COURSE NUMBER: EWMBA 231-11*, this course is cross-listed

COURSE TITLE: Corporate Financial Management

UNITS OF CREDIT: 3 Units

INSTRUCTOR: Raghavendra Rau

E-MAIL ADDRESS: raghu@haas.berkeley.edu

CLASS WEB PAGE LOCATION (HTTP URL): https://bspace.berkeley.edu/portal

MEETING DAY(S)/TIME: Saturday, 1:00pm-4:00pm

PREREQUISITE(S): EWMBA 203 (Introduction to Finance)

CLASS FORMAT: A mixture of lectures and cases

REQUIRED READINGS: A supplementary textbook will be assigned. In addition, a course reader with all cases and handouts in the course will be assigned.

BASIS FOR FINAL GRADE: A mixture of a midterm, final exam, problem sets and class participation

ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:
The objective of 231 is to provide you with the conceptual framework necessary to appreciate and understand the problems facing the financial manager of an operating business. Readings, case analysis, and problem sets focus on the basic tools used by financial analysts and financial decision makers. The course is devoted to the two basic financial problems that all companies face: (1) On what should funds be spent (i.e., investment decisions)? and (2) From where should funds be obtained (i.e., financing decisions)?

The first part of the course will cover the investment decision – given the cost of capital, how should firms and investors value stocks, bonds, companies and projects?

The second part of the course explores how the financial markets and investors view risk, and its implications for capital budgeting and corporate valuation. We will explore what securities the firm can issue to raise funds, how firms decide on the mix of securities with which they will finance their operations, and how to calculate the firm’s resulting cost of capital. In addition, we will discuss corporate valuation, mergers and acquisitions, initial public offerings and leveraged buyouts through cases.

BIOGRAPHICAL SKETCH: Professor Rau currently holds the Sir Evelyn de Rothschild Professorship of Finance at Cambridge University. His primary research interest is centered on how participants in markets acquire and use information. His most recent major publications investigated why mutual funds close their doors to new investors and whether analysts change their opinions of their covered firms depending on the firm they are employed at. His research won the 1996 Competitive Award for Business Finance and the Best of the Best Award from the Financial Management Association for the paper “Glamour, Value and Post-Acquisition Performance of Acquiring Firms.” He has also won the 2000 Barclays Global Investors Award from the European Finance Association for the paper “A Rose.com by any other name” and the 2008 Chinese Finance Association Best Paper in Corporate Finance award for the paper “The helping hand, the lazy hand, or the grabbing hand? Central vs. local government shareholders in publicly listed firms in China”.

Professor Rau has taught corporate finance at UCLA, Purdue University, and the Institut d’Etudes Politiques de Paris, among other schools. He received the Outstanding Undergraduate Teaching Award in 2001 and the Dean’s Outstanding MBA Core Teaching Award in 2005 and 2007 from Purdue University. In 2008-2009, Professor Rau worked as a researcher at Barclays Global Investors, the largest money manager in the world, and held a ring-side seat during the quant fund meltdown, getting personal experience of how a firm engages in corporate restructuring, conducts layoffs, mergers or a split-off. He is a member of the American Finance Association, European Finance Association, European Financial Management Association, the Financial Management Association, the French Finance Association, and the Western Finance Association.