University of Alberta, Alberta School of Business Department of Finance and Statistical Analysis
Instructor: Sheng-Jun Xu Course Section: B1 Email: [email protected] Class Room: BUS 1-10
Phone: 780-492-8057 Class Time: Mon, Wed 16:00 – 17:20 Office: BUS 2-32B Office Hours: Tues, Thurs 15:00 – 16:30 Course Description: Corporate Financial Planning is a case study and teamwork based course that applies the material learned in FIN 301, primarily from the standpoint of the corporation. Topics covered include capital budgeting, the valuation of companies, the cost of capital, capital structure, initial public offerings, dividend policy, corporate restructuring, and cross-border valuation.
Prerequisites: FIN 301, 412, 422.
Learning Objectives: This course incorporates the learning goals of the BCom Program, in particular critical thinking, ethical awareness, global awareness, oral communication, teamwork, quantitative skills and written communications. At the end of this course, you will be able to apply the material learned in FIN 301, In- troduction to Finance, primarily from the standpoint of the corporation. Specifically, you will work on case studies that focus on: the valuation of companies; determining the cost of capital; taking a company public (IPO); designing and executing dividend policy; optimizing a firm’s capital structure; implementing corporate restructurings; and valuing cross-border investments.
Instructor Availability: The instructor is available during office hours (listed at the top of the page). Meetings by appointment can be arranged only during the week leading up to the midterm, final exam, or presentations.
Course Materials:
Case pack: A packet of cases will be made available. Students registered for this course are required to purchase the case packet. Additional required and suggested readings may be handed out in class or posted on the class web site as the term progresses.
Textbook: There is no textbook but most students will probably find it helpful to consult the relevant chapters of their FIN 422 textbook (Berk, De Marzo, Stangeland: Corporate Finance, 4th Canadian Edition, Pearson Canada, 2018, ISBN: 978-0134887456).
Note: Once students are notified of the cases that will be used in this course, they are required to advise the instructor promptly if they have read any of the cases previously or have discussed any of the cases in another course. Failure to advise the instructor of previous exposure to a case would be grounds for a charge of academic misconduct to be brought. Students are not to have access to the teaching notes for any of the cases, and any evidence that the teaching notes were available to a student would also be grounds for a charge of academic misconduct.
Method of Evaluation: Course grades will be determined by combining points earned on case write-ups and presentations, class participation, a mid-term and a final examination. If you miss the midterm examination, the weight of the midterm will be applied to your final exam. These represent the only marks available to students.
Make-up or extra work to improve your grade is not possible. Once assigned, the final grade in the class will not be changed except in the case of a recording error. If you feel that your grade is incorrect, you must notify me in writing during the one-week period following the return of the midterm. After that, the problem will not be reassessed. Please note that a request to have a question on your midterm re-graded entails a request to have the entire exam re-graded.
Individual student achievement is measured by the following assessments:
Case Write-up 15%
Case Presentation 15%
Class Participation 15%
Midterm Exam 25%
Final Exam 30%
Final grades in the course will follow generally the historical distribution of grades in a FIN course that in- cludes third-year and fourth-year students. The following is the link to the official University of Alberta Assess- ment and Grading Policy: https://policiesonline.ualberta.ca/PoliciesProcedures/Pages/DispPol.
aspx?PID=101.
Important Dates:
Form groups for cases End of first week Select case to present End of second week Submit case write-up Day of case presentation
Midterm February 13 (tentative)
Final Exam TBD
Examinations: The midterm exam will cover topics up to and including Capital Structure. The final exam will focus primarily on the material covered following the mid-term. A sample midterm and sample final exam will be provided. Note that Finance is a cumulative discipline so core dumping the materials in the first half of the class after the mid-term is not advisable.
You will not require a financial calculator for this class, although you will likely find one to be useful. You should have a calculator that has yx , ex and ln(x) functions. Programmable calculators must be “de-programmed”
before exams. If you have a programmable calculator, I suggest that you bring a different calculator for exams if you want to retain any programmed information. Your calculator cannot substitute for an understanding of the problem solving process.
Deferred final examinations will be allowed for students following University procedures for obtaining deferrals.
Students interested in deferred final examinations should consult the Undergraduate Office. For more informa- tion on what a deferred exam is, go to http://business.ualberta.ca/programs/bachelor-of-commerce/
current-students/exam-policy-procedures/deferred-exams. If you miss the final exam and meet the criteria for a deferred final, thedeferred final will be on May 15, 2pm to 5pm (location TBD).
Students with accessibility needs can request special accommodations for exam. Please refer tohttps://www.
ualberta.ca/current-students/accessibility-resources/exam more more details about what types of accommodations are available, requirements, and deadlines.
Case Presentations: Students are to form groups and each group is toselect two (2) cases from a prede- termined list of ten from the course case packet. Each group will be responsible for a formal presentation of
20 minutes maximum at the beginning of class on the scheduled case day (see class schedule). Following the formal presentation, the discussion will be opened up to all class participants. At the end of the class, the instructor will attempt to resolve any remaining uncertainty by providing a summary of the major issues in the case.
