Corporate Finance2014-1 (公司金融课件).ppt

CorporateFinanceLecture1Fundamentals Dr OuyangHongbingDepartmentofFinanceSchoolofEconomicsHuazhongUniversityofScienceandTechnologySpring 2014 WhatisCorporateFinance CorporateFinanceaddressesthefollowingthreequestions Whatlong terminvestmentsshouldthefirmengagein Howcanthefirmraisethemoneyfortherequiredinvestments Howmuchshort termcashflowdoesacompanyneedtopayitsbills TheBalance SheetModeloftheFirm TheBalance SheetModeloftheFirm CurrentAssets FixedAssets1Tangible2Intangible Shareholders Equity CurrentLiabilities Long TermDebt Whatlong terminvestmentsshouldthefirmengagein TheCapitalBudgetingDecision TheBalance SheetModeloftheFirm Howcanthefirmraisethemoneyfortherequiredinvestments TheCapitalStructureDecision CurrentAssets FixedAssets1Tangible2Intangible Shareholders Equity CurrentLiabilities Long TermDebt TheBalance SheetModeloftheFirm Howmuchshort termcashflowdoesacompanyneedtopayitsbills TheNetWorkingCapitalInvestmentDecision NetWorkingCapital Shareholders Equity CurrentLiabilities Long TermDebt CurrentAssets FixedAssets1Tangible2Intangible CapitalStructure Thevalueofthefirmcanbethoughtofasapie Thegoalofthemanageristoincreasethesizeofthepie TheCapitalStructuredecisioncanbeviewedashowbesttosliceupathepie Ifhowyouslicethepieaffectsthesizeofthepie thenthecapitalstructuredecisionmatters 50 Debt 50 Equity HypotheticalOrganizationChart TheFinancialManager Tocreatevalue thefinancialmanagershould Trytomakesmartinvestmentdecisions Trytomakesmartfinancingdecisions Cashflowfromfirm C TheFirmandtheFinancialMarkets Taxes D Firmissuessecurities A Retainedcashflows F Investsinassets B Dividendsanddebtpayments E CurrentassetsFixedassets Short termdebtLong termdebtEquityshares Ultimately thefirmmustbeacashgeneratingactivity Thecashflowsfromthefirmmustexceedthecashflowsfromthefinancialmarkets 1 2CorporateSecuritiesasContingentClaimsonTotalFirmValue Thebasicfeatureofadebtisthatitisapromisebytheborrowingfirmtorepayafixeddollaramountofbyacertaindate Theshareholder sclaimonfirmvalueistheresidualamountthatremainsafterthedebtholdersarepaid Ifthevalueofthefirmislessthantheamountpromisedtothedebtholders theshareholdersgetnothing DebtandEquityasContingentClaims F Debtholdersarepromised F Ifthevalueofthefirmislessthan F theygetthewhateverthefirmifworth Ifthevalueofthefirmismorethan F debtholdersgetamaximumof F Ifthevalueofthefirmislessthan F shareholdersgetnothing Ifthevalueofthefirmismorethan F shareholdersgeteverythingabove F Algebraically thebondholder sclaimis Min F X Algebraically theshareholder sclaimis Max 0 X F CombinedPayoffstoDebtandEquity F Debtholdersarepromised F Ifthevalueofthefirmislessthan F theshareholder sclaimis Max 0 X F 0andthedebtholder sclaimisMin F X X Thesumoftheseis X Ifthevalueofthefirmismorethan F theshareholder sclaimis Max 0 X F X Fandthedebtholder sclaimis Min F X F Thesumoftheseis X 1 3TheCorporateFirm Thecorporateformofbusinessisthestandardmethodforsolvingtheproblemsencounteredinraisinglargeamountsofcash However businessescantakeotherforms FormsofBusinessOrganization TheSoleProprietorshipThePartnershipGeneralPartnershipLimitedPartnershipTheCorporationAdvantagesandDisadvantagesLiquidityandMarketabilityofOwnershipControlLiabilityContinuityofExistenceTaxConsiderations AComparisonofPartnershipandCorporations 1 4GoalsoftheCorporateFirm Thetraditionalansweristhatthemanagersofthecorporationareobligedtomakeeffortstomaximizeshareholderwealth TheSet of ContractsPerspective Thefirmcanbeviewedasasetofcontracts Oneofthesecontractsisbetweenshareholdersandmanagers Themanagerswillusuallyactintheshareholders interests Theshareholderscandevisecontractsthataligntheincentivesofthemanagerswiththegoalsoftheshareholders Theshareholderscanmonitorthemanagersbehavior Thiscontractingandmonitoringiscostly ManagerialGoals ManagerialgoalsmaybedifferentfromshareholdergoalsExpensiveperquisitesSurvivalIndependenceIncreasedgrowthandsize corporatewealth arenotnecessarilythesamethingasincreasedshareholderwealth SeparationofOwnershipandControl BoardofDirectors Management Assets Debt Equity Shareholders Debtholders DoShareholdersControlManagerialBehavior Shareholdersvotefortheboardofdirectors whointurnhirethemanagementteam Contractscanbecarefullyconstructedtobeincentivecompatible Thereisamarketformanagerialtalent thismayprovidemarketdisciplinetothemanagers theycanbereplaced Ifthemanagersfailtomaximizeshareprice theymaybereplacedinahostiletakeover 1 5FinancialMarkets Moneymarketvs CapitalmarketPrimarymarketvs SecondarymarketAuctionmarketvs Dealermarket FinancialMarkets PrimaryMarketWhenacorporationissuessecurities cashflowsfrominvestorstothefirm UsuallyanunderwriterisinvolvedIssuermaychoosepublicofferingorprivateplacementSecondaryMarketsInvolvethesaleof used securitiesfromoneinvestortoanother Securitiesmaybeexchangetradedortradeover the counterinadealermarket FinancialMarkets Firms Investors Sue Bob FinancialMarkets DealermarketNophysicalmarket DealerscommunicatewitheachotherbycomputersortelephonesInvestorscannegotiatewithdealersSeveraldealersmakemarketforonesecurityAuctionmarketTradingtakesplaceatasinglesiteontheflooroftheexchange apost SpecialistsareattheheartofthemarketAlltradinginformationaredisclosedtothepublicimmediately Courseproject Subject CasestudiesofcorporatefinancialmanagementTopics strategicmanagementinvestmentdecisionfinancialstatementsanalysisfinancialdistresscapitalstructurecorporategovernanceinitialpublicoffering