module specification

The module explores the theoretical underpinnings and empirical evidence on corporate finance in an international perspective.  The module offers students to develop the knowledge areas of international monetary system, the theories that describe the determinants of foreign exchange rates, sources of financing international trade and projects, international capital structure and investments, risk exposures and management, hedging currency risk cross-border mergers and acquisitions, and multinational working capital management in the overall framework of their impact on international corporate activities.  The module also stresses the application of relevant theories, models and empirical evidence for the analysis and evaluation of major corporate activities and decisions made by global firms. 

The aims of the module are:

• To provide a framework for students to explore corporate strategies and decisions in an international perspective.
• To offer thorough coverage of the international monetary climate, including theories that describe the determinants of foreign exchange rates, Financing international trade, Raising capital from global capital markets, foreign exchange risk management and international capital budgeting and investments.

International financial environment: The exchange rates regimes and international monetary system.

Sources of financing in SMEs: financial reports equity and debt finance through capital markets, banks and other institutions.

Sources of financing in global firms: corporate report, financing international trade, equity and debt finance through international capital markets, money markets, banks and other institutions.

International capital structure: The costs of capital for global firms, international capital asset pricing model and its implications.

Multinational capital budgeting and investments: evaluation of investment projects and decision making.

The foreign exchange market: international parity relations, theories explaining determinants of exchange rates, functions of the spot and forward markets. Currency forwards, futures and options and their application for currency risk management

Risk management: risk exposures (transaction, translation and economic exposures) and foreign exchange risks.

Multinational working capital management: management of trade receivables, trade payables, inventories and cash

Learning and teaching are structured by using a 2-hour lecture and 1-hour seminar in each week as required.

The lectures will outline the key concepts, theories and models to prepare students to develop the capability to solve problems and evaluate alternative decision options.

The seminars will be used by lecturer and students to discuss assigned topics on various aspects of the material covered by the module.
It is expected that students will spend 8 hours per week outside the lecture and seminar to read assigned material, collect data for analysis, solve problems and write essays or prepare essay plans to consolidate their understanding of what is studied in the module.

On the successful completion of the module, students should be able to:

• demonstrate a clear understanding of the historical and contemporary policy and institutional issues in the international financial system and their implications for the development of the international financial architecture to deal with international trade and finance.
• discuss the theoretical determinants of foreign exchange rates and the functions of currency markets;
• analyse the functioning of the major capital and money markets as well as international banking, finance and  how they may be used by global firms to meet their funding, liquidity and risk management objectives;
• evaluate aspects of capital investment projects that multinational firms undertake.
• develop skills of research, data collection and transformation, analysis and written communication.

There are two assignment components.

Assignment component one: An academic essay which will require students to demonstrate their competence in undertaking in-depth research and analysis using quantitative models as well as critical reflection on the module topics studied during the assessment period.

Assignment component two: An unseen and closed final examination. The duration of the examination is 2 hours and it will be due at the end of teaching semester.

Textbooks

Berk, J. and DeMarzo, P. (2013), Corporate Finance, 3rd Edition, Pearson, Harlow

Copeland, L. (2014), Exchange Rates and International Finance, 6th Edition, Pearson, Harlow

Eiteman, D., Stonehill, A. and Moffett, M. (2015) Multinational Business Finance, 14th Edition, Pearson, Harlow
Jacque, L. L. (2014), International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, Wiley and Sons, Ltd, West Sussex
Levi M. D., (2017), International Finance, 5th Edition, Routledge, Oxon

Pileam, K. (2013), International Finance, 4th Edition, Palcrave Macmillan, Hampshire

Ross S A, Westerfield, R., Jaffe, J.  and Jordan, B. D. (2009), Modern Financial Management, 8th Edition, McGraw Hill

Shapiro, A. (2013) Multinational Financial Management, 10th Edition, Wiley & Sons, Inc.

Journals
Journal of Financial Economics
Journal of Finance, European Financial Management
Financial Management
Journal of Banking and Finance
Journal of Applied Corporate Finance
Financial Analysts Journal

Online resources
International Monetary Fund www.imf.org
The World Bank www.worldbank.org
The UK Data Service www.ukdataservice.ac.uk