DRE 7009 Corporate Finance Theory
DRE 7009 Corporate Finance Theory
This course is a rigorous introduction to modern theories of corporate finance. The first half of the course establishes foundational concepts, beginning with the neoclassical and tradeoff models, and then moving to agency problems and possibly asymmetric information. The second half of the course focuses on a select group of topics, including executive compensation, corporate governance, security design, financial contracting and the theory of the firm, with a particular focus on the organizational aspects of the subjects. Empirical research in corporate finance is covered in greater depth in Empirical Corporate Finance and in DRE 7016 Topics in Corporate Finance.
The goal of the course is to familiarize students with central theories underpinning research in corporate finance.
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PART I. Capital Structure: Debt versus Equity
1. Neoclassical Model and Tradeoff Model
2. Agency Problems & Asymmetric Information
PART II. Principal Agent theory
3. General P-A problem
4. Compensation/incentive contracts
PART III. TOPICS
5. Security design: financial contracting and optimality of debt contracts
6. Theory of the firm: incomplete contract approach
7. Allocation of authority/control
8. Stock ownership and managerial monitoring
9. Board independence
Weekly class meetings are organized around lectures that develop and discuss models and their empirical implications. Students are required to participate in the class through presentations of some of the assigned papers and discussions of the topics of the lectures. Homework will be assigned weekly or bi-weekly.
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Enrollment in a PhD programme is a general requirement for participation in PhD courses at BI Norwegian Business School.
External candidates are kindly asked to attach confirmation of enrollment in a PhD programme when signing up for a course. Other candidates may be allowed to sit in on courses by approval of the course leader. Sitting in on a course does not permit registration for the course, handing in exams or gaining credits for the course. Course certificates or confirmation letters will not be issued for sitting in on courses.
Covid-19
Due to the Covid-19 pandemic, there may be deviations in teaching and learning activities as well as exams, compared with what is described in this course description.
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| Assessments |
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Exam category: Submission Form of assessment: Written submission Weight: 20 Grouping: Individual Duration: 1 Semester(s) Exam code: DRE 70091 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Activity Form of assessment: Presentation Weight: 20 Grouping: Individual Exam code: DRE 70091 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 50 Grouping: Individual Support materials:
Duration: 3 Hour(s) Exam code: DRE 70091 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Activity Form of assessment: Class participation Weight: 10 Grouping: Individual Duration: 1 Semester(s) Exam code: DRE 70091 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
| Activity | Duration | Comment |
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Group work / Assignments | 75 Hour(s) | Specified Learning Activities (including reading). |
Student's own work with learning resources | 75 Hour(s) | Autonomous Student learning (including exam preparation). |
Teaching | 30 Hour(s) |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 6 ECTS credits corresponds to a workload of at least 160 hours.