Corporate Management and Financial Decision

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Inoue Kotaro 
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Syllabus updated
Lecture notes updated
Fall Semester

Outline of lecture

This is a graduate school course of corporate finance. Its goal is to bring master students to the fundamental of corporate finance study so that they can start their own research in this field and other related field such as investment, corporate management, and accounting. Participants are expected to have basic knowledge of finance such as capital assets pricing model (CAPM) beforehand. This course will follow recent literature in discussing central topics of corporate finance such as corporate governance, capital structure, IPO, mergers and acquisitions, and behavioral corporate finance. In particular, we will focus on empirical studies in these fields. All the participants are expected to read all the assigned papers. In addition, each participant will be assigned several papers in the following reading list. The number of assigned paper per student will depend on the class size. The assigned students are expected to read and analyze the paper deeply to prepare presentation about the paper and lead discussion on the paper in the classes. Other students are also expected to read the paper and prepare discussion in the class. In the last two classes, we will discuss cases to provide students a sense how implications from academic researched and real businesses interact.

Purpose of lecture

Its goal is to bring master students to the fundamental of corporate finance study so that they can start their own research in this field and other related field such as investment, corporate management, and accounting.

Plan of lecture

笆Introductionary Lecture: Efficient market and Corporate Finance (Inoue)
(Reference Paper)
Fama (1991) Efficient Market ii

Harvey, Liu, and Zhu (2014), 窶懌ヲand the Cross-section of Expected return, 窶 mimeo.

笆Long-term Performance (Ikeda)
(Assign paper)
Lyon, Barber and Tsai (1999), "Improved Methods for Tests of Long-Run縲Abnormal Stock Returns,'' Journal of Finance, 54 (1), 165-201.

(Reference Paper)
Fama (1998), "Market efficiency, long-term returns, and behavioral finance,'' ournal of Financial Economics, 49 (3), 283-306.

笆Law and FinanceシInoueシ
(Assigned Paper)
Spamann (2010), 窶弋he "Antidirector Rights Index" Revisited, 窶 Review of Financial Studies, 23 (2), 467-486.

(Reference paper)
La Porta et al. (1998) Law and Finance

La Porta et al. (2008) The Economic Consequences of Legal Origins

笆Corporate Governance (Inoue)
(Assign paper)
Gompers, P.A., J.L.Ishii, and A.Metrick (2003) Corporate Governance and Equity Prices

(Reference paper)
Shleifer and Vishny (1997) A Survey of Corporate Governance

(Assign Paper)
Bertrand and Mullainathan (2003) Enjoying the Quiet Life? Corporate Governance and Managerial Preferences

(Reference Paper)
Jensen (1986) 窶廣gency Costs of Free Cash Flow and Corporate Control.窶

笆Management and Firm PerformanceシInoueシ
(Assign Paper)
Nicholas Bloom and John Van Reenen, (2007) Measuring and Explaining Management Practices Across Firms and Countries, Quarterly Journal of Economics 122 (4): 1351-1408.

(Reference Paper)
S. N. Kaplan (1997) Corporate Governance and Corporate Performance: A Comparison of Germany, Japan and the U.S.

笆Managerial Compensation
(Assign Paper)
Cai and Vijh (2007), Incentive Effects of Stock and Option Holdings of Target and Acquirer CEOs, Journal of Finance

(Reference Paper)
Core, J.E, W.R.Guay, and D.F. Larcher (2003), Executive Equity Compensation and Incentives: A Survey

Frydman, C. (2007) Rising Through the Ranks: The Evolution of the Market for Corporate Executives, 1936-2003

笆Large Shareholders
(Assign Paper)
Jay Dahyaa, J., O. Dimitrovb, J.J. McConnell (2008) Dominant shareholders, corporate boards, and corporate value: A cross-country analysis

笆Managerial Overconfidence
(Assigned Paper)
Malmendier and Tate (2005), CEO Overconfidence and Corporate Investment, Journal of Finance, 2005, 60, 2261-2700

(Reference Paper)
Baker. M. Ruback, R. and Wurgler, J. Behavioral Corporate Finance

笆Cash HoldingsシIkedaシ
(Assign Paper)
Opler, T., L. Pinkowitz, R. M. Stulz, and R. Williamson (1999), 窶弋he Determinants and Implications of Corporate Cash Holdings,窶扣ournal of Financial Economics 52 (1), 3-46.

(Reference Paper)
Bates, Kahle and Stulz (2009) "Why Do U.S. Firms Hold so Much More Cash than They Used To?'' Journal of Finance 64 (5), 1985-2021.

笆Initial Public OfferingシIkedaシ
(Assign Paper)
Derrien and Womack (2003), "Auctions vs. Bookbuilding and the Control of Underpricing in Hot IPO Markets,'' Review of Financial Studies, 16 (1), 31-61.

(Reference Paper)
Kutsuna and Smith (2004), "Why Does Book Building Drive out Auction Methods of IPO Issuance? Evidence from Japan,'' Review of Financial Studies, 17 (4), 1129-1166.

笆Mergers and AcquisitionsシInoueシ
(Assign Paper)
Jesse Ellis, Sara B. Moeller, Frederik P. Schlingemann, Renテゥ M. Stulz (2012)縲Globalization, Governance, and the Returns to Cross-Border Acquisitions

(Reference paper)
Andrade, Mitchell and Stafford (2001) New Evidence and Perspectives on
Mergers, JEP15(2)

笆Theory and Practice
(Assign Paper)
Graham, J. and C. Harvey (2001) 窶弋he theory and practice of corporate finance: Evidence from the field窶 Journal of Financial Economics 60, 187-243

笆Case 1: HBS9-201-063: Seagate Technology BuyoutシInoueシ
Topic: Efficient Market and Behavioral Corporate Finance
To be distributed in the class.

笆Case 2: HOYA and Pentax (Inoue)
Topic: Mergers and Acquisitions, Board of Directors, Large Shareholders
To be distributed in the class.

Textbook and reference

This class does not have "text book", but students who do not have sufficient knowledge about finance and corporate governance should read basic finance text book such as "Corporate Finance" by Jonathan Berks and Peter DeMarzo.

Related and/or prerequisite courses

Finance, Accounting, Corporate Governance


The grade of this course is based on the report for the assigned paper and discussion participation (80%), and class participation in the case study classes (20%).縲縲

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