高级公司理财1

ADVANCEFINANCIALMANAGEMENT Dr R KabirDepartmentofFinance TilburgUniversity TheNetherlandsTeaching CorporateFinance FinancialManagementEmpiricalCorporateFinanceSeminarinFinanceResearch Corporatefinance Corporategovernance FinancialmarketregulationInternetaddress www tilburguniversity nl WhatisFinance FinanceisusuallyconcernedwiththewayinwhichfundsforafirmareraisedandinvestedFinanceconsistsoffourinterrelatedareas CorporateFinance FinancialManagement Investments AssetPricing FinancialMarkets MoneyandCapitalMarkets Banking Whatis Corporate FinancialManagement FinancialManagementprimarilyaddressesthefollowingthreequestions 1 Whatlong terminvestmentsshouldthefirmengagein 2 Howcanthefirmraisethemoneyfortheinvestments 3 Howmuchshort termcashflowdoesacompanyneed Wetaketheperspectiveofafinancemanagerofafirmtounderstandtheseissues RoleoftheFinanceManager Standsbetweenthefirm soperationsandthefinancialmarketsInvolvedwiththeflowofcashfrominvestorstothefirmandbacktotheinvestorsagainInvolvedwiththeuseofcashtoinvestinfirm srealassets RoleoftheFinancialManager Financial manager Firm s operations Financial markets Differentformsoffirms Firmsareusuallyclassifiedaccordingtotheirformofownership SoleproprietorshipPartnershipCorporation TypicalFeaturesofaCorporation BoardofDirectors Management Assets Debt Equity Shareholders Debtholders Advantagesanddisadvantagesofcorporations Advantages SeparatelegalentityEasytransferofownershipCorporationhasunlimitedlifeShareholdershavelimitedliabilityDisadvantages Doubletaxation corporateandpersonalincometaxSeparationofownershipandcontrolleadstoagencyproblemsbetweenmanagersandshareholders Objectives Goalsofabusiness PopularobjectivesMaximisationof accounting profitMaximisationofsalesMaximisationofreturnoninvestmentSurvivalStabilityGrowth Whynotprofitmaximization Thereareproblemsintheuseofaccountingprofit earnings IgnorestimevalueofmoneyIgnoresriskCalculatedonthebasisofaccountingrules CreativeAccounting Ignoresinvestment growthopportunitiesofafirm Objective GoalofaFinanceManager MaximizeMarketValue WealthfortheOwners Shareholders Marketvalueisthevaluethatshareholdersplaceontheirsecuritiestoday Itdependsonthefuturecashflowsthattheyexpecttoreceive Marketvalueisforwardlooking WhyfocusonMarketValue ThisobjectivetakesintoaccountthevaluablefeaturesofallotherobjectivesItmaynotbeaperfectdescriptionofwhatfirmsseektoachieveBut itisprobablythemostobjectivemeasureMarketvalueofsharesiscalculatedasthesharepricemultipliedbythenumberofoutstandingshares Whywedonotfocusonbookvalue BookValueisthevalueofthefirmaccordingtothebalancesheetBookvalueofassetssuffersfromsameproblemslikeearningsBookvalueofassetsfailstoconsiderinflation technologicalchangeandorganizationalcapitalBookvalueignoresintangibleassets futureliabilities off balancesheet Bookvalueisnotaforwardlookingmeasure SourcesofFinancing Short termandLong termsourcesHowmuchshort termcashflowdoesacompanyneedtopayitsbills Howmuchlong termcashflowdoesacompanyneedtopayforitsinvestments InternalandExternalsourcesHowmuchoftheearningsshouldberetained HowmuchshouldbefinancedbyEquity Debt Bankdebt Bonds Warrants Convertibles etc Waysfirmscanissueshares InitialPublicOffering IPO Itisthefirstpublicequityissuemadebyacompany Publicfirms thosealreadylistedonastockexchange canissuesharesindifferentways PrivateplacingPublicissueGeneralCashOfferRightsOffering 1 DividendValuationModel Sharepriceequalsthepresentvalueofallexpectedfuturedividends Valuationofacommonshare Ifweexpectnogrowthofdividends andplantoholdtheshareindefinitely wewillthenvaluetheshareasfollows Po Div rIfdividendsareexpectedtogrowataconstantrate wewillthenvaluetheshareasfollows Po Div1 r g ThisformulaispopularlyknownasGordonGrowthModel Valuationofacommonshare Valuationofacommonshare AnExample CurrentforecastsareforXYZCompanytopaydividendsof 3 3 24 and 3 50overthenextthreeyears respectively Attheendofthreeyearsyouanticipatesellingyourstockatapriceof 94 48 Whatisthepriceofthestockgivena12 expectedreturn Valuationofacommonshare Valuationofacommonshare Ifweforecastnogrowthofdividendof 3 andplantoholdthestockindefinitely wewillthenvaluethestockasaPERPETUITY Assumesallearningsarepaidtoshareholders 2 ComparableFirmValuationModel Manyrelateprice earnings P E ratioofcomparablefirmstodeterminethecurrentshareprice Po ExpectedEPSxP EAnalystsalsorelatevariablesotherthanP EratiotosharepricePrice CashFlowRatioPrice SalesRatioPrice Book or MarkettoBook Ratio Valuationofacommonshare