Class Name: “Advanced Corporate Finance”
Taught By: Visiting Assistant Professor of Economics Shannon Mudd
Here’s what Mudd had to say about his class:
“Advanced Corporate Finance” focuses on the theory and practices that underlie how financial managers in corporations make decisions about their firm’s activities. Beyond the theory (e.g.. Capital Asset Pricing Model) and mechanics of financial statement and Present Value calculations, one of the practical tools that students learn is how to exploit Excel to organize and manipulate financial data—for example, taking accounting data and backing out cash flows to determine whether a project adds value to a firm. We also go beyond the textbook, looking at the context in which corporate finance happens. We reading two additional texts: Stout’s The Shareholder Value Myth and Lewis’s The Big Short. Stouts book criticized both the assumed legal and the economic underpinnings of the assertion that corporations should only maximize shareholder value. Lewis’ book, now also a movie, provides a very compelling analysis of the most recent financial crisis and the market for subprime mortgages that was at its epicenter.
The course is a standard offering for business schools and has been in Haverford’ catalog for years. [Recently], Haverford had an additional interest in offering the course because of a new partnership with Claremont McKenna’s Master of Finance program that is oriented toward liberal arts students like ours. As part of our agreement, we now offer this course bi-annually.
Personally, I was happy to teach the course for two reasons. First, as an economist who works with theory and models, I believe it is important to understand what is happening on the ground in business to ensure that the simplifications of the world we make to develop theory and models are not missing something crucial.
Second, we are part of a market economy, a human invention that is continuing to evolve. To ensure that it is evolving in directions that benefit our society overall, we need to study how it is being directed and its outcomes. Over the last several decades, finance has been playing an increasing role in our economy, and while in some ways this has been a good thing, in other ways it has caused problems. Adam Smith warned us many years ago about the need for ethics to constrain the market. We need to study finance and its assumptions critically to ensure it continues to go in the directions that serves society overall and not just a few.
See what other courses the Economics Department is offering this semester.
Photo (cc) Gerd Altmann/Flickr
Cool Classes is a series that highlights interesting, unusual, and unique courses that enrich the Haverford experience.