Objective

Content

In the last decade, the international financial environment was characterized by booming stock markets and numerous mergers and IPO's. As a result, only few people will deny the increasing importance of corporate finance. Creating refined hedge strategies (financial engineering) with derivatives and other off-balance sheet products, became of comparable importance to the marketing or innovative capacity of the firm. The shareholders value increased in importance at the cost of the traditional accounting values. At the same time we saw an increasing corporate interest in social and environmental issues.

This may be exemplified by the changing attitude of Shell after the Brent Spar event in 1995. In that well-known case, social interest groups, customers and investors, were successful in changing the basic management policy of the international oil company. Also in financial theory there is a growing interest in a reassessment of the classical financial paradigms. For example the all important shareholders' concept can be discussed in direct comparison to the alternative stakeholders approach.

In this course, most traditional financial theory will be dealt with. Additionally some alternative concepts will be handed, relying on a wider Profit, People and Planet (PPP) approach. Profit is a necessary condition in the market economy, but can only be sustainably established, if it is considered to the background of a viable and long run human resource management together with a profound respect to the environment. This multicriteria approach is the main aim of this class.

In the first part of this course, the finance literature will be discussed in depth, together with a short study of general ethical framework. This is done through student written reports on corporate financial topics including its ethical and methodological dimension. Examples are capital structure and corporate risk, agency theory, personal and management options, social responsible investing etc.

In the second part of the course we will focus the attention on performing and reporting of a specific financial research assignment. This will be done in groups of 3 or 4 students.

Required Literature

• Megginson, W.L., 1997, Corporate Finance Theory, Addison Wesley, ISBN 0-673-99765-0
• Boatright, J.R., 1999, Ethics in finance, Blackwell
• Various articles

					5-7-2002