FINANCE RESEARCH II

COMM - 627

Winter 2022

Instructor: Jing Chen

E-mail: chenj@unbc.ca

Office : 10-4534

Office hour: by appointment

Class time:

Class location:

Zoom: https://unbc.zoom.us/j/9105910199

COURSE DESCRIPTION

We will study the theoretical foundation of corporate finance.

COURSE LEARNING OBJECTIVES

Upon successful completion of the course, students will:

1) Know the history of the development of the theory of corporate finance

2) Understand the problem in the foundation of corporate finance theory

3) Learn the further development on the new foundation of corporate finance theory

READING MATERIALS

Reading list of this course:

• Modigliani, F. and Miller, M.H., 1958. The cost of capital, corporation finance and the theory of investment. The American economic review, 48(3), pp.261-297.

• Miles, J., & Ezzell, J. (1980). The weighted average cost of capital, perfect capital markets, and project life: A clarification. Journal of Financial and Quantitative Analysis, 15, 719–730

• Miller, R. A.(2009). The weighted average cost of capital is not quite right. Quarterly Review of Economics and Finance, 49, 128– 138

• Keef, S.P., Khaled, M.S. and Roush, M.L., 2012. A note resolving the debate on “The weighted average cost of capital is not quite right”. The Quarterly Review of Economics and Finance, 52(4), pp.438-442.

• Lorenz, D., Kruschwitz, L. and Löffler, A., 2016. Are costs of capital necessarily constant over time and across states of nature?: Some remarks on the debate on ‘WACC is not quite right’. The Quarterly Review of Economics and Finance, 60, pp.81-85.

• Chen, J. 2021, On the theoretical foundation of corporate finance, Structural Change and Economic Dynamics, Volume 59, December, 256-262

COURSE ASSIGNMENTS AND EVALUATION

Students will submit a research paper on corporate finance at the end of the term. Alternatively, students can provide a critique of each paper covered in the course. Evaluation will be based on the term paper or critiques of the papers.