Corporate Finance

Corporate finance is the area of finance dedicated to maximizing shareholder value through the financial planning and strategic decisions made within a corporation. It primarily revolves around three fundamental activities: making long-term investment decisions, known as capital budgeting, to determine which projects will generate the most value; making financing decisions to identify the optimal mix of debt and equity, known as capital structure, to fund those investments; and managing the company's short-term assets and liabilities, or working capital, to ensure operational liquidity and efficiency. This discipline provides the essential framework for guiding a company's financial direction, from funding and investment choices to dividend policies and risk management.

1. Introduction to Corporate Finance
   1. Purpose and Scope of Corporate Finance
      1. Definition of Corporate Finance
      2. Key Areas of Corporate Finance
      3. Role in Business Strategy
   2. The Goal of the Corporation
      1. Maximizing Shareholder Wealth
         1. Shareholder Value Maximization
         2. Market Value vs. Book Value
         3. Long-Term vs. Short-Term Value Creation
      2. Agency Problems and Corporate Governance
         1. Principal-Agent Relationship
         2. Types of Agency Conflicts
         3. Agency Costs
         4. Mechanisms to Mitigate Agency Problems
            1. Incentive Contracts
            2. Board Oversight
            3. Market for Corporate Control
            4. Regulatory Oversight
      3. Stakeholder vs. Shareholder Theory
         1. Stakeholder Interests
         2. Balancing Stakeholder and Shareholder Goals
         3. Corporate Social Responsibility
   3. The Role of the Financial Manager
      1. Key Financial Decisions
         1. Investment Decisions
            1. Capital Budgeting Process
            2. Project Evaluation
            3. Strategic Planning
         2. Financing Decisions
            1. Capital Structure Decisions
            2. Sources of Capital
            3. Cost of Capital Considerations
         3. Working Capital Management
            1. Short-Term Asset Management
            2. Short-Term Liability Management
            3. Liquidity Management
      2. Financial Manager's Responsibilities
      3. Interaction with Other Departments
   4. Forms of Business Organization
      1. Sole Proprietorship
         1. Characteristics
         2. Advantages
         3. Disadvantages
         4. Tax Implications
      2. Partnership
         1. General Partnership
         2. Limited Partnership
         3. Limited Liability Partnership
         4. Advantages
         5. Disadvantages
         6. Tax Implications
      3. Corporation
         1. Characteristics
         2. Advantages
         3. Disadvantages
         4. Separation of Ownership and Control
         5. Tax Implications
      4. Limited Liability Company
         1. Characteristics
         2. Advantages
         3. Disadvantages
         4. Tax Implications
      5. Comparison of Business Forms
   5. The Financial Markets and the Corporation
      1. Role of Financial Markets
      2. Types of Financial Markets
         1. Primary Markets
            1. Initial Public Offerings
            2. Seasoned Equity Offerings
            3. Private Placements
         2. Secondary Markets
            1. Stock Exchanges
            2. Over-the-Counter Markets
            3. Electronic Trading Networks
      3. Financial Intermediaries
         1. Commercial Banks
         2. Investment Banks
         3. Insurance Companies
         4. Pension Funds
      4. Regulation of Financial Markets