UNIVERSITY OF SOUTHERN CALIFORNIA
MARSHALL SCHOOL OF BUSINESS
CORPORATE FINANCIAL STRATEGY
FBE 532
Wednesday 6:30 – 9:30 p.m.
Classroom: ACC Room 201
Fall 2010
Please Use Blackboard
Duke K. Bristow, Ph.D.
Office: Accounting Hall 301C
Voice/Fax (213) 740-6513/ (213) 740-6650
Office Hours: 10-11a.m. on MW and by appt.
Email: dbristow@usc.edu
This course is modeled closely on similar courses taught by Profs. Dietrich and Ozbas - both of
USC. They are thanked for the use of their syllabi from which this syllabus comes. You may not
record any portion of the class without my prior written permission.
COURSE OBJECTIVES
The primary objective of “Corporate Financial Strategy” is for students to understand the
implications of financial theory in real world situations. To stimulate your learning and class
discussion, we will utilize three sources of real situations: formal cases (most from HBS), the
real-life business experiences of the students and the professor, and current news from the Wall
Street Journal (and related business publications). A primary teaching objective is to improve
your ability to analyze and to communicate, simply and clearly, the implications of your analyses
to an informed audience. These audiences include CEOs, CFOs, Corporate Directors, Investment
Bankers, Commercial Bankers, Venture Capitalists, Lawyers, Accountants, etc. A second
objective is for students to appreciate the demands and opportunities of pursuing careers in
different functional areas of finance, such as corporate financial management, commercial
banking, investing and investment banking. The course outline is organized around specific
finance functions, like commercial and investment banking and private equity investment, to
emphasize the different finance functions. A final objective is for students to refine and expand
specific skills and use of financial analytical tools in a real-world context.
At the conclusion of FBE 532, hard-working students will be able to:
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Value companies and link capital structure to valuation;
Analyze motivations for mergers and acquisitions;
Understand issues from bank loans to venture-capital financing;
Appreciate the significance of ownership structure on value and performance;
Relate business and financial strategies using sustainable growth models;
Assess strategic factors affecting corporate investment;
Compare alternative sources of financing in international markets;
Use derivatives (e.g. futures, options, and swaps and others) to manage risk;
Integrate shareholder wealth creation in formulating corporate decisions.
PREREQUISITES
See MBA catalog.
REQUIRED READINGS
1. FBE 532 Case Reader [CR] available at the USC bookstore.
2. Ross, Westerfield and Jaffe, Corporate Finance, 9th ed., Irwin, McGraw-Hill
RECOMMENDED READINGS
1. Higgins, Analysis for Financial Management, 9th ed., Irwin, McGraw-Hill
Recommended background readings for class discussion and case preparation are provided in the
course schedule in the MBA-level text, Corporate Finance by Ross, Westerfield, and Jaffe, 9th
edition (RWJ). This best-selling text is similar to basic finance texts used at other business
schools (e.g. Brealey and Myers, Principles of Corporate Finance) and is the graduate-level text
corresponding to the book used in BUAD 306 (Fundamentals of Corporate Finance by Ross,
Westerfield, and Jordan, 7th edition). Students may review subjects in corresponding chapters of
texts other than RWJ if they choose. MBAs at the Marshall School will benefit from the more
extensive and higher-level treatment of subjects in RWJ and I recommend they consider using
this text as a source for background reading in this course and as a reference for other finance
courses. Students are expected to follow business developments reported in the business press,
especially the Wall Street Journal (WSJ), and it is highly recommended that students also read
other periodicals, especially The Economist, Forbes or Fortune magazines. You are expected to
read WSJ before each class and be prepared to discuss What’s News- columns. If you are not
interested in how current events impact corporate finance you should not take this course. No
one may sign you in except yourself; signing others in is cheating and will not be tolerated. The
class is taught in a discussion with the students being active participants. If you don’t plan to
come prepared please drop the course. You should post your short bio and an updated resume on
Blackboard by the end of the second week of classes.
STUDENT DISABILITIES
Any student requesting academic accommodations based on a disability is required to register
with Disability Services and Programs (DSP) each semester. A letter of verification for approved
accommodations can be obtained from DSP. Please be sure the letter is delivered to me as early
in the semester as possible. DSP is located in STU 301 and is open 8:30 a.m. - 5:00 p.m.,
Monday through Friday. The phone number for DSP is (213) 740-0776.
ELECTRONIC RESOURCES
FBE 532 has a course website on Blackboard. Using the discussion board in a productive fashion
will count toward your grade. Post thoughtful questions and answer others’ postings. Some
course materials are distributed through Blackboard. The website may also contain links to
useful financial information and data sources available on the Internet. At times, I will also
distribute materials and notify students through class discussions.
COURSE ORGANIZATION
Case discussions are scheduled to illustrate different finance functions. Lectures and
recommended readings covering some important issues and relevant material for each case will
precede the case assignments. Students in the class will be formed into groups of four or five
students after enrollment has stabilized to work outside of class to discuss, analyze, and write
group case memoranda. Students as individuals must also hand in write-ups for at least two
cases. Group case assignments are marked with an asterisk and G and cases eligible for
individual student write-ups with asterisk and I in the Course Schedule and Case Schedule below.