Howtofindcomparablefirms UsefirmsoperatinginthesameindustryWhatconstitutesanindustry Thereisstillpotentialformisusewithcomparablefirms Valuationofacommonshare 3 DiscountedCashFlowModel CurrentsharepriceisderivedfromthevalueofabusinesswhichisusuallycomputedasthediscountedvalueoffutureFreeCashFlowsofthefirm Inpractice peopleusethefollowingapproach PV freecashflowsforacertainnumberofyears PV horizonvalue Valuationofacommonshare Example Giventhefollowingfreecashflows calculatethePVofneartermcashflows PV horizonvalue andthetotalvalueofthefirm r 10 andg 6 Example Example EvaluatingtheDiscountedCashFlowapproachtovaluation StrengthsRecognizesthatvalueiscreatedwheninvestedcapitalearnsreturnsaboveitsopportunitycostsAttemptstovaluedirectlythebenefitsthataccruetoinvestorsCanbeappliedtoalltypesoffirmWeaknessesForecastingfuturecashflowsisnoteasyEstimatingcostofcapitalforaprivatefirmisnoteasy FreeCashFlowapproachtovaluation Whenvaluingabusiness FreeCashFlows FCF shouldbethetheoreticalbasisforallPresentValue PV calculations FCFisamoreaccuratemeasurementofPVthaneitherDividendorEarningsPerShare FrameworkforValuation Copeland KollerandMurrin StepsinvaluationForecastfreecashflowsAfter taxoperatingearnings non cashexpenses depreciation investmentsEstimatecostofcapitalCostofequityandcostofdebtTargetweights basedonmarketvalue EstimatecontinuingvalueCalculateandInterpretresults CaseStudy KPN FollowDCFapproachonlyConsiderforecastassumptions long termprospects Forecastcashflows1993 1998After taxoperatingearnings non cashexpenses depreciation investmentsEstimateweightedaveragecostofcapitalCostofequity CAPM andcostofdebt 7 1 Targetweights basedonmarketvalue Estimatecontinuingvalue 1999uptoinfinity CalculatevaluepershareofKPN InitialPublicOffering IPO BasicfeaturesGoingpublicinvolvesthesharesofacompanygettingquotation listing onastockexchange AllIPOsarecashoffers Twowayssharesaremadeavailabletopublic Old shareholdersaresellingout secondaryofferingCreationofnewshares increaseinsharecapital primaryoffering WhyIPO GoPublic Toraiseadditionalcapital forfurtherexpansionlikenewinvestments acquisitions repaydebt Toallowtheownerstoselltheirstakes diversification risksharingbenefits ToincreaseliquiditybenefitstoshareholdersToescapecontrol monitoringofbanksToenhancecompany svisibility statusandprestigeToprovideincentivecompensationschemeformanagers employees BenefitsandCostsofIPO BenefitsAccesstonewsourcesoffinanceMoreliquidityforexistingshareholdersEnhancedcompanyimageandemployeemotivationCostsDirectcost investmentbankfees legal administrative Indirectcost obligationtoprovideinformation OngoingcostAgencycostDangeroflossofcontrol ProfileofanIPOcandidate Old shareholderswishtocashin Old shareholderswishtokeepcontrol Old shareholderswantaninternalrestructuringofcurrentshareholderstructureCompanyneedsadditionalequityDifficultiestofindasuitablefinancialandindustrialpartner Mechanicsofgoingpublic Thechoiceofamarket stockexchange Producingaprospectus Registration Marketing undertakeroadshows Pricing FixedorVariable Allocation FairorDiscriminatory Offer Flotationmethod PrivateorPublic Offer Flotation Introductionmethods PrivatePlacement customers usuallyinstitutionalinvestors areinvitedtoparticipateinanissue FixedPriceMethod offerforsaleatfixedpriceIssuingfirmpre announcespriceandnumberofsharessoldIndividualinvestorsspecifynumberofsharestheywantIfoversubscription rationingtakesplaceIfundersubscription partofsharesremainsunsoldOne stage Two stage Bookbuilding fixedprice PriceDrivenMethod Auction Tendermethod offerforsalebytenderPublicisinvitedtobidatapriceoverastatedminimumpriceTheissuingpriceisdeterminedatalevelwheredemandequalssupply principle practice Offer Flotation Introductionmethods Roleofinvestmentbanker Investmentbankingservices syndication book building allocation etc arespecifiedintheunderwritingcontract Firmcommitment clauseInvestmentbankercommitstopurchaseallunsoldsharesatpredeterminedprice belowpre announcedofferprice Bestefforts clauseInvestmentbankeronlytakescareofthepracticalrealisationoftheoffer e g collectandprocessthebidsoftheinvestors EmpiricalIssues 1 WhichfactorsaffectthelikelihoodofanIPO Whendofirmsgopublic IsIPOvolumedeterminedbygrowthopportunitiesand orstockmarketvaluation Dofirmshavetimingability EmpiricalIssues 2 InitialunderpricingHowtomeasureit Whataretheexplanations Long rununderpricingHowtomeasureit Whataretheexplanations Long rununderperformanceHowtomeasureit Whataretheexplanations Read Styliz