Universität Wien

040094 KU Corporate Finance 1 (MA) (2024S)

4.00 ECTS (2.00 SWS), SPL 4 - Wirtschaftswissenschaften
Prüfungsimmanente Lehrveranstaltung


Hinweis: Ihr Anmeldezeitpunkt innerhalb der Frist hat keine Auswirkungen auf die Platzvergabe (kein "first come, first served").


max. 50 Teilnehmer*innen
Sprache: Englisch



Blocked in the first half of the semester:

1. Part
Th 14 March 2024, 03.00 pm - 06.15 pm, HS 17, OMP1
Th 21 March 2024, 03.00 pm - 06.15 pm, HS 17, OMP1
Mo 08 April 2024, 03.00 pm - 04.30 pm, HS 12, OMP1 and
Mo 08 April 2024, 04.45 pm - 06.15 pm, HS 09, OMP1

Midterm: Mo 22 April 2024, 04.45 pm, HS 6, OMP1

2. Part
Th 11 April 2024, 03.00 pm - 06.15 pm, HS 17, OMP1
Th 18 April 2024, 03.00 pm - 06.15 pm, HS 17, OMP1
Attention: no course on 25 April
Mo 29 April 2024, 03.00 pm - 04.30 pm, SR 5, Kolingasse 14 -16
Attention! Change of location:
Mo 29 April 2024, 04.45 pm - 06.15 pm, HS 17, OMP 1
Th 02 May 2024, 03.00 pm - 06.15 pm, HS 17, OMP1

Tutorium: Friday, 10 May 9.45 - 11.15 HS 8, OMP1

Final Exam: Mo 13 May 2024, 4.45.00 pm, HS 1, OMP1


Ziele, Inhalte und Methode der Lehrveranstaltung

The Corporate Finance I course is an introductory course that forms the first part of a two-course sequence covering topics in Corporate Finance. The aim of the course is to provide a broad conceptual and practical platform for analysing issues in Corporate Finance.
The objective is to develop a framework to think about financial decisions firms regularly undertake. We will go back and forth between developing theories and confronting them with specific real life examples. We start by analysing the firm’s financing decision in perfect markets. We outline the role of taxes in financing and project valuation. Incorporating the notion of financial distress and bankruptcy, we draw on the Static Trade-off Theory of Capital Structure. We analyse the role of information in shaping the financing of corporations and discuss the resulting pecking order of financing. We then focus on the potential conflicts of interest between shareholders and debt holders and between shareholders and management, and their implications for the firm’s capital structure decision. We conclude this part by discussing dynamic considerations the firm might have to make when setting its capital structure.
Second, we will focus on the firm’s pay out policy, i.e. we will look at the question of when and how the firm is able to distribute excess cash to shareholders. We show, that, as with capital structure, a firm can create value by its pay out policy only in the presence of market imperfections such as taxes, agency costs, transaction costs or asymmetric information between management and investors. We also discuss cash management by corporations and the usefulness of credit lines for them.
The third topic of the course analyses mergers and acquisitions (M&As).

Upon completing this course, students should be able to:
• Discuss the financing decisions of corporations.
• Understand the importance of asymmetric information and signalling in capital markets and financial decisions.
• Critically discuss the question of the dividend policy a firm should follow.
• Understand the feasibility and trade-offs employed in the different forms of restructuring for financially distressed firms.
• Explore different methods of issuing securities and understand the stock price reaction to issuing securities.

Session 1-2:
Irrelevance of capital structure in perfect capital markets
Impact of taxes on capital structure
Capital structure and financial distress
Session 3:
Capital structure and asymmetric Information (Signalling)
Session 4:
Conflicts of Interest between shareholders and debt holders
Conflicts of Interest between shareholders and managers
Midterm Exam
Session 5:
Pay out policy in perfect capital markets
Impact of taxes on pay out policy
Dividends and transaction costs
Dividends and asymmetric information
Session 6:
The economics of M&A
Reasons to acquire.
Market reaction to M&A
Session 7:
Guest Lecture and Case Study on Mergers and Acquisitions
Final Exam

Art der Leistungskontrolle und erlaubte Hilfsmittel

Course format and methodological approach
The course “Corporate Finance I” consists of 7 three hour sessions. Sessions consist of lectures, exercise-solving and at least one case study, and will involve class discussion.
Case Studies
The case method is one of the most effective pedagogical tools to sharpen your analytical and decision-making skills, as it requires you to be an active participant in financial decisions. The discussion constitutes an opportunity to defend your position and to learn from others, by listening to their comments and criticism.
This is an interactive course, where your active participation is required.
A learning area will be available in the Intranet (Moodle). There, you would find instructions for the sessions, communications, bibliography, etc. Please look at it a couple of times a week. Slides of the sessions will also be posted here, always BEFORE the class.

Mindestanforderungen und Beurteilungsmaßstab

Attendance is compulsory. This also applies to the guest lecture. Missing more than one class without a medical certificate results in not receiving credit for the class.The evaluation will be based on the following items:
40% Mid-term Exam
50% Final Exam
10% Case Study
Bonus points might be available for excellent participation.
Use of AI or any other auxiliary means are not allowed.


All lecture materials and paper presentations.


The main reading material for the course is contained in:
• “Corporate Finance”, 4th Edition by P.DeMarzo and J.Berk, Pearson Global Edition. (2013).
• “The New Corporate Finance. Where Theory Meets Practice”, 3rd Edition by D.Chew, McGraw-Hill Irwin (CHEW).
Supplementary Readings by Topic:
I: Capital Structure Theories and Payout (Parts I-II)
• Chew, D. (2001), ‘The Modigliani-Miller Propositions after Thirty Years’ Journal of Applied Corporate Finance, Vol. 6.Num.1
• Graham, J. & Harvey, C. (2002), “How do CFOs make capital budgeting and capital structure decisions?” Journal of Applied Corporate Finance, 15(1): pp.8-23
• Opler, T.C., Saron, M. & Titman, S. (1997), “Designing capital structure to create shareholder value.” Journal of Applied Corporate Finance, 10(1): pp.21-34
• Smith, C.W. (1986), “Raising capital: theory and evidence.” Midland Corporate Finance Journal, 4: pp.6-22
• Barclay, M.J. & Smith, C.W. (1996), “On financial architecture: leverage, maturity, and priority.” In: Chew, D.H. (eds.) (2001) New corporate finance: where theory meets practice. 3rd ed. Boston, Mass.: Irwin McGraw-Hill, pp.210-223
• Ghosh, C. & Woolridge, J.R. (1988), “An analysis of shareholder reaction to dividend cuts and omissions.” Journal of Financial Research, 11(4): pp.281-294
II. Selected Topics – Financial Distress and Restructuring
• Franks, Nyborg and Torous, “A Comparison of US, UK and German Insolvency Codes,” Financial Management, Volume 25, No 3.
• Stuart C. Gilson (1991), “Managing Default: Some Evidence on How Firms Choose Between Workouts and Chapter 11”, Journal of Applied Corporate Finance Volume 4, Issue 2.
• Lawrence A. Weiss (1991), “The Bankruptcy Code and Violations of Absolute Priority”, Journal of Applied Corporate Finance, Volume 4, Issue 2.

Zuordnung im Vorlesungsverzeichnis

Letzte Änderung: Mo 13.05.2024 13:05