Servizi per la didattica
PORTALE DELLA DIDATTICA

Corporate governance and finance

01TUOPH

A.A. 2023/24

Course Language

Inglese

Course degree

Master of science-level of the Bologna process in Ingegneria Gestionale (Engineering And Management) - Torino

Course structure
Teaching Hours
Teachers
Teacher Status SSD h.Les h.Ex h.Lab h.Tut Years teaching
Teaching assistant
Espandi

Context
SSD CFU Activities Area context
ING-IND/35
SECS-P/06
4
4
B - Caratterizzanti
C - Affini o integrative
Ingegneria gestionale
A11
2022/23
This course covers intermediate concepts of financial decision making for prospective managers and entrepreneurs taking investment and financial decisions. It also discusses the needs and the functioning of a governance system that prevents abuse by the corporations and its executives and protects shareholders, creditors, employees and other firm stakeholders. The course is divided into two parts. The first part is devoted to a comprehensive view of the providers of finance for entrepreneurial ventures, ranging from business angels, crowdfunding, to venture capital and private equity investors. The course will devote some attention to the recent fintech revolution that is changing the entrepreneurial finance landscape. The second part of the course will present advanced material in corporate finance theory, such as financing decisions in imperfect markets, investment analysis under uncertainty and fundamentals of corporate governance, such as the design of appropriate managerial incentives and takeovers.
This course illustrates intermediate and advanced financial decision-making principles for prospective managers and entrepreneurs. It also discusses the needs and the functioning of corporate governance systems that prevent abuse by the corporations and their executives and protect shareholders, creditors, employees, and other firm stakeholders. The course is divided into two parts. The first part covers some advanced material in corporate finance. This part first discusses financing decisions in imperfect markets, illustrating how asymmetric information and moral hazard affect the cost of capital for firms and their access to external finance. Then it continues presenting investment decisions under uncertainty, by considering both internal growth opportunities and external growth via mergers and acquisitions. The second part of the course explains the need and the functioning of a corporate governance system, together with some real-world examples of corporate governance codes and regulations. This second part illustrates some specific governance mechanisms: the design of appropriate managerial incentives, the functioning of the market for corporate control, through takeovers, the role of the Board of Directors, and the effects of the ownership structure on corporations’ decisions. Throughout the two parts of the course, there will be special attention to illustrating how behavioral biases may affect firms' decisions, by using behavioral finance concepts.
The specific learning outcomes of the course are the following ones: 1. to learn how to evaluate a company, and how to generate a return for limited partners 2. to understand alternative sources of finance for start-ups, depending on the stage of development of the business 3. to understand the functioning of the most established financial alternatives, such as bank finance, venture capital, private equity, secondary markets 4. to provide the theoretical and operational concepts necessary in order to compute the cost of financing in imperfect capital markets and to take an investment decision under uncertainty 5. to understand the functioning and the cost of structural financial decisions such as IPOs and acquisitions 6. to provide an in-depth knowledge of the incentive packages paid to executives and their impact on corporate decisions 7. to illustrate how the control of corporation is contested in the financial markets, and the consequences of this mechanism for the governance of firms At the end of the course, the student will have acquired the methodological and theoretical competences to evaluate the financing and investment opportunities of the firm, the main financial operations on the public markets, and the ways to control the inherent conflicts of interests internal to corporations.
The specific learning outcomes of the course are the following: 1. to provide the theoretical and operational concepts necessary in order to compute the cost of capital in imperfect capital markets; 2. to be able to take investment decisions under uncertainty; 3. to evaluate financial call and put options with the Cox-Ross-Rubinstein model; 4. to be able to evaluate the firm's external growth opportunities arising through mergers and acquisitions; 5. to understand the need for control mechanisms on the corporations’ activity, in order to protect the firm’s shareholders and stakeholders; 6. to provide in-depth knowledge of the incentive packages paid to executives and their impact on corporate decisions; 7. to illustrate how the control of the corporation is contested in the financial markets, and the consequences of this mechanism for the governance of firms; 8. to know the characteristics of some existing corporate governance codes; 9. to be aware of some behavioral biases in financial decision-making. At the end of the course, the student will have acquired the methodological and theoretical competencies to evaluate the financing and investment opportunities of the firm, the main financial operations on the public markets, and the ways to control various conflicts of interests internal to corporations.
