Name of course
2019 - 2020
Number of credits
Number of hours
Language of instruction
Objectifs et contribution de l'Unité d'Enseignement au programme
• Provide students with a first appreciation of the role of a financial manager within a firm
• Train future managers to understand the tools and the nature of the decisions that financial managers must make.
• Enable future managers to use financial tools in order to make financial decisions based on these rather than on intuition.
• Develop future managers’ global perspective of the corporate finance by presenting the underlying principles of financial valuation (bonds and equity) as well as the concepts of return and risk and the firm’s financial structure.
• Develop a critical perspective on Financial Management and understand the operational ambiguities inherent to its underlying hypotheses and its tools, without being naive and/or cynical.
Prerequisites and co-requisites
This course is accessible to students who have followed the basic training in management, expected at the end of two years in a business school, including basic math skills (algebra) and a good (passive) level in English.
1. The first part presents an introduction to financial markets. This part aims to develop an understanding of the functioning of financial markets in terms of market constituents and the language and tools of finance. (Berk & Demarzo chapters 1 to 3)
2. The second part focuses on valuation of financial assets. After studying the investment decision rules, we study the valuation of bonds and equity (Berk & Demarzo chapters 5 to 9)
3. The third part addresses the notions of risk and return. It presents the traditional measures of risk and return, as well as portfolio theory and cost of capital (Berk & Demarzo chapters 10 to 13)
4. The fourth part of this course analyses the financial structure of the firm as well as its value, including in terms of corporate governance. (Berk & Demarzo chapters 14, 15, 17, 18, 29)
The course consists in lectures. During these lectures, I develop the concepts and theories, stimulate questioning and answer questions raised by students. The lectures illustrate concepts with practical cases and real data. They are also an opportunity to interact, with questions and answers, using online technology such as Socrative.com to test understanding and raise critical thinking. While some of the lecture time is dedicated to drill exercises, additional, more complex exercises are provided for students to practice finance management tools on their own study time.
There is no formative evaluation planned. However, exercises and data cases are available on the on-line platform of the reference book, allowing students to test their level of understanding. Students who validate 3 of the proposed activities during the course can receive a bonus point on the final exam.
The formal evaluation takes place during a 3-hour written exam.
Grades are attributed for the structure of the reasoning developed by the students rather than for the final results. In general, a student is graded on his or her:
• Ability to justify an answer
• Coherence in the arguments put forth
• Ability to develop an argued interpretation or critical view.
These criteria will be tested during the exam using several fictitious case, with detailed data requiring:
• A justified choice of concepts among those studied in the course
• A justified relationship between these concepts,
• The ability to justify a financial decision based on the results obtained through the analysis.
• The ability to justify a coherent and concise conclusion.
• Slides projected during the lectures, available on the « Financial Management » course on sur www.icheccampus.ichec.be.
• Reference book : Corporate Finance, 3rd Edition, by Jonathan Berk and Peter DeMarzo (Pearson / Addison Wesley, 2013)
Arrow, K., Cropper, M., Gollier, C., Groom, B., Heal, G., Newell, R., & Sterner, T. (2013). Determining benefits and costs for future generations. Science, 341(6144), 349-350.
Brealey, R., S. Myers, and F. Allen, Principles of Corporate Finance, 10th Edition, McGraw-Hill Irwin, 2011.
Brav, Graham, Harvey, and Michaely (2005) “Payout policy in the 21st century”.
Brounen, Dirk, Abe De Jong, and Kees CG Koedijk. "Corporate finance in Europe confronting theory with practice." EFA 2004 Maastricht Meetings Paper. No. 2769. 2004.
Copeland, T., Koller, T., Murrin, J., Valuation – Measuring and managing the value of companies, 5th edition, Wiley Editions, USA, 2010, 550 pages
Damodoran, A., Applied Corporate Finance, 3rd edition, Wiley Editions, USA, 2011, 738 pages
Devolder, P., Mathilde Fox, Francis Vaguener, Mathématique Financière, Pearson Education, 2012, as a review on discounting methods.
Graham, Harvey, and Rajgopal (2006), “Value Destruction and Financial Reporting Decisions”
Graham and Harvey (2001) “The theory and practice of corporate finance: evidence from the field” (particularly pages 187-209).
Heude, X. (2006). La notion de risque dans une approche éthique de la finance. Conditions et implications. Finance & bien commun, (1), 47–53.
Jensen, Michael, “Value Maximization, Stakeholder Theory, and the Corporate Objective Function”
McKinsey article “Assessing the Impact of Societal Issues: A McKinsey Global Survey”
Ross, S., R. Westerfield and J. Jaffe, Corporate Finance, 9th Edition, McGraw-Hill Irwin, 2010.
Stout, Lynn, 2002, “Bad and not-so-bad arguments for stakeholder primacy”.
Walter, C. (1996). Une histoire du concept d’efficience sur les marchés financiers. In Annales. Histoire, Sciences Sociales (Vol. 51, pp. 873–905).
Vernimmen, P., QUIRY, P., LE FUR, Y., Finance d’entreprise, Editions Dalloz, Paris, 2011, 1191 pages
• Recommended press: daily financial press : Financial Times or Wall Street Journal
• Stock exchange website (www.euronext.com)