This course provides an overview of modern corporate finance. The growth of corporate finance has been spectacular since Modigliani and Miller developed the capital-structure irrelevance proposition in 1958. After reviewing Modigliani and Miller (1958), we study the optimal capital structure under the presence of various frictions in which capital structure affects firm value. We cover the static trade-off theory, agency problem, principal-agent model, mechanism design approach of capital structure, and incomplete contracts. In addition, we cover the literature on investment and banking. Lastly, we cover modern empirical methods to test various hypotheses in corporate finance. In particular, we focus on quasi-experimental and structural approaches. 

Learning Outcomes

Upon successful completion, students will have the knowledge and skills to:

1. Discuss the main theoretical and empirical methods of modern corporate finance;
2. Critically review previous literature in corporate finance;
3. Derive testable hypotheses in corporate finance and methods to test them; and
4. Communicate in detail various topics on modern corporate finance to a diverse audience

Research-Led Teaching

This course offers a rigorous survey of modern corporate-finance theory. Since Modigliani and Miller introduced the capital-structure irrelevance proposition in 1958, the field has expanded dramatically; we now draw on insights from information economics, contract theory, and the theory of the firm. The syllabus focuses on the core building blocks of contemporary research: agency conflicts arising from moral hazard and asymmetric information, mechanisms for monitoring and governance, and the allocation of control rights. Through these topics, we explore how financing choices, ownership structures, and contractual design shape corporate value and actions. By the end of the course, students will be able to formulate and analyze theoretical models, and to leverage those models to generate testable predictions that guide empirical work.

Required Resources

I will provide students with all presentation materials required for this course.

Recommended Resources

The recommended text is Jean Tirole, 2006, “The Theory of Corporate Finance.” Princeton University Press, Princeton, New Jersey. It is available in the Chifley library.

Staff Feedback

Students will be given feedback in the following forms in this course:

• Written comments
• Verbal comments

Student Feedback

ANU is committed to the demonstration of educational excellence and regularly seeks feedback from students. Students are encouraged to offer feedback directly to their Course Convener or through their College and Course representatives (if applicable). The feedback given in these surveys is anonymous and provides the Colleges, University Education Committee and Academic Board with opportunities to recognise excellent teaching, and opportunities for improvement. The Surveys and Evaluation website provides more information on student surveys at ANU and reports on the feedback provided on ANU courses.

Class Schedule

Week/Session	Summary of Activities	Assessment
1	Corporate Institution and Stylised Facts
2	Moral Hazard (I)
3	Moral Hazard (II)
4	Asymmetric Information (I)	Assignment 1 due
5	Asymmetric Information (II)
6	Monitoring (I)
7	Monitoring (II)	Assignment 2 due
8	Control rights (I)
9	Control rights (II)
10	Takeovers (I)	Assignment 3 due
11	Takeovers (II)
12	Extension Topics

Tutorial Registration

There are no tutorials for this course.

Assessment Summary

Assessment task	Value	Due Date	Return of assessment	Learning Outcomes
Assignments	30 %	15/08/2025	22/08/2025	1,2,3,4
Presentations	30 %	04/08/2025	08/08/2025	1,2,3,4
Final project	40 %	31/10/2025	27/11/2025	1,2,3,4

* If the Due Date and Return of Assessment date are blank, see the Assessment Tab for specific Assessment Task details

Policies

ANU has educational policies, procedures and guidelines, which are designed to ensure that staff and students are aware of the University’s academic standards, and implement them. Students are expected to have read the Academic Misconduct Rule before the commencement of their course. Other key policies and guidelines include:

• Student Assessment (Coursework) Policy and Procedure
• Special Assessment Consideration Policy and General Information
• Student Surveys and Evaluations
• Deferred Examinations
• Student Complaint Resolution Policy and Procedure

Assessment Requirements

The ANU is using Turnitin to enhance student citation and referencing techniques, and to assess assignment submissions as a component of the University's approach to managing Academic Integrity. For additional information regarding Turnitin please visit the ANU Online website Students may choose not to submit assessment items through Turnitin. In this instance you will be required to submit, alongside the assessment item itself, hard copies of all references included in the assessment item.

Moderation of Assessment

Marks that are allocated during Semester are to be considered provisional until formalised by the College examiners meeting at the end of each Semester. If appropriate, some moderation of marks might be applied prior to final results being released.

Participation

Course content delivery will take the form of weekly on-campus lectures (recorded and available via echo360). Weekly consultations with the lecturer will be conducted over Zoom.

Examination(s)

There is no final exam in this course.

Assessment Task 1

Assignments

The course includes three individual, take-home assignments, each contributing 10% to the overall grade (30% in total). The assignments are designed to reinforce and extend the concepts presented in the lectures. Note that 2025-08-15 is the due date of the first assignment. The due dates of the other two assignments will be 2025-09-19 and 2025-10-10. Each assignment will be made available two weeks before its due date. The completed work must be submitted via Turnitin by 4.59 p.m. on the due date.

