ULMS Electronic Module Catalogue
The information contained in this module specification was correct at the time of publication but may be subject to change, either during the session because of unforeseen circumstances, or following review of the module at the end of the session. Queries about the module should be directed to the member of staff with responsibility for the module.
Title Corporate Finance and Accounting Theory
Code ULMR801
Coordinator Dr S Sainani
Finance and Accounting
S.Sainani@liverpool.ac.uk
Year CATS Level Semester CATS Value
Session 2023-24 Level 8 FHEQ First Semester 15

Pre-requisites before taking this module (other modules and/or general educational/academic requirements):
 

Modules for which this module is a pre-requisite:
 

Programme(s) (including Year of Study) to which this module is available on a required basis:
 

Programme(s) (including Year of Study) to which this module is available on an optional basis:
 

Teaching Schedule
  Lectures Seminars Tutorials Lab Practicals Fieldwork Placement Other TOTAL
Study Hours 24

 12

         36
Timetable (if known)              
Private Study 114
TOTAL HOURS 150

Assessment
EXAM Duration Timing
(Semester)		 % of
final
mark		 Resit/resubmission
opportunity		 Penalty for late
submission		 Notes
             
CONTINUOUS Duration Timing
(Semester)		 % of
final
mark		 Resit/resubmission
opportunity		 Penalty for late
submission		 Notes
Individual written assignment. Reassessment Opportunity: Yes Penalty for Late Submission: Standard UoL penalty applies Anonymous Assessment: Yes  0    100       

Aims

This module aims to:

Develop students’ knowledge and understanding of corporate finance and accounting theory;

Provide students with an appreciation and understanding of the complexities involved with the main theories developed in corporate finance and accounting research literature.

Learning Outcomes

(LO1) Demonstrate knowledge and understanding at an advanced level of a range of corporate finance and financial accounting theories.

(LO2) Understand and interpret the main elements in the field of corporate finance and financial accounting.

(LO3) Develop a critical awareness of theoretical studies in the fields of corporate finance and financial accounting.

(LO4) Communicate research ideas and empirical results in a succinct and clear manner.

(LO5) Develop a critical awareness of how theory and practice apply to specific issues in corporate finance and financial accounting.

(S1) Research skills.
Students will acquire research skills through lectures, seminars and reading research articles.

(S2) Problem solving.
Students will work on analysing problems.

(S3) Teamwork.
Students will work in teams to develop a conceptual understanding of problems and issues.

(S4) Communication skills.
Students will develop oral communication skills through presentations and written communication skills in their assignment.

(S5) Lifelong learning.
Students will develop this skill through the development of critical thinking.

(S6) Ethical awareness.
Students will develop ethical awareness by understanding issues related to accountability, governance and corporate social responsibility.

Teaching and Learning Strategies

Lectures x 24 hours (2 hours per week)

Seminars x 12 hours (1 hour per week consisting of presentations and group discussion)

Self-directed learning x 114 hours
Self-directed learning hours will be spent on class preparation and revision of the weekly topics and research activity in preparation for in-class presentations and coursework.

Syllabus
 

Introduction to Corporate Finance and Financial Accounting Theory (Tirole, Ch. 1; Scott, 1 and 2)

Decision-Usefulness of Accounting: Information Approach and Measurement Approach (Scott, Ch. 3-4 and 6):
Usefulness of accounting numbers to investors
Fair value accounting

Conflicts of Interest in Accounting (Scott, Ch. 8 and 9):
Efficient contracting theory
Agency Theory

Economic Consequences of Accounting Choices (Scott, Ch. 10 and 11):
Executive Compensation
Earnings Management

The Financing of Corporations (Tirole, Ch. 2-3 and 6):
Modigliani-Miller Propositions under Perfect Capital Markets and Taxes
Trade-off Theory: Financial Distress and Taxes
Pecking Order Theory

Cash holdings and Liquidity Management (Tirole, Ch. 5):
Theories on Optimal Cash Policy
Agency Cost of Free-cash Flow

Payout Policy (Franklin and Michaely, Hanbook of Economics and Finance, Ch. 7):
Modigliani-Miller Irrelevance Proposi tion
Role of Taxes and other Market Frictions
Agency, Dividend Signalling and Adverse Selection Models

Takeovers (Tirole, Ch. 11):
Positive Theory of Takeovers
The Payment Method Choice and Takeover Gains
Managerial Hubris (biases) and Empire-building Theory

Recommended Texts
Reading lists are managed at readinglists.liverpool.ac.uk. Click here to access the reading lists for this module.