What you will study
The module consists of the following five units:
Unit 1 – Corporate governance
This unit provides you with an overview of corporate governance, including the meaning, significance, and the fundamental principles that underpin it. It also includes a critical examination of current theories and practices in global corporate governance. You'll be introduced to key corporate governance issues such as board diversity, board structure, executive compensation, and institutional investors. As a result you'll gain an understanding of how governance plays a pivotal role in addressing fraud and ethical issues, as well as shaping corporate investments and financing decisions.
Unit 2 – Ethics, fraud and governance
This unit covers the topic of ethics, identifying ethical issues and dilemmas while discussing the role of the code of ethics within an organisation. You'll be introduced to the meaning, impact, and nature of fraud, along with the reasons it is committed. The focus will be on internal fraud, as it is the most prevalent and costly form of fraud. The unit then explores how corporate governance plays a crucial role in countering internal fraud by highlighting key governance mechanisms such as ethical leadership, auditors and audit committees, and internal controls.
Unit 3 – Company valuation
This unit looks at company valuation in the context of investment. The unit outlines a number of ways of valuing companies, using the techniques from Financial markets and the financing of organisations (B815), and shows how different valuation techniques can be used in different contexts. Namely, the three main types of valuation approaches are discussed. The unit starts by looking at asset values, which use balance sheet data to estimate value. Market multiples, which use share prices to establish comparative benchmarks for value, are then illustrated. Finally, discounted cash flow valuation (DCF) techniques, which use forecast data to estimate present value, are considered.
Unit 4 – Financing decisions, pay-out policy and Islamic finance
This unit examines company valuation in the context of investment. It outlines various methods for valuing companies, building on the techniques from Financial markets and the financing of organisations (B815), and demonstrates how different valuation approaches are applied in different contexts. Specifically, the unit discusses the three main types of valuation methods. It begins with asset-based valuation, which uses balance sheet data to estimate value. Next, market multiples are introduced, using share prices to establish comparative benchmarks for value. Finally, discounted cash flow valuation (DCF) techniques, which use forecast data to estimate present value, are considered.
Unit 5 – Mergers & acquisitions and corporate restructuring
The final unit explores the waves of mergers and acquisitions (M&As) over the past decades and their impact on financial decision-making and firm value. You will learn why firms engage in M&As and whether these transactions actually benefit different stakeholders, including shareholders, debtholders and employees. Building on earlier units covering governance and financing policies, you will examine how M&As can function as a governance mechanism. The unit also discusses corporate restructuring methods and their associated costs and benefits. Additionally, you will explore how firms that operate in multiple lines of businesses face specific costs and benefits.
You will learn
By completing this module, you will be able to:
- examine various governance mechanisms to mitigate agency problems
- illustrate how standard setters influence corporate governance practices
- understand the limitations of the shareholder perspective and evaluate the relevance of the stakeholder view in corporate governance
- assess fraud risk and identify types and methods of insider fraud
- understand the role of corporate governance and external auditors in countering fraud
- understand the three main methods of company valuation – asset-based valuation, market multiples and discounted cash flow
- critically evaluate the strengths and weaknesses of each valuation technique
- identify the most appropriate valuation method based on the circumstances
- explain the link between capital structure, pay-out policy and company value
- examine the implications of behavioural biases on corporate financial policy
- understand the key principles and instruments of Islamic finance
- explain trends in mergers and acquisitions, evaluate the motives behind them and assess post-transaction performance
- assess the practical issues surrounding corporate restructuring.