Assessment Task 2

Presentations

From Week 3 through Week 12, papers related to the topics covered will be assigned each week to students for presentation. The presentation order will be determined randomly, and the number of presentations per student will depend on class size. Each presentation lasts approximately 30 minutes and must include prepared slides. Papers are assigned one week in advance. Presentations will be evaluated on both the substance of the content and the clarity of the delivery. Students are required to identify the paper’s main contribution, explain it in non-technical terms, and respond to follow-up questions from the instructor or the audience. All presentations will be recorded. Note that the due date 2025-08-04 is the first day of Week 3; presentations will take place during regular class meetings each week from Week 3 through Week 12.

Assessment Task 3

Final project

The final project is an individual assignment requiring students to apply or extend research related to the material covered in class -- for example, by formulating and analysing a theoretical model and generating testable predictions to guide empirical work. Detailed guidelines will be distributed in Week 10. The written report must be electronically submitted to Canvas via Turnitin no later than 4.59 p.m. on the due date (2025-10-31).

Academic Integrity

Academic integrity is a core part of our culture as a community of scholars. At its heart, academic integrity is about behaving ethically. This means that all members of the community commit to honest and responsible scholarly practice and to upholding these values with respect and fairness. The Australian National University commits to embedding the values of academic integrity in our teaching and learning. We ensure that all members of our community understand how to engage in academic work in ways that are consistent with, and actively support academic integrity. The ANU expects staff and students to uphold high standards of academic integrity and act ethically and honestly, to ensure the quality and value of the qualification that you will graduate with. The University has policies and procedures in place to promote academic integrity and manage academic misconduct. Visit the following Academic honesty & plagiarism website for more information about academic integrity and what the ANU considers academic misconduct. The ANU offers a number of services to assist students with their assignments, examinations, and other learning activities. The Academic Skills and Learning Centre offers a number of workshops and seminars that you may find useful for your studies.

Online Submission

You will be required to electronically sign a declaration as part of the submission of your assignment. Please keep a copy of the assignment for your records. Unless an exemption has been approved by the Associate Dean (Education) as submission must be through Turnitin.

Hardcopy Submission

For some forms of assessment (hand written assignments, art works, laboratory notes, etc.) hard copy submission is appropriate when approved by the Associate Dean (Education). Hard copy submissions must utilise the Assignment Cover Sheet. Please keep a copy of tasks completed for your records.

Late Submission

No submission of assessment tasks without an extension after the due date will be permitted. If an assessment task is not submitted by the due date, a mark of 0 will be awarded.

Referencing Requirements

Accepted academic practice for referencing sources that you use in presentations can be found via the links on the Wattle site, under the file named “ANU and College Policies, Program Information, Student Support Services and Assessment”. Alternatively, you can seek help through the Students Learning Development website.

Extensions and Penalties

Extensions and late submission of assessment pieces are covered by the Student Assessment (Coursework) Policy and Procedure The Course Convener may grant extensions for assessment pieces that are not examinations or take-home examinations. If you need an extension, you must request an extension in writing on or before the due date. If you have documented and appropriate medical evidence that demonstrates you were not able to request an extension on or before the due date, you may be able to request it after the due date.

Privacy Notice

The ANU has made a number of third party, online, databases available for students to use. Use of each online database is conditional on student end users first agreeing to the database licensor’s terms of service and/or privacy policy. Students should read these carefully. In some cases student end users will be required to register an account with the database licensor and submit personal information, including their: first name; last name; ANU email address; and other information. In cases where student end users are asked to submit ‘content’ to a database, such as an assignment or short answers, the database licensor may only use the student’s ‘content’ in accordance with the terms of service — including any (copyright) licence the student grants to the database licensor. Any personal information or content a student submits may be stored by the licensor, potentially offshore, and will be used to process the database service in accordance with the licensors terms of service and/or privacy policy. If any student chooses not to agree to the database licensor’s terms of service or privacy policy, the student will not be able to access and use the database. In these circumstances students should contact their lecturer to enquire about alternative arrangements that are available.

Distribution of grades policy

Academic Quality Assurance Committee monitors the performance of students, including attrition, further study and employment rates and grade distribution, and College reports on quality assurance processes for assessment activities, including alignment with national and international disciplinary and interdisciplinary standards, as well as qualification type learning outcomes. Since first semester 1994, ANU uses a grading scale for all courses. This grading scale is used by all academic areas of the University.

Support for students

The University offers students support through several different services. You may contact the services listed below directly or seek advice from your Course Convener, Student Administrators, or your College and Course representatives (if applicable).

• ANU Health, safety & wellbeing for medical services, counselling, mental health and spiritual support
• ANU Diversity and inclusion for students with a disability or ongoing or chronic illness
• ANU Dean of Students for confidential, impartial advice and help to resolve problems between students and the academic or administrative areas of the University
• ANU Academic Skills and Learning Centre supports you make your own decisions about how you learn and manage your workload.
• ANU Counselling Centre promotes, supports and enhances mental health and wellbeing within the University student community.
• ANUSA supports and represents undergraduate and ANU College students
• PARSA supports and represents postgraduate and research students