and explain the key similarities and differences (intuition).
- Argue to what extent the formal theoretical results derived in various articles relate to the articles’ more informal interpretation (formal modeling).
- Identify new, relevant, real-life cases, and evaluate whether theoretical insights from various articles can shed light on these cases (application to cases).
The tools and knowledge obtained in this course are of immediate relevance for graduates seeking employment in the business and financial industries.
The teaching activities will consist of lectures where students are expected to actively participate. This will include discussing questions in groups, submitting short answers and voting on multiple choice questions using the Socrative online system, and at times coming to the board.
The first approximately 25% of course will be based on selected topics from the textbook “The Theory of Corporate Finance” by Jean Tirole.
The remaining approximately 75% of the course will be devoted to seven academic articles, supplemented by in-class discussions of related real-world issues in corporate finance.
The preliminary reading list is as follows (subject to change). Links to the articles will be posted on the Absalon course homepage.
Textbook:
- Tirole, Jean. The theory of corporate finance. Princeton University Press, 2010.
Articles:
- Edmans and Mann (2019). “Financing Through Asset Sales.” Management Science, 65(7), 3043-3060.
- Malenko and Malenko (2015). "A theory of LBO activity based on repeated debt-equity conflicts." Journal of Financial Economics, 117(3), 607-627
- Banal-Estañol, Ottaviani, and Winton (2013). "The Flip Side of Financial Synergies: Coinsurance Versus Risk Contamination." Review of Financial Studies
- Bayar and Chemmanur (2011), “IPOs versus Acquisitions and the Valuation Premium Puzzle: A Theory of Exit Choice by Entrepreneurs and Venture Capitalists,” Journal of Financial and Quantitative Analysis 46(6), 1755–1793.
- Fahn, Merlo, and Wamser (2019), “The Commitment Role of Equity Financing,” Journal of the European Economic Association 17(4), 1232-1260
- Levit (2019), “Soft shareholder activism,” The Review of Financial Studies, 32(7), 2775-2808.
- Edmans, Levit, and Schneemeir (2022) “Socially responsible divestment.” European Corporate Governance Institute-Finance Working Paper (823).
As game-theoretic tools and concepts are used systematically
throughout the course, it is recommended that students complete
“Microeconomics III” in the program of Economics, University of
Copenhagen, or a similar introduction to game theory, before
following “Corporate Finance Theory”.
Students will also benefit from having followed the course
"Financial Decision Making" in the program of Economics,
University of Copenhagen, or an equivalent introduction to Finance.
Students who have not done so can benefit from following “Financial
Decision Making” in parallel with “Corporate Finance Theory”.
Students should have a good understanding of the topics covered in
Part 5 (Capital Structure) of the textbook “Corporate Finance” by
Jonathan Berk and Peter DeMarzo, or in another book of a similar
level.
Schedule:
2 hours lectures 1 to 2 times a week from week 36 to 50 (except
week 42).
The teaching assistants gives the students individual feedback at their mandatory assignments.
The lecturer gives collective oral feedback at the quizzes the students make in the lectures.
For enrolled students: Rules etc at Master(UK) and Master(DK)
When registered you will be signed up for exam.
- Full-degree students – sign up at Selfservice on KUnet
- Exchange and guest students from abroad – sign up through Mobility Online and Selfservice- read more through this website.
- Credit students from Danish universities - sign up through this website.
- Open University students - sign up through this website.
The dates for the exams are found here Exams – Faculty of Social Sciences - University of Copenhagen (ku.dk)
Please note that it is your own responsibility to check for overlapping exam dates
- ECTS
- 7,5 ECTS
- Type of assessment
-
On-site written exam, 3 hours under invigilation
- Examination prerequisites
-
To qualify for the exam the student must no later than the given deadline during the course
- Hand in and have approved one mandatory assignment.
- Aid
- Written aids allowed
- Marking scale
- 7-point grading scale
- Censorship form
- No external censorship
- Exam period
-
Exam information:
The examination date can be found in the exam schedule here
More information is available in Digital Exam from the middle of the semester.
More information about examination, rules, aids etc. is available at Master students (UK) and Master students (DK).
- Re-exam
-
Same as the ordinary exam.
- You must hand in and have approved 1 mandatory assignment for qualifying to the reexam.
Reexam info:
The reexamination date/period can be found in the reexam schedule here
More information in Digital Exam in February. In special cases decided by the Department, the re-sit can change to another day and/or time than announced.
More info: Master(UK) and Master (DK).
Criteria for exam assessment
Students are assessed on the extent to which they master the learning outcome for the course.
In order to obtain the top grade “12”, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.
In order to obtain the passing grade “02”, the student must in a satisfactory way be able to demonstrate a minimal acceptable level of the knowledge, skills and competencies listed in the learning outcomes.
Single subject courses (day)
- Category
- Hours
- Lectures
- 42
- Preparation
- 161
- Exam
- 3
- English
- 206
Kursusinformation
- Language
- English
- Course number
- AØKK08202U
- ECTS
- 7,5 ECTS
- Programme level
- Full Degree Master
Ph.D.
- Duration
-
1 semester
- Placement
- Autumn
- Price
-
Information about admission and tuition fee: Master and Exchange Programme, credit students and guest students (Open University)
- Studyboard
- Department of Economics, Study Council
Contracting department
- Department of Economics
Contracting faculty
- Faculty of Social Sciences
Course Coordinator
- Nick Vikander (13-746f6971347c6f7167746a6b78466b69757434717b346a71)
Teacher
See 'Course Coordinators'
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Kursusinformation for indskrevne studerende