CORPORATE FINANCIAL POLICIES

Corporate Financial Policies is an elective course offered for the Master's degree in Economics and Finance. The course aims to equip students with the theoretical foundations and methodological tools necessary to understand the principles that guide corporate financial decisions, particularly those related to raising capital for business operations.
The primary educational objective is to help students grasp that a company’s value is fundamentally linked to its ability to generate free cash flows, which in turn must yield returns that are aligned with the firm’s level of risk and meet the expectations of all stakeholders.
Course content is delivered through a balanced combination of theory and practical application, fostering the development of quantitative skills essential for addressing key financing decisions. To this end, students will engage in exercises and analyze real-world case studies during class sessions.
More specifically, the course explores financial policies aimed at distributing the firm’s available cash flows across various types of capital providers. Topics include: (1) the optimal mix of financing instruments (equity versus debt), (2) contractual structures designed to minimize agency costs, and (3) the maturity structure of liabilities (i.e., time diversification). Special emphasis is placed on dividend policy and equity management strategies, with a focus on both publicly listed and privately held 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 are expected to have met the learning objectives and passed the prerequisite courses "Economia Aziendale 1 & 2". In particular, they should be familiar with the structure and reclassification of the balance sheet and income statement.
Additionally, students are expected to have a solid understanding of key mathematical concepts such as present and future value, interest compounding rules, as well as basic statistical notions including mean, variance, standard deviation, and the properties of the normal distribution.

The course covers the following topics, which will be explored on a weekly basis:
1. The relationship between firm value and the amount of debt
2. Types of debt and the maturity structure of corporate liabilities
3. Equity financing policies
4. Dividend policy
5. Capital structure and risk management, including an introduction to derivative instruments

Textbook: the required textbook will be announced shortly before the beginning of the course.

Additional readings:
Other readings will be communicated during the course.

The examination consists of a written test followed by an oral examination. The use of textbooks or notes is not permitted.
The written test will consist of 15 multiple-choice questions and will last 25 minutes. The questions will assess students’ knowledge of the fundamental concepts presented during the course, their ability to apply these concepts to practical examples, and their critical understanding of them.
Passing the written test is a prerequisite for admission to the oral examination. The oral examination will involve an in-depth discussion of the examination materials and will assess the student’s ability to critically analyse and elaborate on the concepts covered in the course.
The final grade will also take into account any supplementary activities undertaken voluntarily by students, for which up to one additional point may be awarded.

written

The instructor is responsible for ensuring the authenticity and originality of all examinations and coursework. In cases of suspected academic misconduct, an additional on-site assessment may be required during the exams, which may differ from the standard format.

Regarding the grading scale (the manner in which grades will be assigned), regardless of whether one is attending or not attending:
A. Scores in the range of 18-22 will be attributed in the presence of:
- Sufficient knowledge and applied understanding in reference to the program;
- Limited ability to collect and/or interpret data, formulating independent judgments;
- Sufficient communication skills, especially in relation to the use of specific language pertaining to the corporate financial policies;
B. Scores in the range of 23-26 will be attributed in the presence of:
- Fair knowledge and applied understanding in reference to the program;
- Fair ability to collect and/or interpret data, formulating independent judgments;
- Fair communication skills, especially in relation to the use of specific language pertaining to the corporate financial policies;
C. Scores in the range of 27-30 will be attributed in the presence of:
- Good or excellent knowledge and applied understanding in reference to the program;
- Good or excellent ability to collect and/or interpret data, formulating independent judgments;
- Fully appropriate communication skills, especially in relation to the use of specific language pertaining to the corporate financial policies;
D. Distinctions (lode) will be attributed in the presence of excellent knowledge and applied understanding in reference to the program, excellent judgment ability, and excellent communication skills.

The course is mainly based on frontal lectures. All the materials discusses in class will be available on the Moodle platform.
The course consists of 6 hours per week, meaning 30 hours for the whole course. Each topic will be covered within 3 lectures: a theoretical one, an empirical one and finally, the last one will be an application (case study or tutorial). Lectures focusing on empirical evidence could require specific references to be read in advance.