COURSE NUMBER: MBA 231.1

COURSE TITLE: Corporate Financial Management

UNITS OF CREDIT: 3 Units

INSTRUCTOR: Raghavendra Rau

CLASS WEB PAGE LOCATION: https://bspace.berkeley.edu/portal

MEETING DAY(S)/TIME: Tuesdays, 6:00 – 9:00PM

PREREQUISITE: MBA 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 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 is currently visiting from Purdue University where he teaches corporate and behavioral finance, both theoretical and empirical. 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. In 1996, he won the Competitive Award for Business Finance and the Best of the Best Award from the Financial Management Association. In 2000, he won the Barclays Global Investors Award from the European Finance Association. In addition to Purdue University and Haas, Professor Rau has also taught at UCLA, and the Institut d’Etudes Politiques de Paris, among other schools. He received Krannert’s Outstanding Undergraduate Teaching Award in 2001, and also won a John and Mary Willis Young Faculty Scholar Award. Over the past year, 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.