Corporate Finance: a Sustainability Perspective

URL study guide

https://studiegids.vu.nl/en/courses/2024-2025/E_IBA2_CFSP

Course Objective

This course aims to develop a framework that guides firms' investment and financial decisions, emphasizing sustainability considerations. This framework combines a solid understanding of the most common corporate finance theories with a sensible selection of the most suitable approach in practical situations. Specifically the course objectives are as follows ACADEMIC AND RESEARCH SKILLS After completing this course, the student can:
• identify international differences in regulation and corporate governance;
• understand which financial decisions create value;
• distinguish between relevant and irrelevant information for corporate financing decisions.
• understand how ethical, social, and environmental considerations influence the financial decisions of a firm in different international contexts. BRIDGING THEORY AND PRACTICE Knowledge: (Demonstrates theoretical and empirical knowledge concerning the relevant areas in international business administration) After successfully completing this course, the student will have a working knowledge of the following:
• relevant corporate governance mechanisms and international differences in CG;
• capital structure and financing decisions;
• agency conflicts within firms;
• corporate payout policies;
• the most common valuation methods (APV, WACC, FTE, and valuation multiples);
• relevant concepts on sustainability and corporate social responsibility in finance.
• quantify the value of a project/company taking financing decisions into account;
• compute expected changes in stock prices relating to these financing decisions. Application (Ability to propose a solution to an international real-life business problem by applying relevant theories and methodologies). After completing this course, the student:
• understands the relevance of our financing theories in practice;
• understands the investment and financing decisions of firms discussed in financial media;
• appreciates the importance of financial models and the guidance they on how financial decisions are implemented in business by focusing on and simplifying the relevant aspects;
• can identify the role of corporate governance in helping firms and society to achieve sustainability and social responsibility goals. BROADENING YOUR HORIZONS After successfully completing this course, the student:
• can use a basic but comprehensive toolset to build valuation models for companies;
• understand how the institutional environment can shape the capital structure of firms operating in developed and emerging markets;
• understand the opportunities and challenges of sustainable finance in different institutional environments.

Course Content

This course discusses some of the firms' most important financingdecisions. Throughout the course, we will examine different businessenvironments and their implications on the firms' optimal capitalstructure, payout policies, and corporate valuation models.The course will allow students to understand better the behavior ofmarkets of corporate securities in emerging and developed markets and the advancement of sustainable finance initiatives, departing from the historical, cultural, and regulatory environments across countries. After successfully attending this course, the student will be able to:
• Discuss the implications of equity and debt financing;
• Critically assess assumptions and outcomes of most common valuation models;
• Understand how ethical, social, and environmental considerations influence the financial decisions of a firm in different international contexts

Teaching Methods

Lectures Tutorials

Method of Assessment

Written exam Practical assignment
- group Participation assignment

Literature

In this course, we use a book and case study materials: 1) Book: Berk and DeMarzo (2017), Corporate Finance, Pearson, 4th Global Edition. Chapters 14-19, 23-27 and 29. 2) Additional discussion material will be posted on Canvas. 3) Cases: the case study material will be announced during the course. Case materials can be purchased from Harvard Publishing. (A credit card may be required.)

Target Audience

The course Corporate Finance: a Sustainability Perspective is an elective course of the second year of the IBA program. Students interested in specializing further in Financial Management can follow the specialization courses Financial Modelling and Derivatives and International Financial Management. Students who would like to transfer to the MSc Finance after this bachelor’s program also need to follow the Financial Markets & Institutions course on top of their courses.

Additional Information

The themes taught in this course are prerequisites for the MSc Finance and strongly recommended for the MSc Financial Management.

Recommended background knowledge

Finance (E_IBA2_FIN)

Explanation Canvas

The content covered during lectures and tutorials might be complemented with videoclips that will be posted on Canvas if needed.