UNIVERSITY OF SOUTHERN CALIFORNIA
MARSHALL SCHOOL OF BUSINESS
CORPORATE FINANCIAL STRATEGY
(Preliminary Subject to Revision)
FBE 532
Monday 6:00 – 10:00 p.m.
Classroom: JKP Room 204
Summer 2015
Please Use Blackboard
Duke K. Bristow, Ph.D.
Office: Accounting Hall 301C
Voice/Fax (213) 740-6513/ (213) 740-6650
Office Hours: 5-6 p.m. on M and by appt.
Email: dbristow@usc.edu
This course is modeled closely on 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 reallife business experiences of the students and the professor, and current news from the Wall Street
Journal (and related business publications). The class is made up-to-the-minute and forward
looking by using the WSJ. The cases are classic cases that teach important ideas that never go out
of date. Knowing about historic business cases – some brilliant, some blunders will enhance your
business acumen. A primary teaching objective is to improve your ability to think critically, to
analyze and to communicate, simply and clearly, the implications of your analyses to an informed
audience. Here we focus on board-level audiences including CEOs, CFOs, Corporate Directors,
Investment Bankers, Commercial Bankers, Hedge Funds, Private & Public Equity Investors,
Venture Capitalists, Lawyers, Accountants, Regulators, etc. We will often treat the classroom like
a board meeting where the decision in the case is before the board of directors. 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,
investment banking, etc. The course outline is organized around specific finance functions, like
commercial and investment banking, M&A, risk management, and private equity investment, to
emphasize the different finance functions. A final objective is for students to refine and expand
their specific skills and use those new 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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Think Critically about Finance and Strategy
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 strategic 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, 10th ed., Irwin, McGraw-Hill
ISBN 007803477-9
RECOMMENDED READINGS
1. Higgins, Analysis for Financial Management, 10th ed., Irwin, McGraw-Hill
ISBN 007803468-X
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, 10th
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 GSBA 548 and the MBA Core. 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 daily and certainly before each class and be
prepared to discuss What’s News- columns. If you are not interested in how current events impact
corporate financial strategy 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 when possible
precede the case assignments. Students in the class will be formed into groups of four or five
students to work outside of class to discuss, analyze, and write group case memoranda. Students
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as individuals must also hand in write-ups for at least two cases. Group case assignments are
marked 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 limiting but as a minimum guide to case solutions: the case analysis should be a
coherent assessment of these and other issues.
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 and post the write up and analysis to
Blackboard before class. 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 graded. 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.
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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.
Your case analysis memo should include what is the decision and what is your recommendation.
Exams, notes, cases, problems and all other materials distributed in this course are copyrighted by
me or others and may not be copied, sold or re-distributed in any manner.
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UNIVERSITY OF SOUTHERN CALIFORNIA
MARSHALL SCHOOL OF BUSINESS
FBE 532
Summer 2015
(213) 740-6513
Duke K. Bristow, Ph.D.
Accounting Hall 301C
email: dbristow@usc.edu
Preliminary COURSE SCHEDULE subject to change
Dates
Week 1
June 1
Week 2
June 8
Topic
Course Syllabus
Introduction/ Overview
Butler Lumber (Session I) (Individual)
Lecture Capital Structure I, II, & III
Readings / other
RWJ Chapters 2, 3
Select your groups
RWJ Chapters 16, 17
Butler Lumber (Session II) (Individual)
UST Inc. (Individual)
Massey-Ferguson, 1980 (Group)
Lecture Dividend Policy
Chapter 19
General Electric Healthcare, 2006 (Group)
Intel Corporation, 1992 (Individual)
Lecture Risk Management
RWJ Chapters 13, 25
FST HBR 1994
American Barrick Resources Corporation (Group)
British Satellite (group case)
Valuation Lecture
Chapters 4-9
Week 3
June 15
Week 4
June 22
Week 5
June 29
Capital Market History
Dixon Corp Session 1 (Individual case)
Dixon Corp Session 2 (group case with group
presentations)
Week 6
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RWJ Chapter 10
July 6
Midterm Exam
All material thus far
Midterm Exam Return
Discussion of Real Options
Valuing a Company
No cases due
RWJ Chapter 7
Jensen, HBR
Week 7
July 13
Week 8
July 20
Week 9
July 27
Lecture and Discussion on Venture Capital
MW Petroleum Corporation (A) (Questions 1 to 8,
group case)
The Southland Corporation (A) (Individual case)
Chapter 20
Gomper’s notes (both)
ZEFER (Group)
Radio One (Group)
Presentations 4-5 slides for each case
Week 10
August 3
Flex Day
Comprehensive Final Review
Week 11
August 10
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All material thus far
FINAL EXAM
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