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Strategic Finance: Course Outline (MBA-Finance)

This course emphasis is on theoretical and conceptual understanding of financial management function

Course Contents

An Economic Overview of Corporate Institutions

  • Corporate Governance
  • Corporate Financing: Some Stylized Facts
  • Historical development of corporate finance theories
  • Economic theories as the basis
  • Comparative overview of different economic systems and its impact on financial management practices

Corporate Financing and Agency Costs

  • Outside Financing Capacity
  • The Role of Net Worth: A Simple Model of Credit Rationing
  • Debt Overhang
  • Borrowing Capacity: The Equity Multiplier
  • Related Models of Credit Rationing:
  • Inside Equity and Outside Debt
  • Determinants of Borrowing Capacity
  • Pledge able Income
  • Boosting the Ability to Borrow:
  • Diversification and Its Limits
  • The Costs and Benefits of Collateralization
  • The Liquidity–Accountability Trade-off
  • Inalienability of Human Capital
  • Group Lending and Microfinance
  • Sequential Project
  • Modigliani–Miller and the Financial Structure Puzzle
  •  Debt Instruments
  •  Equity Instruments
  •  Financing Patterns

Liquidity and Risk Management, Free Cash Flow and Long-Term Finance

  • The Maturity of Liabilities
  • The Liquidity–Scale Trade-off
  • Corporate Risk Management
  • Endogenous Liquidity Needs, the Sensitivity of Investment to Cash Flow, and the Soft Budget

Corporate Financing under Asymmetric Information

  • Implications of the Lemons Problem and of Market Breakdown
  • Dissipative Signals
  • Contract Design by an Informed Party:
  • Optimal Contracting in the Privately-Known-Prospects Model
  • The Debt Bias with a Continuum of Possible Incomes
  • Signaling through Costly Collateral 271
  • Short Maturities as a Signaling Device 271
  • Formal Analysis of the Under pricing Problem

Money and Capital Markets    

  • Theoretical basis of risk and return debate
  • Capital Markets- Theory and Operations
  • Arbitrage Pricing Theory
  • Asset Pricing Models
  • Historical Development of Financial Markets in Pakistan

Islamic Banking and Finance

  • Theoretical basis of Islamic Economics
  • History and development of Islamic Banking
  • Modes of Islamic Financing
  • Current Status of Islamic Banking
  • Future of Islamic Banking
  • Islamic Perspective of Capital Markets

Dividend policy

  • Dividend policy defined
  • Forms of cash dividends
  • Cash dividends vs. stock dividends
  • Chronology of paying dividends
  • Factors affecting dividend payments
  • Setting a dividend policy
  • Information content of dividends
  • Clientele effect
  • Stock dividends, splits and other forms of dividends
  • Dividend theories
  • Walter’s model
  • Gordon’s model
  • Modigliani and Miller argument
  • Market imperfections

Course Contents

Long term sources of finance: leasing

  • The basics of leasing
  • The types of leases
  • · Operating leases
  • · Financial leases
  • · Reasons for, and pros and cons of, leasing
  • · The cash flows from leasing arrangements
  • Analysis of lease-buy decisions

Corporate restructuring

  • Describe divestitures and the reasons for it
  • Describe various forms of divestiture and the reasons for each
  • Describe and evaluate leverage buyouts and leverage recapitalization
  • Corporate financial distress and its consequences
  •  Aspects of financial distress
  • Causes of financial distress
  • Early detection of financial distress
  • Reorganization vs. liquidation
  • Reorganize-liquidate decisions

Takeovers

  • The Pure Theory of Takeovers: A Framework
  • Extracting the Raider’s Surplus:
  • Takeover Defenses as Monopoly Pricing
  • Takeovers and Managerial Incentives
  • Positive Theory of Takeovers: Single-Bidder Case
  • Value-Decreasing Raider and the One-Share–One-Vote Result
  • Positive Theory of Takeovers
  • Multiple Bidders
  • Managerial Resistance

Mergers and Acquisitions, and the Equilibrium Determination of Asset Values

  • Valuing Specialized Assets
  • General Equilibrium Determination of
  • Asset Values, Borrowing Capacities,
  • The Kiyotaki–Moore Model Types of long term debt
  • Main features of long term debt
  • Designing a long term debt issue
  • An overview of the debt market in Tanzania
  • International debt financing
  • Bond refunding analysis

Recommended Books

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