Corporate Finance

Professor McCall

Basic Information

• Syllabus is online via my Faculty Profile

• Read Syllabus and Attendance Policy

• Required Book: William J. Carney, Corporate Finance Principles and Practice (Foundation Press)

• A word on business and accounting background

What is involved in the Study of Corporate Finance

• Measurement, Calculation and Evaluation of Firms and their Output

• The investment in and return from business ventures

What do Corporate Finance Lawyers Do?

• Represent Banks and Businesses in structuring and documenting secured and unsecured loans (Banking Law, Corporate Law, Contract Law, Uniform Commercial Code, Bankruptcy Law, State Debtor-Creditor Law, Tax Law)

• Represent Investment Banks and Companies in accessing Public Finance Markets (Securities Laws, Contract Law, Corporate Law, Bankruptcy Law, Uniform Commercial Code, Tax Law)

What do Corporate Finance Lawyers Do?

• Represent Private Investors (Venture Capitalists, Business Angels, Private Equity Funds) and Companies in private investments in business ventures (Contract Law, Corporate Law, Securities Laws, Bankruptcy Law, Tax Law)

• Represent Originators, underwriters and Services in Securitization (Securities Laws, Fraudulent Conveyance Laws, Corporate Law, Contract Law, Uniform Commercial Code, Bankruptcy Law, State Debtor-Creditor Law, Tax Law)

Outline of Course

• Accounting: Understanding and Using Financial Statements: Abbreviated Accounting for Lawyers

• Understanding different metrics for valuing assets, liabilities, firms and investments

• Overview of Capital Structure• Issues Connected with Common Stock• Corporate Debt with a focus on Corporate bonds• Issues connected to Preferred Stock• Options and Convertibles• Dividends and Distributions

Accounting for Lawyers

• Why does it matter?• I went to law school because I do not want to be an accountant • Accounting – process of producing financial statements• Auditing – Review of the methodology and processes for

producing accounting statements• Public Company – A company with an obligation to file reports

under the Securities Exchange Act of 1934 usually as a result of conducting a public offering of securities

• Private Company – A company which does nto have such an obligation

Bodies of Accounting “Law”

• US GAAP (Generally Accepted Accounting Principles in the United States)

• Other country GAAP (UK GAAP, Mexican GAAP)• International Accounting Standards (IAS) also referred to as

IFRS – transnational harmonization of accounting standards mandatory for European Public Companies and permitted in some US Public Company filings.

Sources of Accounting “Law”

• Financial Accounting Standards Board FASB– SFAS (Statements of Financial Accounting Standards)– (EITF) Early Issue Task Force Reports

• US Securities and Exchange Commission– Regulation S-X– (SAB) Staff Accounting Bulletins– Office of the Chief Accountant and resolving Accounting Comments on

Registration Statements

• Public Company Accounting Oversight Board (PCAOB)• International Accounting Standards Board (IASB)

Handy Web Addresses 10

• Law.com’s daily corporate law news site:– http://www.law.com/jsp/pc/corplaw

• The SEC’s EDGAR site for all corporate filings:– http://www.sec.gov/edgar/searchedgar/webusers.htm

• The Corporate Library:– http://www.thecorporatelibrary.com

• Financial Dictionary (your glossary for this course):– http://www.afponline.org/dictionary/bfglosa

• Public Company Accounting Oversight Board– http://www.pcaobus.org/

Handy Web Addresses 11

• Financial Accounting Standards Board– http://www.fasb.org/

• Staff Accounting Bulletins– http://www.sec.gov/interps/account.shtml

• International Accounting Standards Board– http://www.iasb.org/Home.htm