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.

Basic knowledge in corporate budgeting (NPV and IRR rules) and financial accounting.

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. (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 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.

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.

Lecture slides; Exercises; Exercise with solutions ;

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 student's understanding of the concepts illustrated during the course, the 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 (less than 15-20 students approximately), 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.