Some cases do not require write-ups but students must be ready to answer questions and discuss
issues raised by these cases during the class discussion. I will distribute some questions for some
cases to provoke thinking but these questions are not to be taken literally or as guides to case
solutions: the case analysis should be a coherent assessment of these and other issues.
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All written case analyses must include a cover sheet listing the group members (alphabetically by
last name) for group write-ups or student’s name for individual write-ups, and the case name.
Write the analysis like a memo to a key decision-maker, CEO, CFO, etc., assuming that the
reader is financially sophisticated. Stick to the finance issues raised by the case, i.e. do not review
a corporation’s business or history. Case memoranda should consist of analysis and
recommendations limited to one page typewritten in length. An appendix may contain 1-3 pages
of graphs, spreadsheets, or data, which are expected to make the case analysis clearer. No credit
will be granted for a case handed in after the beginning of the class; students should retain a copy
of their write-ups for reference during the class discussion. BRING AT LEAST TWO COPIES
to class – hand one in and keep one for your use (and one each for any other group members).
Case analysis is time consuming and several readings of the case will be necessary. Students
should allow plenty of time to survey the case contents, digest case facts, and analyze issues
raised. You may not be able to identify a single theme or issue: cases may involve marketing and
accounting and other business disciplines as well and financial issues. Students should focus only
on the financial implications of business problems described in the case. There is sometimes no
single right answer to a case and none will be distributed. Analyses and discussion must be
clearly related to the corporate financial strategy issues in the case. There are wrong answers.
COURSE GRADING
The grade will be based upon class attendance, participation, Blackboard work and there will be
case 5 write-ups (collected at random), a midterm and a final examination. Two individual case
preparations and three group case preparations must be handed in before the case discussion for
credit. These will be called for before class begins and will be collected on random dates.
Therefore, you must prepare for each class because it may the one that is collected. There are no
make up cases or exams. Course grading will be based on the following weights:
Class Attendance, Participation, Blackboard
Case Analyses
Individual write-ups
10%
Group write-ups
20%
Midterm (20) and final exams (30)
Total
20%
30%
50%
100%
Class participation will be based on students’ ability to respond to cold-call questions (on a
random basis). Zero credit is given when a student is called upon and is absent. Good responses
will advance the discussion, not merely demonstrate attendance in class. There is no reward for
talking at length or repeating my or others comments. In this class, the truth is rewarded: If you
do not know saying “I do not know” gets higher credit than talking for 2 minutes and
demonstrating you have no idea what is being discussed. In addition, the grade will be based on
the general quality of a student’s contribution to the class discussion, their contributions to the
Blackboard discussion boards and the overall learning experience.
The individual and group case write-ups will be graded on brevity, clarity, and persuasiveness of
the written presentation. Each will be communicated via a formal letter of transmittal which
includes the summary action or your conclusion in one to three sentences. Grades will be check
plus, check, or fail. Case notes will not be distributed. If you are uncomfortable with the case
method including cold calling you should not take this course. Individual team member’s grade
for the group case write-ups may be adjusted according to individual team member’s contribution
as determined by a peer evaluation form which may be distributed at the end of the semester.
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UNIVERSITY OF SOUTHERN CALIFORNIA
MARSHALL SCHOOL OF BUSINESS
FBE 532
Fall 2010
(213) 740-6513
Duke K. Bristow, Ph.D.
Accounting Hall 301C
email: dbristow@usc.edu
Preliminary COURSE SCHEDULE subject to change
Topic
Dates
Week 1
Aug 25
Week 2
Sep 1
Week 3
Sep 8
Week 4
Sep 15
Week 5
Sep 22
Week 6
Sep 29
Week 7
Oct 6
Readings / other
Course Syllabus
Introduction/ Overview
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Butler Lumber (Session I) (Individual)
Butler Lumber (Session II) (Individual)
RWJ Chapters 2, 3
Lecture Capital Structure I, II, & III
RWJ on Capital Structure
Select your groups
UST Inc (Individual)
Massey-Ferguson, 1980 (Group)
General Electric Healthcare, 2006 (Group)
Lecture Dividend Policy
RWJ on Dividends
Intel Corporation, 1992 (Individual)
Lecture Risk Management
RWJ on Risk
FST HBR 1994
American Barrick Resources Corporation (Group)
Sample Midterm Exam
Week 8
Oct 13
MIDTERM EXAM
Week 9
Oct 20
Capital Market History
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RWJ on Capital Markets
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British Satellite (group case)
Week 10
Oct 27
Readings, RWJ on
valuation
Valuation Lecture
Dixon Corp Session 1 (Individual case)
Week 11
Nov 3
Week 12
Nov 10
Week 13
Nov 17
Week 14
Nov 24
Week 15
Dec 1
Week 16
TBA
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Dixon Corp Session 2 (group case with group
presentations)
Discussion of Real Options and introduction to the
MW Petroleum Corporation (A) (group case)
Readings on real options
MW Petroleum Corporation (A) (Questions 1 to 5)
MW Petroleum Corporation (A) (Questions 6 to 8)
Valuing a Company
The Southland Corporation (A) (group case)
Lecture and Discussion on Venture Capital
ZEFER
Jensen, HBR
Gompers notes (both)
Radio One, Inc.
Practice Final Exam (last class)
Final Exam TBA.
Cases and Multiple
Choice Questions
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