Current Issues in Finance (in English)

llsms2108  2020-2021  Louvain-la-Neuve

Current Issues in Finance (in English)
Due to the COVID-19 crisis, the information below is subject to change, in particular that concerning the teaching mode (presential, distance or in a comodal or hybrid format).
5 credits
30.0 h
Q1
Teacher(s)
Language
English
Main themes
The objective is to provide students with a clear understanding of what today s management of a firm in a globalized trade and capital markets environment is about i.e.: -identify treasury and finance matters/risks associated with doing business in an international environment -understand the extent to which the business can be affected treasury and finance matters/risks -present and discuss financial and banking products/techniques in order to manage international risks and optimize treasury and finance decisions -understand the objectives and approach of Chief Financial Officers, Group Treasurers, Heads of M&A/Strategy, Investors relations, Corporate Bankers, Investment Bankers, Traders and Risk managers when dealing with the reality of doing business on a globalized world
Aims

At the end of this learning unit, the student is able to :

1

Having regard to the LO of the programme X, this activity contributes to the development and acquisition of the following LO:

  • 1. Corporate citizenship 1.1. ¿Demonstrate independent reasoning, look critically ¿ 1.2.Decide and act by incorporating ethical and humanistic values ,¿ 1.3. Decide and act responsibly ¿ 2. Knowledge and reasoning 2.1. Master the core knowledge of each area of management. 2.2. Master highly specific knowledge ¿ 2.3. Articulate the acquired knowledge from different areas 2.4. Activate and apply the acquired knowledge ¿ 2.5. Contribute to the development and advancement of the man- agement field. 3. A scientific and systematif approach 3.1. Conduct a clear, structured, analytical reasoning ¿ 3.2. Collect, select and analyze relevant information ¿ 3.3.Consider problems using a systemic and holistic approach ¿ 3.5.Produce, through analysis and diagnosis, implementable solutions¿ 5. Work effectively in an international and multicultural environment 5.1.Understand the inner workings of an organization ¿ 5.2.Position ... the functioning of an organization, in its ...socio-economic dimensions¿ 5.3.Understand and establish their own role and scope for action ¿ 6. Teamwork and leadership 6.1. Work in a team...  8. Communication and interpersonal skills 8.1. Express a clear and structured message¿ 9. Personal and professional development 9.1. Independent self-starter ¿
 

The contribution of this Teaching Unit to the development and command of the skills and learning outcomes of the programme(s) can be accessed at the end of this sheet, in the section entitled “Programmes/courses offering this Teaching Unit”.
Content
For many years, most companies have been dealing with the challenge of having to grow their business on an international basis through export sales (international trade) or direct foreign investments (subsidiaries, JVs, etc). In the last decade, this strategy has become even more important as the world economy has become a true global market place for consumer and industrial goods as well as financial products and services.
In the course Current Issues in Finance, we mix theory, examples and practical case studies to truly understand what to do when confronted with difficult financial decisions at the corporate level. The course is split in two parts:
  1. Behavioral finance
By the end of the part on behavioral finance, students should be able to assess the impact of psychology on individual choice behavior when making financial decisions, and the subsequent implications for investment finance and corporate finance. Behavioral Finance has successfully addressed several observed anomalies, that is, empirical facts that cannot be explained using traditional Finance theories. The lectures give an introduction to Behavioral Finance starting with a brief overview of the classical paradigms for decision making under risk (expect utility theory) and the implications for portfolio selection and asset pricing.
  1. Stock market efficiency and anomalies
In this component, we address important questions related to market efficiency. We first discuss the definition of market efficiency. We then investigate in detail various market anomalies (January/December effects, Friday effect, post earnings announcement drift etc.) and discuss some psychological biases and limits of real economic agents (investors, managers, analysts,…) that might generate those anomalies.
The course provides the student with practical tools that can be used to fulfill the tasks of a manager. These tasks include (i) financing (funding, financial investments), (ii), risk management (especially hedging, that is, risk reduction), and (iii) help in decision making by offering valuation of commercial or investment proposals.
 At the end of the course, the student should be able to:
  • understand the current challenges in international markets and their implications for managers, investors and other stakeholders.
  • understand the challenges dealt with in a context of M&As or the implications of tax aggressiveness in major corporations.
  • understand the main stock market inefficiencies and the related strategies adopted by managers to circumvent them (e.g., the post-earnings announcement drift).
  • develop a critical opinion on current financial issues.
Content
Session 1: Introduction to behavioral finance
Session 2: Dividend policy
Session 3: CEO compensation and agency issues
Session 4: Mergers and Acquisitions & Behavioral Finance
Session 5: Financial analysts, the transmission of information & the stock market
Session 6: Tax aggressiveness – Uncovering the under-sheltering puzzle – Corporate practices, trends and the missing pieces
Session 7: Earnings management as a pervasive strategic tool
Session 8: Stock market efficiency – Introduction, definitions and some anomalies
Session 9: Textual analysis – The power of words in finance
Teaching methods

Due to the COVID-19 crisis, the information in this section is particularly likely to change.

The method of this course combines theory and real business life experience:
  1. The presentation of theoretical background with references to the existing literature.
  2. Presentation of real-life examples through a case study leading to a class discussion.
  3. Case study on which students will work on their own.
  4. The course also benefits from the intervention of external professionals.
The course is taught on the campus and will be livestreamed on the Teams platform. A recording of the conversation will be provided on Moodle.
Evaluation methods

Due to the COVID-19 crisis, the information in this section is particularly likely to change.

  • Oral: Yes (TBD)
  • Written: Yes (TBD)
  • Unavailability or comments: Written or oral examination according to the number of students. To be discussed as the end of the semester approaches.
The (oral or written) exam will be worth 60% of the grade. Students will also work on a case-study of their choice. The report should be five page long and will be written in groups. Sessions will be organized during the course to discuss the report. The analysis of the case study (shortly defended during the oral exam, if an oral exam) counts for 40% of the grade. If an oral exam takes place (online or presential, depending on the situation), 50% of the grade for the homework will be related to the oral defense. If not, the end report will be worth the full 40% of the final grade.
Bibliography
Slides
Research papers
Videos
Bekaert and Hodrick, International Financial Management, 2018, Cambridge University Press
  • Selected chapters
  • Available in the library
Sercu, P., International Finance: Theory into Practice, 2009, Princeton University Press
  • Selected chapters
  • Available in the library
Faculty or entity


Programmes / formations proposant cette unité d'enseignement (UE)

Title of the programme
Sigle
Credits
Prerequisites
Aims
Master [120] in Management

Master [120] in Management

Master [60] in Management