INTERNATIONAL CORPORATE FINANCE
Prof. Art Durnev
www.artdurnev.com
artdurneviowa@gmail.com
Course materials will be distributed electronically
COURSE OBJECTIVES
International Corporate Finance is designed to introduce students to practical applications of the global financial environment. The main objective of this class is to prepare you for valuing an international project, assessing the risks and returns of the project, and developing tools to mitigate the risks. We will cover capital budgeting issues in the international setting and methods to mitigate various risks. We will emphasize financial issues of the public-private partnership projects and governance regulations and procedures in different countries. The course is tailored to students seeking careers in the government sector, international banking and investment or with finance and strategy departments of corporations operating in the world markets.
GRADING
4 Group Cases (10% for write-up + 5% for discussion, each): 60% Take-home final exam (individual, due three weeks after the course ends): 30% Participation: 10%
CASES
Cases are an integral part of this course and constitute 60% of your grade. The cases are to be done in groups of up to 5 people and submitted electronically to artdurneviowa@gmail.com. All group members are expected to contribute to the case analysis. You will be required to evaluate your teammates’ contribution. A case write-up has to contain an executive summary, the key questions addressed, and a conclusion. The case write-up must be no more than 4 pages long with the font size of 11 and line spacing of 1.5. All tables and figures must be properly referenced in the text. Note that case studies rarely have one correct answer. Cases 1, 2, and 4 will be discussed in class. You have to be ready for case discussions, which will be a part of your grade. The cases should be submitted electronically. Case 3 is due two weeks after the course ends.
PRACTICE PROBLEMS
For every session, there is a set of practice problems, most of which will be solved during class.
CLASS PARTICIPATION
You have to actively participate in class discussions to earn class participation grade which constitutes 10% of your final grade. If you are frequently absent from class, your class participation grade will be reduced.
INFORMTION ABOUT PROFESSOR
I am Assistant Professor of Finance at the Henry B. Tippie College of Business at the University of Iowa (USA) and Desautels Faculty of Management at McGill University (Montreal, Canada). My research interests are primarily focused on corporate finance, governance, and financial markets development. I was also a faculty member in the University of Miami (Florida, USA). In 2009, I was a visiting professor at SKOLKOVO Moscow School of Management. My work involves empirical investigations of firm governance structures, disclosure policies, insider trading regulation and idiosyncratic volatility. I have published this work in top academic journals, such as the Journal of Finance, Review of Financial Studies, Journal of Accounting Research, Journal of International Business Studies, Michigan Law Review, and Economics of Transition. I taught classes for undergraduates, MBAs, PhDs, and executives in the U.S., Canada, Japan, and Russia. I presented his work at over 100 seminars and conferences worldwide. I earned Ph.D. in Finance from the University of Michigan Business School and MA in Economics from the New Economic School. I have written articles for the Canadian and international newspapers and given numerous interviews to the national TV and radio programs in the U.S., Canada, Brazil, and Russia.
SUBJECTS
* the dates are preliminarySESSION 1. REVIEW OF EXCHANGE RATE TRANSACTIONS AND INTERNATIONAL
PARITIES (May 10, Th)
Slides (S1.ppt)
Basics of exchange rates handout (H1A.doc) Practice problems 1 (P1.doc)
SESSION 2. CAPITAL BUDGETING ISSUES IN FAST-GROWING ECONOMIES (May 14, M)
Slides (S2_1.ppt and S2_2.ppt) Practice problems 2 (P2.doc)
Excel exercise: Capital budgeting in local and foreign currencies (B2.xls) Case 1: Globalizing the cost of capital and capital budgeting at AES (AES.pdf). Case 1 handout (AES.doc)
Additional slides (review of investment rules and capital budgeting, not required, S2_A1.ppt and S2_A2.ppt)
SESSION 3. HEDGING FOREIGN CURRENCY RISK: OPTIONS (May 16, W)
Slides (S3.ppt)
Case 2: Hedging currency risks at AIFS (AIFS.pdf). Case 2 handout (AIFS.doc, AIFS_E.doc, and AIFS.xls) Practice problems 3 (P3.doc)
SESSION 4. HEDGING FOREIGN CURRENCY RISK: SWAPS (May 21, M)
Case 1 is due, in-class Case 1 discussion Slides (S4.ppt)
Example (E4.doc)
Practice problems 4 (P4.doc)
SESSION 5. HEDGING CURRENCY RISKS IN INTERNATIONAL PORTFOLIOS (May 23, W)
Slides (S5.doc)
Practice problems (P5.doc)
Case 3: Hedging currency risks in international portfolios (portfolios.doc, portfolios_ex.xls), due two weeks after the course ends
SESSION 6. GLOBAL CORPORATE GOVERNANCE ISSUES (May 28, M)
Case 2 is due, in-class Case 2 discussion Slides (S6_1.ppt, S6_2.ppt, S6_3.ppt) Practice problems 6 (P6.doc)
Article to read: Explaining Differences in the Quality of Governance Among Companies: Evidence from Emerging Markets (article6_1.pdf)
SESSION 7. POLITICAL RISK AND PRIVATE-PUBLIC PARTNERSHIP (May 30, W) Case 4 is due, in-class Case 4 discussion
Slides (S7.ppt)
Case 4: Dhārāvi: Developing India’s largest slum (Dharavi.pdf) Case 4 handout (Dharavi.doc)
TWO WEEKS AFTER THE CLASS Case 3 is due (June 13)
THREE WEEKS AFTER THE CLASS
Student Profile MiF: International Corporate Finance
Name ______________________________________________________________ Email ______________________________________________________________ Previous Finance Courses ______________________________________________ ___________________________________________________________________ ___________________________________________________________________ Professional Experience _______________________________________________ Any special interests or other background info you'd like me to know ___________ ___________________________________________________________________