Concepts developed in the course “Accounting and Corporate Finance”
Basic knowledge in corporate budgeting (NPV and IRR rules) and financial accounting. Basic knowledge of math and calculus.
The first part of the course offers a comprehensive view of the providers of finance for entrepreneurial ventures. The course is covering why Venture Capital and Private Equity investors are better equipped to provide finance to such companies than traditional providers, such as banks. The course will consider alternative sources of finance, depending on the stage of development of the business and will discuss how in recent years the fintech revolution is shaping entrepreneurial finance and allowing companies to raise money in innovative ways. For each topic, theoretical argumentations will be covered, but also recent trends and figures will be analysed and real cases will be discussed. The second part of the course will address both financing and investment decisions of the firm, and explain why corporate governance matters for managing firms. This second part starts presenting the methods of firm financing in presence of transaction costs, agency costs and asymmetric information. Then it covers real options techniques for the firm investment decisions under uncertainty. Finally, it shows the importance of governance systems, which are based on internal and external control mechanisms. The main governance tools, such as the design of top-management compensation, the role of active shareholders and of the Board of Directors, are covered. This part concludes illustrating the functioning of the market for corporate control.
The course is divided into two parts. The first addresses both the financing and investment decisions of the firm. The second part shows the importance of governance systems and their main internal and external mechanisms. For each topic, theoretical argumentations will be covered, but also recent trends and figures will be analyzed together with some real cases. The detailed syllabus is the following. Advanced Corporate Finance (1st Part) 1. Financing decisions of the firm in frictionless markets; 2. Financing decisions of the firm in imperfect markets: bankruptcy costs, agency costs of debt and agency costs of equity, firm financing under asymmetric information; dividend policy. 3. Introduction to the real options approach: the valuation of European Call and Put financial options in a binomial tree model; 6. Investment decisions of the firm: internal investment using the real options approach; 7. Investment decisions of the firm: external investment through M&As; Corporate Governance (second part): 8. Why do we need a governance system 9. Internal governance mechanisms: managerial compensation, ownership structure and the role of the Board of Directors; 10. External governance mechanisms: takeovers and the market for corporate control; 11. Shareholders and stakeholders protection; 12. Existing Corporate Governance Codes: some real cases. 13. (Common to both parts): the Behavioral Finance view.
The lectures will be “interactive” in that the instructor will periodically ask students to pause the presentation and make classroom exercises on the different modules taught.
The lectures will be “interactive” in that the instructor will periodically ask students to pause the presentation and make classroom exercises on the different modules taught. On a voluntary basis, some group discussions about existing Corporate Governance Codes in different countries will be organized at the end of the course.
First part: 1. Bootstraping and debt finance 2. An overview of Private Equity and Venture Capital: the role of PE and VC in the entrepreneurial finance ecosystem, history, legal and fiscal frameworks, market trends and figures, in Europe and in the USA 3. Venture Capital financing: the VC cycle, fundraising, investing, contracting, monitoring, exiting 4. Venture Capital valuation techniques 5. Later stage Private Equity 6. Other equity investors: corporate venture capital investors, governmental and bank-affiliated venture capital investors, university-affiliated venture capital investors 7. Business angels 8. Fintech revolution: crowdfunding, peer to peer lending and ICOs Second part: 1. Financing decisions of the firm in frictionless markets 2. Financing decisions of the firm in imperfect markets: bankruptcy costs, agency costs of debt and agency costs of equity, firm financing under asymmetric information 3. Raising equity: IPOs and SEOs 4. Investment decisions of the firm: internal investment using the real options approach 5. Investment decisions of the firm: external investment through M&As 6. Corporate Governance: definitions and why do we need a governance system 7. Internal governance mechanisms: managerial compensation, ownership structure and the role of the Board of Directors 8. External governance mechanisms: takeovers and the market for corporate control
