Ch1What is the Corporate Finance(澳大利亚新英格兰大学公司金融课件)

Control of Corporation elections
Board of Directors
selections
Management Shareholders
operations
Assets Debt
Equity
Corporate Capital Structure
Structure of financing : Current market value of the firm Debt Vs. Equity Debt (B) + Equity (S) V=B+S
Vice President and Chief Financial Officer (CFO)
Tresurer
Controller
Cash manager Capital expenditures
Credit manager Financial planning
Tax manager Financial accounting manager
Hyperthetical Organization Chart for a Corporation
Board of Directors
Chairman of the Board and Chief Executive Officer (CEO)
President and Chief Operations Officer (COO)
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Corporation
Distinct legal entity acquire and exchange property enter into contracts sue and be sued expensive to form : need articles of incorporation & by laws
Shareholders attempt to control managers by
Using incentives in employment contracts or pay with shares, stock options or profit sharing : Agency cost Agency costs are sum of monitoring costs of the shareholders costs of implementing the control devices Exploiting a competitive labor market Mounting a takeover offer and casting out the current managers
Conflict between shareholders and Managers
Owners delegate operational control to agents. Agents, the managers, have their own goals which may not be consistent with those of shareholders. Managers are monitored and selected by directors, who are elected by shareholders
Key features of corporation
Ownership shared by many individuals Potential separation of ownership from management easy ownership transfer unlimited life of corporation limited liability of shareholders
B = min(X,F)
S = V-B = max(X-F,0)
F
B+S
F
F
X
F
F
X
F
X
Payoff to Debt holders : B = min(X,F) Payoff to Share holders : S = V - B = max(X-F,0) Total Payoff to investors : B + S
Payoffs to investors as a function of firm value X
Double taxation corporate income tax on corporate income personal income tax on dividend income
Corporate Finance
Capital budgeting : real investment decision Capital structure : financial instruments used to finance investments Decisions of investors
General partnership : all partners have unlimited liability limited partnership : most partners have limited liability at least one partner has unlimited liability at least one partner is a general partner
Debt is a promise by firm to repay a fixed amount by a certain date Equity is a claim on the residual value over debt Both debt and equity are contingent claims Payoffs to investors as a function of firm value X
Lecture 1
What is the Corporate Finance?
What is Corporate Finance?
The study of investment decisions by corporations and ways the investment is financed
Other forms of business Organizations (continue)
Features of Partnership
Inexpensive to form Income taxed as personal income Limited life General partners control management Ownership difficult or expensive to transfer Difficult to raise large amount of capital
Cost accounting manager Data processing manager
Other forms of business Organizations
Sole Proprietorship Owned by one person Inexpensive to form Income taxed as personal income Unlimited liability Limited life Equity limited to owner’s personal wealth Partnership