This module examines the core principles of Corporate Finance, focusing on the aims and objectives of shareholders and the conflicts that can arise both between shareholders themselves and between shareholders and management (such as CEOs and CFOs). It explores Stock Market Efficiency and the Efficient Market Hypothesis, alongside the concept of shareholder wealth maximisation and how it is achieved. The module also covers company valuation techniques based on income and assets, including dividends, price–earnings ratios, and cash flows, as well as the cost of equity and debt financing through models such as the Dividend Valuation Model, Capital Asset Pricing Model, and the Weighted Average Cost of Capital.
In addition, the module considers capital structure decisions and the balance between equity and debt financing, taking into account the risks faced by shareholders and finance providers such as banks. It examines sources of short-term and long-term finance, capital investment appraisal techniques that incorporate risk and taxation, and the management of foreign currency risk arising from exchange rate fluctuations. Finally, the module analyses dividend policy decisions and their impact on both the firm and shareholder value.