As part of a continuing series on Spring 2018 semester courses that relate to innovation and business, this post spotlights Corporate Finance.
Corporate Finance is a course title many students might expect to find at a business school. In fact, Iowa’s Tippie College of Business has an entire MBA track devoted to corporate finance. “At a business school, corporate finance has a qualitative focus – how to value different types of debt and equity securities,” explained Professor Robert Miller, who teaches Corporate Finance. “In the law school course, we spend a little bit of time on valuation, but focus more on the contracts between the buyers and sellers of debt and equity.”
While ordinary consumers can rely on securities laws to protect their investments, the law presumes that participants in the corporate financial markets can protect themselves. “This is the law for large, sophisticated, well-advised parties that meet in the marketplace as equals and negotiate an efficient allocation of rights and responsibilities,” explained Miller. “This is not the widows and orphans crowd.”
Given the importance of buy/sell contracts, the agreements tend to be very complicated. Students in the course will spend as much time reading deal documents as they will reading cases that litigate deals, which is similar to the format of another Miller course, Mergers and Acquisitions. “Corporate Finance is not a drafting class, but we spend a lot of time in understanding deal documents,” Miller added.
Miller thinks of this class as Business Associations (BA) II or III. “Some topics that students see from a high altitude in BA, we drill into pretty deeply,” Miller continued. For that reason, students who desire to enroll must have successfully completed BA.
-- Jay Stirling (updated by Peter Kline) | updated September 18, 2017
This course treats the legal aspects of corporate finance. It begins by introducing elements of financial theory necessary to make the legal treatment of corporate finance intelligible, including basic topics in accounting, the valuation of securities, portfolio theory, capital structure, and the efficient capital markets hypothesis. Primary topics include the legal analysis of the contractual rights of bondholders and convertible security holders and the dividend and control rights of preferred and common stockholders. Time permitting, the course will also touch on the nature and function of derivative contracts and options. A course in Business Associations is a prerequisite.