The course is organized into lectures and exercise sessions. The exercises will be used as examples in the development of each topic as will as at the end of the two parts. The slides of the course and the exercises with solutions will be published on the portal. Real world applications and case studies concerning some existing Governance Codes will also be presented during the lectures.
First part: 1. Metrick A., Yasuda A. Venture Capital and the Finance of Innovation, Wiley (2010) 2. Prahl M., White B., Zeisberger C. Transformation via Private Equity, Venture Capital, Minority investments and Buyout, Wiley (2017) 3. Course slides and supplementary readings Second part: 4. Berk, J., and P. DeMarzo, Corporate Finance, IV Global Ed., Pearson Education, Selected Chapters: 14-15-16-22-23-28. 5. Copeland,T. E., J. F. Weston and K. Shastri, Financial Theory and Corporate Policy, Pearson Education, Selected Chapters: 9-18 6. Larcker, D., and B. Tayan, Corporate Governance Matters, II Ed., Pearson Education, Selected Chapters: 3-4-5-7-8-9-11-12 7. Slides Integration
1. Berk, J., and P. DeMarzo, Corporate Finance, IV Global Ed., Pearson Education, Selected Chapters: 14, 15, 16, 20, 21, 22, 23, 24, 28. 2. Larcker, D., and B. Tayan, Corporate Governance Matters, II Ed., Pearson Education, Selected Chapters: 1, 3, 4, 5, 8, 9, 11, 12, 13. 3. Course slides and supplementary readings.
Modalità di esame: Prova scritta (in aula);
Exam: Written test;
... The exam is based on a written test of 2 hours.
Gli studenti e le studentesse con disabilità o con Disturbi Specifici di Apprendimento (DSA), oltre alla segnalazione tramite procedura informatizzata, sono invitati a comunicare anche direttamente al/la docente titolare dell'insegnamento, con un preavviso non inferiore ad una settimana dall'avvio della sessione d'esame, gli strumenti compensativi concordati con l'Unità Special Needs, al fine di permettere al/la docente la declinazione più idonea in riferimento alla specifica tipologia di esame.
Exam: Written test;
The exam is based on a written test lasting one hour and organized through Multiple Choice Questions. The exam will be composed of (a minimum of) 15 to (a maximum of) 22 Multiple Choice Questions. The questions aim to evaluate the students' understanding of the concepts illustrated during the course, their ability to solve simple numerical examples of such concepts, and to critically assess some statements concerning the concepts covered by the course. Exam questions can be of two types. (1) Open questions intended to assess the knowledge of (some of) the topics illustrated during the course; (2) Numerical exercises similar to the ones solved during the lectures and at the end of the course. Examples of both types of questions will be discussed at the end of each part of the course. The questions will be graded in the following way. Each correct answer will receive a positive number of points, according to its difficulty (the score is indicated together with the text of the question). Each wrong answer receives a penalty equal to -25% of the score of the question (e.g. -0.25 points for a question providing +1 point if answered correctly). Missing answers receive 0 points. The candidate will be allowed to submit only one answer to each question, and the test can be revised after it will be completed, and after the candidate has submitted the final version of his/her test. During the test, the candidate will not be able to access any material: in case of need, the proctoring system (Respondus) will be activated and a lockdown browser will prevent the use of any application on the personal computer of the candidate. The exam is considered to have succeeded if the candidate obtained a minimum score of 18/30. Explanations of the correct answers will be provided shortly after (one/two days) the exam has taken place. In case the number of students subscribing to an exam is extremely limited, the exam will be an oral exam. The students will be informed of this decision as soon as the total number of students who subscribed to the exam is known.
In addition to the message sent by the online system, students with disabilities or Specific Learning Disorders (SLD) are invited to directly inform the professor in charge of the course about the special arrangements for the exam that have been agreed with the Special Needs Unit. The professor has to be informed at least one week before the beginning of the examination session in order to provide students with the most suitable arrangements for each specific type of exam.
Esporta Word


© Politecnico di Torino
Corso Duca degli Abruzzi, 24 - 10129 Torino, ITALY
Contatti