Session 1 - Overview of Corporate Finance and Agency Theory, Chapters 1 and 13

All page numbers are references to Corporate Finance: A Focused Approach 7th edition by Ehrhardt and Brigham (Cengage South-Western, 2020)

From Chapter 1 and Chapter 13

Things to Absorb

Everything in Chapter 1, including agency problems, advantages and disadvantages of three major forms of business organization, goal of the management is to maximize shareholders wealth (which are roughly equivalent to maximizing firm value and/or maximizing the value of existing common stock), and some terms/terminology. You may need to search the Internet for some of the terms (you probably learned many of these terms in your foundation Finance course and will use them again in this course).  For Chapter 13, understand the basics of Agency Theory and Agency Problems.

Do not need to absorb: Section 1-12's discussion of the Great Recession that began in 2007.

Things to Read

• You will need to read Chapter 1.
• You will need to read pages 537-549 of Chapter 13.
• You may also need to search for terms using a search engine.

Things to Do - Make 100 on the quiz. Be able to answer the below suggested end of chapter questions. 

Here is a structured study guide for this chapter.

• Watch the Chapter 1 Overview. You can download the PowerPoint slides from these videos from here.
• Read the chapter.
• If you would like a review of basics of valuation and many financial terms, watch the Chapter Review, Part 1 (covers mini-case parts a-h, has most of the exam questions from this chapter) and Chapter Review, Part 2 (covers the mini-case parts i-q) videos. Hint, most past students learned the this material by doing the Chapter Quiz multiple times.
• Optional (not suggested or tested) is the video on the Great Recession of 2007 (covers the mini-case part r).
• Be able to answer end of Chapter 1 questions 1-3, 5-8.
• For Chapter 13, read pages 537-549.
• If you would like a review of basics of agency theory and agency problems, watch the Chapter 13 Review (from the 6th edition). Hint, this video is important if you really want to understand Corporate Finance.  However, most past students just want a 100 on the quiz and learn the concepts by doing the Chapter Quiz multiple times.
• Be able to answer end of Chapter 13 questions 1 a-e, 2 ,3, and 4.
• Be prepared for a quiz on the material from Chapters 1 and 13.