New Economic School
CASES IN FINANCIAL MANAGEMENT
June 2010
Syllabus
Professor:
Ilona Babenko (babenko@asu.edu)
Assistant:
Dates: May 29 (Saturday), June 3 (Thursday), June 11 (Friday), June 19 (Saturday).
Summary: This is a case-based class that will cover some of the corporate finance topics in more
depth. Specifically, we will focus on executive and non-executive compensation issues, IPOs,
SEOs, and alternative financing methods, and short-term financing decisions.
Textbook and Readings:
There is no required textbook for the course. The required materials are in the lecture notes,
assigned articles, and cases. Berk and de Marzo’s textbook can serve as background reading on
some of the topics.
Grading Policy: Your grade will be calculated as follows:
Cases (3): 75%
Take-home exam: 20%
Class Participation: 5%
Class Participation and Attendance: Your class participation will count on the margin towards
your final grade. An important pre-requisite for getting participation points is attending the class.
You can not participate if you are frequently absent. Please be on-time for the class. Coming to
class late will lower your participation grade and I may call you more frequently to answer the
questions in class.
Please switch off your cell-phones completely for the class time. It is very disruptive for the whole
class and disrespectful to your classmates when your phone rings during the lecture.
Teaching Assistant and Administrative Information
Teaching assistant for this course is TBA. His Email is TBA. TBA will answer questions via Email and will meet with you by appointment.
Name Cards: I would like you to have your name cards in front of your seat each time you come to
class. Please be attentive during the class, occasionally I will use cold calling using your name.
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Course outline: (tentative, subject to change)
Week 1 Executive Compensation: Agency theory and Pay-for-Performance, Risk-Taking
Behavior, Liquidation Decisions and Compensation, Mergers and Acquisitions and
Compensation, Valuation of non-tradable stock options, Relative-performance evaluation,
Benchmarking to peer compensation, Hedging by Executives, Legal and Illegal Insider
Trading
Non-Executive Compensation: Pay-for-performance and the free-rider problem,
Retention, Attraction, Sorting and Compensation, Tax and Compensation Structure,
Employee Financing, Hidden Compensation (Accounting and other issues)
Week 2 Case 1 Due and Presentation: Compensation at Level 3 Communications
Asymmetric information and the Sale of Securities to Public
Investment Banking, Advantages and Disadvantages of an IPO, Investment Performance
of IPOs, seasoned equity offerings, private placements
Week 3 Case 2 Due and Presentation: Netscape’s Initial Public Offering
Alternative Financing Instruments: Warrants, Convertible bonds, Right Issues
Week 4 Case 3 Due and Presentation: MCI Communications Corporation
Short-term Financing Decisions: Cash Conversion, Inventory, and Receivables
Management
Class Review
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