Advanced Company Finance MANG0211.
BBA4, Semester 1.
Lecturer: Dr Fairchild
Reading list.
All of the following books are available in the library. Books 1-3 can be
considered as basic textbooks on the subject. It is suggested that students find the
style of book that suits them.
1. Corporate Finance (4th Edition, 1996): Ross, Westerfield and Jaffe.
2. Financial Theory and Corporate Policy (3rd Edition 1988): Copeland and Weston.
3. Corporate Finance: Theory and Practice: Damadoran.
4. Modern Corporate Finance: Shapiro and Balbirer.
The following book (available in the library) presents a collection of published
papers on the topics in this course.
5. The Revolution in Corporate Finance. Stern and Chew.
Students will be required to analyse case studies from the following books.
6. Cases in Managerial Finance (1980): Brigham.
7. Cases in Managerial Finance (1994): Murray.
The course covers the following topics. As well as the relevant textbooks, students are
expected to have some knowledge of the relevant articles.
1. New Investment Appraisal.
Copeland and Weston Ch 2 and 3.
Weston and Copeland Ch 5 and 6.
RWJ Ch 4 – Ch 8.
2. Cost Of Capital, Capital Structure, Firm Value.
Copeland and Weston ch 13 and 14.
Weston and Copeland 20 and 21.
RWJ Ch 15, 16.
Modigliani and Miller. “The Cost of Capital, Corporation Finance, and the Theory
of Investment.” American Economic Review 1958, 261 –297.
3. Optimal Capital Structure, Agency Costs, Signalling.
Copeland and Weston ch 13 and 14.
Weston and Copeland 20 and 21.
RWJ Ch 15, 16.
Jensen and Meckling. “Theory of the Firm: Managerial Behavior, Agency Costs,
and Ownership structure.” Journal of Financial Economics, October 1976, 305360.
Jensen. “Agency Costs of Free Cashflow, Corporate Finance and Takeovers.”
American Economic Review. May 1986.
Myers and Majluf. “Corporate Financing and Investment Decisions when Firms
Have Information that Investors do not have.” Journal of Financial Economics
November 1977, 147 – 176.
Ross. S.A. “The Determinants of Financial Structure: The Incentive Signalling
Approach.” Bell Journal of Economics Spring 1977, 23 – 40.
Masulis and Korwar. “Seasoned Equity Offerings.” Journal of Financial
economics 1986.
Hart. “Financial Contracting.” Downloadable from the SSRN database, under
‘Financial Contracting.’
4. Dividend Policy.
CW ch 15 and 16.
RWJ Ch 18.
Miller and Rock. “Dividend Policy Under Asymmetric Information.” Journal of
Finance, September 1985, 1031-1051.
Lintner. “Distribution of Incomes of Corporations Among dividends, Retained
Earnings, and Taxes.” American Economic Review. May 1956. 97 –113.
5. Trade Credit.
WC Ch 14.
Smith. “Trade Credit and Informational Asymmetry.” Journal of Finance 1987
Vol 4, pp 863 –871.
Smith and Schnucker. “An Empirical Examination of Organisational Structure:
The economics of the factoring decision.” Journal of Corporate Finance March
1994.
Petersen and Rajan. “Trade Credit, theories and evidence.” (Unpublished).
6. Convertible Debt.
Copeland and Weston pp 475-480.
Weston and Copeland ch 28.
RWJ Ch 22.
Brennan. “The Case for Convertibles.” In The Revolution in Corporate Finance.
Stein. “Convertible Bonds as Backdoor Equity Financing.” Journal of Financial
Economics 1992 vol 32, pp 3 – 21.
Mayers. “Why firms issue convertible bonds: the matching of financial and real
investment options.” Journal of Financial Economics 1998 Vol 47 N0. 1. pp 83 –
102.
Ingersoll. “An Examination of Corporate Call Policies on Convertible Bonds.”
Journal of Finance (May 1977).
Harris and Raviv. “A Sequential Signalling Model of Convertible Debt Call
Policy.” Journal of Finance (December 1985).
7. Takeovers.
Copeland and Weston ch 19
Weston and Copeland ch 30.
RWJ Ch 29
Stern and Chew book. Some good articles on Mergers and Acquisitions.
Asquith. P. “Merger Bids, Uncertainty, and Stockholder Returns.” Journal of
Financial Economics, April 1983. 51 – 83.
Asquith et al. “The gains to bidding firms from merger.” Journal of Financial
Economics April 1983. 121 – 139.
Grossman and Hart. “Takeover Bids, the Free-rider Problem, and the theory of the
Corporation.” Bell Journal of Economics, Spring 1980, 42 – 64.
Garvey and Hanka. “The Management of Corporate Capital Structure: theory and
evidence.” Unpublished.