CORPORATE FINANCIAL POLICIES

“Corporate Financial Policies” is an elective course in the second-year program of theFirst Level Degree in Economics and Finance. The goal of the course is to provide students with theories and methods to understand the principles that guide the financial function when raising money for the company activities.
The main educational goal is to make students understand that the value of a company depends on its ability to generate free cash flows to the firm and, consequently, returns proportioned to the company risk and adequate to all stakeholders’ expectations.
The course contents will be presented both on a theoretical and practical basis, allowing students to develop the quantitative skills necessary to cope with the main financing decisions. Accordingly, exercises and real cases will be presented and solved in class.
More specifically, the course analyses the policies designed to distribute among the different classes of lenders the cash flows available for the company in terms of: 1) mix of liabilities (equity vs debt), 2) contractual arrangements for funding (minimization of agency costs), 3) term structure of liabilities (time diversification). Specific insights are focused on the dividend policy and the equity management for both listed and not listed companies.

The participation to the activities proposed for the course (frontal classes, exercises and real cases) and the personal workload will allow students to:
1. Knowledge and understanding
• understand the key mechanisms underlying the company financial choices, the decisions on how to remunerate the capital lenders and the risk management policies
2. Applying knowledge and understanding
• be able to evaluate the different financing alternatives available fot the company, in order to maximize the company market value
• be able to identify the remuneration policies for the capital providers
• be able to identify the best risk management solutions
3. Judgmental capabilities
• evaluate the sustainability of the capital structure and the possible decisions to bring it to the desired levels
• assess the appropriateness and costs of the possible risk management solutions
4. Communication abilities
The course will allow students to enhance their communication abilities through the knowledge of the technical language in the corporate finance field.
5. Learning abilities
The course will increase the students’ ability to integrate the study of the book with practical exercises and real cases. The aim is to show how theoretical models reconcile with real life and real corporate decisions.

Students should be familiar with balance sheet and income statement and their reclassification schemes. Moreover, students should know mathematical concepts like “present/future value”, the rules of interest compounding and statistical concepts like mean, variance and standard deviation and the characterization of the normal distribution.

- Capital, risk and information trading: financial policies
- Firm value and amount of debt
- Debt value determinants
- Choose the appropriate debt maturity
- Dividend policies
- Value management of equity: shareholder capital operations
- the use of options by non-financial companies

Analisi e valutazione finanziaria d'impresa (Beltrame-Bertinetti-Sclip), Giappichelli, 2021 (available on Giappichelli website and in Cafoscarina Library)

The exam is written: 10 multiple choice (20 points) and open question (10 punti). The final grade is the sum of the two parts.

The course is mainly organized in frontal lessons (face-to-face and/or on-line via zoom). The lessons combine the illustration of the theoretical principles of the subject with their practical application through exercises and referring to real cases. All material discussed in the classroom will be made available to students through the Moodle platform.

Italian

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