NEW YORK UNIVERSITY FINANCIAL ECONOMICS Spring 2003 Franklin Allen and Douglas gale Topic 1: What is Corporate Finance? Readings A Ph. D. textbook that provides basic coverage of some of the main topics is J. A. de Matos. Theoretical Foundations of Corporate Finance, Princeton: Princeton University Press, 2002) There are many MBa textbooks. A very good one is R.A. Brealey and S.C. Myers, Principles of Corporate Finance, 7th edition(New York McGraw Hill, 2002) 1.0 Introduction Corporate finance is concerned with how firms should make investment and financing decisions. It is at the heart of most MBA programs. In recent years it has also become an important part of financial economics. In this course we will cover the subject at an advanced level by first developing the economic tools that are used in the subject and ther applying them. In this first part of the course we will start by briefly outlining what corporate finance focuses on. We will do this by outlining the coverage of a typical MBA course. As a comparison of the two books above will show this is somewhat different from what is usually studied in Ph. D courses. These usually cover a subset of what MBA courses1 NEW YORK UNIVERSITY FINANCIAL ECONOMICS II Spring 2003 Franklin Allen and Douglas Gale Topic 1: What is Corporate Finance? Readings: A Ph. D. textbook that provides basic coverage of some of the main topics is: J. A. de Matos. Theoretical Foundations of Corporate Finance, Princeton: Princeton University Press, 2002). There are many MBA textbooks. A very good one is R.A. Brealey and S.C. Myers, Principles of Corporate Finance, 7th edition (New York: McGraw Hill, 2002). 1.0 Introduction Corporate finance is concerned with how firms should make investment and financing decisions. It is at the heart of most MBA programs. In recent years it has also become an important part of financial economics. In this course we will cover the subject at an advanced level by first developing the economic tools that are used in the subject and then applying them. In this first part of the course we will start by briefly outlining what corporate finance focuses on. We will do this by outlining the coverage of a typical MBA course. As a comparison of the two books above will show, this is somewhat different from what is usually studied in Ph. D. courses. These usually cover a subset of what MBA courses