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, initial public offerings, dividend policy, capital structure, corporate restructurings, and applications of option pricing to corporate finance.
Prerequisites: FIN 301, 412.
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 applications of option pricing to corporate finance.
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 301 textbook (Ross, Westerfield, Jordan, and Roberts: Fundamentals of Corporate Finance, 8th Canadian Edition, McGraw-Hill Ryerson, 2013, ISBN: 978-0071051606).
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 (3 cases, 5% each) 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 26 (tentative)
Final Exam TBD (late April)
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. 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 necessary, the deferred final exam will be held during the second week of the spring term (in May 2018).
Students with accessibility needs can request special accommodations for exam. Please refer tohttps://www.
By the end of the first week of class, students are expected to form groups of four people (groups of three may be possible if there are fewer than 40 students in the class). In case some students have not joined a group by the deadline, I will assign students to groups arbitrarily. 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 served basis.
Case Write-up: Groups are required to turn in three case write-upsin total. This includes the case they present in class, as well as two other cases which I will assign to each group at the end of the second week.
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: I expect honesty and integrity from my students. Cheating of any sort will be dealt with as sternly as University policy allows. 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 athttp://www.governance.ualberta.
ca/CodesofConductandResidenceCommunityStandards/CodeofStudentBehaviour.aspx) and avoid any be- havior 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.” (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: Recording is permitted only with the prior written consent of the professor or if recording is part of an approved accommodation plan.
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. Readings included published journal articles from Financial Management (FM), the Journal of Applied Corporate Finance (JACF), and the Journal 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 Chapters
in Ross
Readings/Comments
Jan 8 Introduction, overview of syllabus
Jan 8, 10 Cost of Capital and Leverage 14 Ruback, 2002FM
Jan 15 Case 1: Toy World I take the lead as an example.
Jan 17 Valuation Basics 3, 4, 9, 10, 11
Jan 22 Case 2: Marriott Corp.: The Cost
of Capital I take the lead as an example.
Jan 24 Capital Structure 16
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 29 Case 3: Valuation of AirThread
Connections Student group presentation
Jan 31 Going Public 15
Brau and Fawcett, 2006 JACF
Jagannathan and Sherman, 2005 JACF Kim and Ritter, 1999 JFE
Wilhelm, 2005 JACF Feb 5 Case 4: Case 4: Diageo PLC Student group presentation
Feb 7 Dividends and Cash 17, 19
Dittmar, 2008JACF
Fama and French, 2001 JACF Julio and Ikenberry, 2004JACF Pinkowitz and Williamson, 2007 JACF
Date Topics/Case Chapters in Ross
Readings/Comments
Feb 26 Midterm Exam Covers up to and including Capital
Structure
Feb 28 Restructuring
Cusatis, Miles, and Woolridge, 1994JACF Donaldson, 1991 JACF
Stewart & Glassman, 1988 JACF (Part II) Mar 5 Case 6: Case 6: Intel Corp–1992 Student group presentation
Mar 7 Cross Border Valuation 21 Estrada, 2007JACF
Mar 12 Case 7: Humana, Inc.: Managing
in a Changing Industry Student group presentation
Mar 14 Case 8: Case 8: Kohler Co. (A) Student group presentation
Mar 19 Case 9: Geeli Student group presentation
Mar 21 Case 10: Corning Convertible
Preferred Stock Student group presentation
Mar 26 Case 11: Williams–2002 Student group presentation
Mar 28 Case 12: Arundel Partners: The
Sequel Project Student group presentation
Apr 2 Easter Monday
Apr 4 Case 13: Buffett’s Bid for Media
General’s Newspapers I take the lead. Come ready to participate!
Apr 9 Case 14: Flash Memory, Inc. I take the lead. Come ready to participate!
Apr 11 Final Exam Review