By the end of the first week of class, students are expected to formgroups of four (4). In case some students have not joined a group by the deadline, I will assign those students to groups. By the end of the second week of class, each group is expected to pick the case the group wishes to present. I will assign non-selected cases to the groups that have not yet selected their cases for presentation. The cases are allocated to groups on a first come, first serve basis.
Case Write-up: Groups are required to turn in two(2) case write-ups, corresponding to the same cases they have selected to present in class. Write-ups handed in late will not be accepted. Team members should remember to bring an extra copy of their write-up to class; this will help the team during the discussion.
The reports are to be submitted in class on the day the given case is scheduled to be presented, in the form of a typewritten report of maximum 4 pages (double-spaced) containing both analysis and recommendations.
The four-page limit is for the text only—you may attach as many tables and numerical calculations as you wish. In order to conduct the analysis, it is expected that all students are familiar with Excel (or other spreadsheet software). Resources are available online for those who need a refresher or practice. For example, http://www.excel-easy.com/data-analysis.htmlcontains guides for basic data analysis tools and functions.
Class Participation: The mark for class participation will in large part be based on participation in the classes when the valuation project presentations are made. The best way to maximize your class participation grade is by volunteering helpful insights and/or questions. I may also cold call on students, but participation is ultimately your responsibility.
Academic Integrity: The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online atwww.governance.ualberta.ca) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.” (Section 23.4 of the University Calendar) Please be aware that writing help is available at the following sites:
1. Centre for Writers: http://www.c4w.ualberta.ca/
2. Student Conduct and Accountability: http://www.osja.ualberta.ca/
Recording of Lectures: Audio or video recording, digital or otherwise, of lectures, labs, seminars or any other teaching environment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study, and is not to be used or distributed for any other purpose without prior written consent from the content author(s).
Outline Policy: Policy about course outlines can be found in Course Requirements, Evaluation Procedures and Gradingof the University Calendar
Tentative Class Schedule
The course consists of lectures and case discussions. Lecture classes will be devoted to issues and concepts underlying the topic to be covered. Supplementary (optional) readings included published journal articles from Financial Management (FM), theJournal of Applied Corporate Finance (JACF), and theJournal of Financial Economics (JFE). Journal articles will be posted on eClass.
Case classes will be spent presenting and discussing the case assigned for that day. The first two cases and last two cases will be led by the instructor. All other cases will be led by the presenting group.
Date Topics/Case
Reference Chapters from BDS (4th Ed.)
Readings/Comments
Jan 7 Introduction
Jan 9 Cost of Capital Ruback, 2002 FM
Jan 14 Case 1: Marriott Corp.: The Cost
of Capital Ch. 12 I take the lead as an example.
Jan 16 Valuation Basics Ch. 7, 21, 22
Jan 21 Case 2: The Body Shop Modeling Exercise (pre-class prep required)
Jan 23 Capital Structure Ch. 17 – 19
Barclay and Smith Jr., 1996 JACF Barclay and Smith Jr., 2005 JACF Graham and Harvey, 2002 JACF Kisgen, 2007 JACF
Shivdasani and Zenner, 2005 JACF Jan 28 Case 3: Valuation of AirThread
Connections Student group presentation
Jan 30 Going Public Ch. 23.2
Brau and Fawcett, 2006 JACF
Jagannathan and Sherman, 2005 JACF Kim and Ritter, 1999 JFE
Wilhelm, 2005 JACF
Feb 4 Case 4: Diageo PLC Student group presentation
Feb 6 Dividends and Cash Ch. 20
Dittmar, 2008 JACF
Fama and French, 2001 JACF Julio and Ikenberry, 2004 JACF Pinkowitz and Williamson, 2007 JACF Pinkowitz et al, 2007 JACF
Feb 11 Midterm Review
Feb 26 Midterm Exam Covers up to and including Dividends and
Cash
Date Topics/Case
Reference Chapters from BDS (4th Ed.)
Readings/Comments
Feb 18, 20 Reading Week
Feb 25 Case 5: Rosetta Stone IPO Student group presentation
Feb 27 Restructuring
Cusatis, Miles, and Woolridge, 1994 JACF Donaldson, 1991 JACF
Stewart & Glassman, 1988 JACF (Part II) Mar 4 Case 6: Case 6: Intel Corp–1992 Student group presentation
Mar 6 Cross Border Valuation Ch. 31 Estrada, 2007JACF
Mar 11 Case 7: Humana, Inc.: Managing
in a Changing Industry Student group presentation
Mar 13 Case 8: Case 8: Kohler Co. (A) Student group presentation
Mar 18 Case 9: Geeli Student group presentation
Mar 20 Case 10: Corning Convertible
Preferred Stock Student group presentation
Mar 25 Guest lecture
Mar 27 Case 11: Williams–2002 Student group presentation
Apr 1 Case 12: Buffett’s Bid for Media
General’s Newspapers Student group presentation
Apr 3 Case 13: Arundel Partners: The Sequel Project
I take the lead on this. Come prepared to participate!
Apr 8 Case 14: Flash Memory, Inc. In-class exercise and exam review Apr 10 Final Exam Review
