Fundamentals of Corporate Finance

Contents

PART 1 INTRODUCTION

CHAPTER 1The Financial Manager and the Firm

1.1 THE ROLE OF THE FINANCIAL MANAGER

Stakeholders

It's All About Cash Flows

Three Fundamental Decisions in Financial Management

1.2 FORMS OF BUSINESS ORGANIZATION

Sole Proprietorships

Partnerships

Corporations

1.3 MANAGING THE FINANCIAL FUNCTION

Organizational Structure

Positions Reporting to the CFO

External Auditors

The Audit Committee

The Compliance and Ethics Director

1.4 THE GOAL OF THE FIRM

What Should Management Maximize?

Why Not Maximize Profits?

Maximize the Value of the Firm's Stock

Can Management Decisions Affect Stock Prices?

1.5 AGENCY CONFLICTS: SEPARATION OF OWNERSHIP AND CONTROL

Ownership and Control

Agency Relationships

Do Managers Really Want to Maximize Stock Price?

Aligning the Interests of Management and Stockholders

Sarbanes-Oxley and Other Regulatory Reforms

1.6 THE IMPORTANCE OF ETHICS IN BUSINESS

Business Ethics

Are Business Ethics Different from Everyday Ethics?

Types of Ethical Conflicts in Business

The Importance of an Ethical Business Culture

Serious Consequences

Summary of Learning Objectives

Self-Study Problems

Solutions to Self-Study Problems

Critical Thinking Questions

Questions and Problems

Sample Test Problems

PART 2 FOUNDATIONS

CHAPTER 2The Financial System and the Level of Interest Rates

2.1 THE FINANCIAL SYSTEM

The Financial System at Work

How Funds Flow through the Financial System

2.2 DIRECT FINANCING

A Direct Market Transaction

Investment Banks and Direct Financing ...