Jacopo Ponticelli joined Kellogg School of Management in 2017 as an Associate Professor of Finance. He is an applied economist who primarily studies corporate finance and development economics, with a particular focus on firms in developing countries and the role played by financial markets and institutions in the process of economic development. His work has been published in top economics and finance journals, including the American Economic Review, the Quarterly Journal of Economics, the Journal of Financial Economics and the Review of Financial Studies. Before joining the Kellogg School of Management, he served as an Assistant Professor of Finance and Cohen and Keenoy Scholar at the University of Chicago Booth School of Business. Professor Ponticelli holds a PhD in Economics from the Universitat Pompeu Fabra (Spain).
Finance II: Corporate Finance covers the financial knowledge you need to run a firm, whether the firm is a multi-billion international conglomerate or a three-person start up. You will learn how to answer the three fundamental question of corporate finance: (1) Capital structure or the funding decision: which source(s) of capital should you use to fund the firm's project? (2) Capital budgeting or the investment decision: which projects should you invest in? (3) Dividend decision: how should you deploy the capital that the project returns?
We will cover the three fundamental methods for valuing projects and firms: discounted cash flow (or net present value), real options, and multiples analysis. The class begins with a theoretical framework. The world of finance is very complex. Without a logical structure that you can use to frame and answer questions, you will rapidly become lost and will be unable to defend your position. The theoretical framework is valuable, however, only if you can use it to examine real world decisions. Thus the majority of class time will be devoted to applying the logical framework.
This course is important for anyone who plans to run a firm or a division, who hopes to be involved in the investment or funding decisions of the firm, who plans to work for a service provider who will assist the firm in analyzing these decisions (e.g., banking and consulting), or who plans to invest in firms or advise clients who will invest in firms. Even if you initially specialize in a different functional area, you want to understand how the finance function works. The most brilliant idea isn't useful if you cannot get it funded.
Recommended Prerequisites: ACCT-430 and MECN-430