Advanced Corporate Valuation

Catalog description

This intensive course provides an advanced understanding of modern corporate finance, emphasizing the connection between financial theory and real-world practice. Students will master analytical frameworks for sophisticated financial analysis and explore how corporations make critical decisions affecting firm value. Upon completion, students will have the theoretical foundations necessary for advanced finance electives. Students should have a background in finance fundamentals and an interest in understanding the theoretical underpinnings of advanced financial concepts and their practical application. The course begins with a comprehensive review of essential concepts, followed by two interconnected modules. The first module examines the determination of optimal capital structure, starting with the Modigliani-Miller Theorem, which establishes the conditions under which project choice and financing can be separated. We then explore why these conditions rarely hold in practice: financing decisions convey information to capital markets, shape managerial incentives, and have tax implications. The module concludes with two valuation methodologies linking financing and valuation: WACC and APV approaches. The second module introduces optionality and its applications to financial and real assets. Students learn to identify and value embedded options in corporate decisions. The course concludes by demonstrating that corporate hedging policies are integral components of capital structure strategy, not independent considerations. The course employs lectures supplemented by case studies that illustrate theoretical concepts in complex, real-world contexts, ensuring students develop both conceptual understanding and practical analytical skills.