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,ShareholdersEquity,CurrentLiabilities,Long-TermDebt,Whatlong-terminvestmentsshouldthefirmengagein?,TheCapitalBudgetingDecision,TheBalance-SheetModeloftheFirm,Howcanthefirmraisethemoneyfortherequiredinvestments?,TheCapitalStructureDecision,CurrentAssets,FixedAssets1Tangible2Intangible,ShareholdersEquity,CurrentLiabilities,Long-TermDebt,TheBalance-SheetModeloftheFirm,Howmuchshort-termcashflowdoesacompanyneedtopayitsbills?,TheNetWorkingCapitalInvestmentDecision,NetWorkingCapital,ShareholdersEquity,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.Theshareholdersclaimonfirmvalueistheresidualamountthatremainsafterthedebtholdersarepaid.Ifthevalueofthefirmislessthantheamountpromisedtothedebtholders,theshareholdersgetnothing.,DebtandEquityasContingentClaims,$F,Debtholdersarepromised$F.,Ifthevalueofthefirmislessthan$F,theygetthewhateverthefirmifworth.,Ifthevalueofthefirmismorethan$F,debtholdersgetamaximumof$F.,Ifthevalueofthefirmislessthan$F,shareholdersgetnothing.,Ifthevalueofthefirmismorethan$F,shareholdersgeteverythingabove$F.,Algebraically,thebondholdersclaimis:Min$F,$X,Algebraically,theshareholdersclaimis:Max0,$X$F,CombinedPayoffstoDebtandEquity,$F,Debtholdersarepromised$F.,Ifthevalueofthefirmislessthan$F,theshareholdersclaimis:Max0,$X$F=$0andthedebtholdersclaimisMin$F,$X=$X.Thesumoftheseis=$X,Ifthevalueofthefirmismorethan$F,theshareholdersclaimis:Max0,$X$F=$X$Fandthedebtholdersclaimis:Min$F,$X=$F.Thesumoftheseis=$X,1.3TheCorporateFirm,Thecorporateformofbusinessisthestandardmethodforsolvingtheproblemsencounteredinraisinglargeamountsofcash.However,businessescantakeotherforms.,FormsofBusinessOrganization,TheSoleProprietorshipThePartnershipGeneralPartnershipLimitedPartnershipTheCorporationAdvantagesandDisadvantagesLiquidityandMarketabilityofOwnershipControlLiabilityContinuityofExistenceTaxConsiderations,AComparisonofPartnershipandCorporations,1.4GoalsoftheCorporateFirm,Thetraditionalansweristhatthemanagersofthecorporationareobligedtomakeeffortstomaximizeshareholderwealth.,TheSet-of-ContractsPerspective,Thefirmcanbeviewedasasetofcontracts.Oneofthesecontractsisbetweenshareholdersandmanagers.Themanagerswillusuallyactintheshareholdersinterests.Theshareholderscandevisecontractsthataligntheincentivesofthemanagerswiththegoalsoftheshareholders.Theshareholderscanmonitorthemanagersbehavior.Thiscontractingandmonitoringiscostly.,ManagerialGoals,ManagerialgoalsmaybedifferentfromshareholdergoalsExpensiveperquisitesSurvivalIndependenceIncreasedgrowthandsize(corporatewealth)arenotnecessarilythesamethingasincreasedshareholderwealth.,SeparationofOwnershipandControl,BoardofDirectors,Management,Assets,Debt,Equity,Shareholders,Debtholders,DoShareholdersControlManagerialBehavior?,Shareholdersvotefortheboardofdirectors,whointurnhirethemanagementteam.Contractscanbecarefullyconstructedtobeincentivecompatible.Thereisamarketformanagerialtalentthismayprovidemarketdisciplinetothemanagerstheycanbereplaced.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：strategicmanagementinvestmentdecisionfinancialstatementsanalysisfinancialdistresscapitalstructurecorporategovernanceinitialpublicofferingandsea