Current Issues in Finance

Teacher(s)

Thewissen James;

Language

English

Main themes

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.

Learning outcomes

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: 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

This course explores contemporary debates and challenges in corporate finance and capital markets by combining theoretical insights with recent research and case studies. Topics covered include the foundations of behavioral finance and its implications for financial decision-making, the determinants and consequences of dividend policy, and the design of CEO compensation in light of agency issues. The course also examines mergers and acquisitions through both traditional and behavioral lenses, the role of financial analysts in transmitting information to the stock market, and the puzzle of corporate tax aggressiveness. Further, it addresses earnings management as a pervasive strategic tool, evaluates stock market efficiency and documented anomalies, and concludes with an introduction to textual analysis, highlighting the growing importance of language and disclosure in finance.
Beyond its thematic content, the course also serves as an introduction to the Master thesis process. Students will be guided in identifying and refining research questions, selecting topics aligned with current debates in finance, and connecting methodological approaches to both theory and practice. Dedicated sessions will provide advice on how to conduct a literature review, structure an argument, and situate their work within ongoing academic and professional discussions. This way, the course not only equips students with an understanding of current issues in finance but also prepares them for independent research and critical inquiry as part of their Master thesis.
The sessions are as follows:
Session 1 – Introduction to Behavioral Finance
Foundations of behavioral finance: cognitive biases, heuristics, and investor behavior that challenge traditional finance theory.
Session 2 – CEO Compensation and Agency Issues
Executive pay structures, incentives, and agency problems in corporate governance.
Session 3 – Mergers and Acquisitions & Behavioral Finance
Economic and behavioral drivers of M&A activity, valuation challenges, and integration outcomes.
Session 4 – Earnings Management as a Strategic Tool
Techniques, motivations, and consequences of earnings management.
Session 5 – Stock Market Efficiency
Definitions, empirical evidence, and anomalies that challenge the efficient markets hypothesis.
Session 6 – Textual Analysis: The Power of Words in Finance
How language, disclosure, and sentiment shape financial markets.

Teaching methods

The course combines theory and practice through:

1. In-class interactions introducing financial markets and core theoretical concepts.
   
2. Case studies providing real-world examples for class discussion and independent student work.
   
3. Guest lectures by external professionals (e.g., regulators, analysts, corporate executives) offering applied perspectives.
   
4. Mini-Thesis project, allowing students to apply course insights in a research-based assignment linked to their Master thesis preparation.
   

The course is delivered on campus and/or online. The precise schedule is communicated at the start of the academic period (P1Q1).

Evaluation methods

1. Written Exam - 50%
   • Assesses the theoretical part of the course.
   • Format may include multiple-choice questions, open-ended questions, and exercises.
   • Covers concepts, models, and applications discussed during the lectures and case studies.
2. Mini-Thesis - 50%
   • A five-page group report on a selected topic related to the course.
   • The grade includes both the written report and the oral presentation in class.
   • Dedicated sessions will support students in defining their research question, structuring the report, and linking theory to practice.

• If a student fails the exam, they must retake the failed part. They may also choose to retake the other component if desired. In this case, the professor must be informed at least one month before the exam date.
• The Mini-Thesis counts for 20% of the final grade, and the written exam counts for 80%.

Online resources

• Course slides, articles, and other resources will be communicated at the start of the year.
  
• Videos, case studies, and complementary materials will be discussed and shared in class.
  
• Recommended academic papers and book chapters will guide students in linking course topics to their Mini-Thesis work.
  

Students must acknowledge the use of artificial intelligence (AI) in the text for the parts where they have used it. They must clearly cite the paragraphs/parts where AI has been used. A failure to acknowledge the use of AI is considered fraud if detected by the similarity detection tools used by the instructor.
The group members are all jointly responsible for the work that they hand in on Moodle and are informed that any piece of work is part of the formal examination of the course.  

Bibliography

Slides
Research papers
Videos

Faculty or entity

> CLSM