Politecnico di Torino
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Politecnico di Torino
Academic Year 2016/17
01OVZPG
Economics and business finance
Master of science-level of the Bologna process in Engineering And Management - Torino
Teacher Status SSD Les Ex Lab Tut Years teaching
Rondi Laura ORARIO RICEVIMENTO O2 SECS-P/06 80 0 0 0 11
Rondi Laura ORARIO RICEVIMENTO O2 SECS-P/06 80 0 0 0 11
SSD CFU Activities Area context
SECS-P/06 8 F - Altre attività (art. 10) Altre conoscenze utili per l'inserimento nel mondo del lavoro
Subject fundamentals
This course presents the economic and financial theories of the firm and the econometric methods to test their predictions. The objective of the course is to provide a framework for understanding how firms take real and financial decisions that have a relevant impact on their boundaries as well as on their value. The basic idea is that firms arise in situations where people write incomplete contracts and where the allocation of power and control is therefore important. This approach allows for testable hypotheses that have been supported by empirical evidence in the recent corporate finance and corporate governance literature.
The course begins by presenting well established theories of the firm and then turns to more recent approaches throwing light on the firms’ boundaries, ownership and capital structure decisions for private as well as public (quoted) firms. The course then examines the interaction between the firms and the financial and legal institutions in which they operate, providing international comparisons as derived by the recent empirical evidence. The focus will be on the functioning of the market for corporate control, causes of different ownership configurations, legal protection of creditors and shareholders rights, application of best-practice rules of corporate governance in Italy, continental Europe, the UK and US. Finally, introductory econometric methods are taught that will enable the student to test the empirical predictions of the above theoretical models, using firm level (accounting and financial) data
Expected learning outcomes
At the end of the course, the student should be able to: i) understand how incomplete contracting and asymmetric information influence the firm’s boundaries; ii) identify different classes of firm owners’ objectives and conflicts of interests based on whether they are either owner or managerially controlled; iii) understand differences across different types of markets of corporate control; different corporate governance systems and market-based or bank-based financial systems; iv) use firm level data to execute basic econometric tests.
Prerequisites / Assumed knowledge
Previous knowledge in microeconomics, industrial economics; corporate finance; statistical methods.
Contents
1. Part I: Established theories of the firms
Economic theory of managerial capitalism; the principal-agent approach; transaction cost theories, the property rights approach
2. Part II: Recent theories corporate finance
i. Financial structure, firm ownership and corporate governance. Managerial behaviour, agency costs and the firm’s financial and ownership structure. Corporate financing and investment decisions under asymmetric information. The decision to go public. Allocation of corporate control and firm efficiency
ii. Corporate governance. External and internal mechanisms
iii. Corporate ownership and governance and financial institutions around the world. The Law and Finance agenda: Investor protection and financial and economic development
3. Part III. Econometric methods for the analysis of company data.
Texts, readings, handouts and other learning resources
Ravazzi P. et al.: L’impresa. Organizzazione, strategie, tecniche economiche e contabili, Cap. 1: Rondi L.: "Analisi economica dell’impresa", Il Mulino
Church J. e Ware R.: "Industrial Organization", Ch. 3, The Theory of the Firm, McGraw-Hill
Ross, Westerfield, Jordan: "Finanza Aziendale", Ch. 14-16, McGraw-Hill
Tirole, Jean: "The Theory of Corporate Finance", Ch. 1-2, Princeton Univ. Press, 2006.
J. H. Stock e M. W. Watson, Introduzione all’Econometria, Pearson, 2009

Lecture notes and reference papers downloadable from the University website.
Assessment and grading criteria
The exam is a written test made up of 6 questions. Four questions are on Parts I and II, two questions on Part III (one on theory; one question on an econometric exercise: e.g. interpretation of econometric results, calculation of tests or quantitative effects of estimates, etc.). Books, lecture notes and slides are not allowed, same as tables or cell/smart phones.

Programma definitivo per l'A.A.2016/17
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