Corporate Finance



Assessment will be made through one exam (70%) and one piece of coursework (30%). Grades will be based on the completeness, correctness, coherency, clarity, and presentation of your work.

  • The exam has a length of 2 1/4 hours and will include problems covering the material given in the course. There will be no formulae sheet. An exam grade of zero will be assigned for any absence that is not allowed by University rules. Cheating on exams or other academic misconduct is grounds for failing the course and additional sanctions.


  • The coursework is to be done in groups of 3/4 PEOPLE (no more, no less; 10 marks penalty) and CANNOTEXCEED 8 PAGES OVERALL including front page (10 marks penalty). The group-work format will help you to learn how to be part of a team. Manuscripts should be DOUBLE-SPACED, with a MINIMUM FONT SIZE OF 11 PT ARIAL, with MINIMUM MARGINS OF 2 cm (top/bottom/left/right), and ideally printed on the TWO SIDES of the paper. All pages should be NUMBERED CONSECUTIVELY and STAPLED (no binding). There will be PEER EVALUATIONS if required, so each member of the group might receive different grades. In the event of problems of any sort within the group, please bring them promptly to my attention.

Coursework – Event study analysis

Choose one UK firm from any industry, listed on the FTSE All Share Index, that made a corporate announcement in 2015, e.g., M&A bidder, M&A target, dividend cut – it needs to be a surprise (not expected – the deal itself, the values involved, etc – check Factiva/Nexis for news), so use the announcement and not the effective date. Assess the market reaction for your firm using the event study methodology seen in the lecture. Use the FTSE All Share Index and also the relevant Industry Index as the benchmark, one at a time. Use adjusted close stock prices (adjusted for dividends and stock splits) and trading days only (so excluding weekends and bank holidays). Use the previous trading day stock price when your company did not trade on a trading day). Your report should have the following structure (do not add any appendices):

(indicative) # Pages

  • Front page: Name of your company, type of event, and group composition only (e.g., no abstract) (1.0)
  • Abstract: What you do in your report and summary of results. Be informative and focus on main findings (0.5)
  • Introduction: What you do (thorough description of the event e.g., M&A, etc). Why it is interesting (motivation).Empirical findings from an academic paper published in 2012 or later ⇒ Hypothesis setting (i.e., expect ± market reaction for your event following this paper; [so the academic paper is not on market efficiency/event studies in general but on an event study applied to a specific event, e.g., dividend cuts]. Your main findings. Organisation of report (one very small paragraph). (1.5)
  • Data and Methodology: State name of company and announcement date. Describe your data sources, methodology, and formulae. Limitations of analysis (1.5)
  • Results: You need to analyse all information very deeply, comparing your results with your hypothesis and previous empirical findings. Discuss your results for each benchmark index. In your discussion include: snapshots of spreadsheets for your firm (following EXACTLY the 1-Firm layout in the Appendix of the Lecture Notes for Session 1, both estimation and event windows); graph for AR and CAR (all graphs to cover only the event window). Focus in particular on AR for days -2, -1, 0, +1, +2, but talk about other significant values if applicable, and try to explain them based on company news. Present also results for CAR(-1,+1) and CAR(-2,+2), and analyse those figures as well. Discuss market efficiency based on your AR analysis, and expand this discussion to include potential post-announcement drifts based on your CAR analysis. Compare/contrast your results with the two benchmarks. (2.0)
  • Conclusion: Focus on your main findings, lessons from your results, and agenda for future work (1.0)
  • References (0.5)