Module Convenor: Dr Giles Spungin
This module aims to develop an understanding of how firms raise external finance and design their capital structure. We will examine the assumption that a firm's cash flows are exogenous with respect to financial decisions. Also studied are the Modigliani-Miller theorems stating which conditions make capital structure irrelevant, and derive the optimal debt/equity mix in the presence of taxes and costly bankruptcy. The rest of the module addresses the issue of how a firm's financial and governance structure affects its value once information problems between firms' insiders and investors are taken into account.
Assessment: 80.0% Examination, 20.0% Coursework