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DRPS : Course Catalogue : School of Law : Law

Undergraduate Course: Economic analysis of corporate finance law (LAWS10153)

Course Outline
SchoolSchool of Law CollegeCollege of Humanities and Social Science
Credit level (Normal year taken)SCQF Level 10 (Year 3 Undergraduate) AvailabilityAvailable to all students
SCQF Credits20 ECTS Credits10
SummaryThis course aims to examine fundamental concepts and theories concerning corporate financing and investing decisions. It is an in-depth study of some aspects of corporate law and corporate finance. Some seminars have a strong theoretical focus and engage in detail with various theories explaining the interactions between various corporate constituencies. At the same time, the course as a whole has very significant practical relevance.
Course description The course is structured in two parts. The first part (seminars 1-5) covers the economic structure of corporate law and governance, with a focus on legal rules governing financing, investment and dividend decisions. The second part (seminars 6-10) is an analysis of legal and economic issues arising out of the relationship of the corporation with capital markets through IPOs, stock exchange listings, and other forms of raising finance through equity and debt markets.

Topics covered include:

First part:
- Fundamental concepts of corporation law and economics
- The contractarian theory of the firm;
- Limited liability and shareholders' voting rights
- Dividend policy and agency costs
- Directors' fiduciary duties and the business judgement rule

Second part:
- Introduction to the economic theories underpinning capital markets
- The market for corporate control
- Nature and organization of securities and derivatives markets
- Issuer disclosure, market transparency, and the cost of capital
- Legal and economic analysis of market abuse

The course will be taught in 10 two-hour seminars. Each seminar will be a combination of teacher-led and student-led activities. The student-led activities include group discussions. Students will be divided in groups of three students and asked to discuss a topic among group members, followed by a class discussion of group findings.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Students MUST have passed: ( Business Entities (LAWS08134) OR Business Entities (LAWS08099))
Prohibited Combinations Other requirements None
Information for Visiting Students
High Demand Course? Yes
Course Delivery Information
Not being delivered
Learning Outcomes
On completion of this course, the student will be able to:
  1. Demonstrate a critical understanding of the main economic theories of the corporation and their implications on corporate finance.
  2. Compare and contrast the legal and economic approaches to fiduciary duties and the business judgement rule.
  3. Analyse the main economic functions of capital markets and of capital market instruments.
  4. Demonstrate a critical understanding of the main economic theories relating to the operation of capital markets and prohibition of market abuse.
  5. Be able to analyse critically primary and secondary source materials and use them to present a logical and well-structured oral or written argument.
Reading List
The following titles offer background information on company law:

Reiner Kraakman et al., The Anatomy of Corporate Law, 2nd ed. (New York: Oxford University Press, 2009), chapters 3-6

John Lowry and Arad Reisenberg, Pettet's Company Law: Company Law and Corporate Finance, 4th ed. (Essex: Pearson, 2012), chapters 7 - 11

Specific materials and resources for each class will be indicated in the course handouts which will be made available on a weekly basis in advance of each class.
Additional Information
Graduate Attributes and Skills By the end of the course the students will:

1) develop their ability to work independently under fixed deadlines, seeking relevant advice and support when necessary

2) develop their ability to work constructively as a member of a group or team, assert leadership or follow instructions

3) participate effectively in seminars, workshops and discussions

4) develop their capacity of reflecting on the outcomes of individual research efforts with a view to identifying strengths and weaknesses and furthering their own learning
KeywordsTheory of the Firm; Shareholder Primacy; Stakeholders; Fiduciary Duties; Market for Coporate Control
Course organiserMr Remus Valsan
Tel: (0131 6)50 2008
Course secretaryMrs Susan Leask
Tel: (0131 6)50 2344
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