FINANCE 456 - Emerging Markets Corporate Finance

Course Overview

Emerging markets are deeply important to the functioning of the world economy. The recent crises in Asia, Russia, Brazil and Argentina have reinforced the importance of having a better understanding of these markets. The goal of this course is to explore the corporate finance side of emerging markets. In particular, how should multinational companies evaluate projects in emerging markets. While most of the project evaluation is focused on finance, we actively discuss the political, economic, legal and cultural environments in forming measures of country risk. The country risk measures lead to a quantitative way to evaluate the discount rate for project evaluation. The course also explores the roles of multilateral agencies in mitigating the riskiness of investment projects. Our case situations mainly focus on large scale investment projects that use a technique of financing known as Project Finance. We contrast Project Finance with corporate finance.

Course Requirements

There are three cases that are required. Each involves a valuation of a large scale project. The main deliverable is the composition of a case. This includes both the case writeup as well as a proposed solution document. The student cases are posted on the Internet. Since we cannot make site visits, you need to make extensive use of the telephone, express mail, fax and email. It is important that you consult with the international students in the class, in particular, those from emerging markets. They might have a number of interesting cases in mind. You can prepare this individually or in groups up to four people. I highly recommend the group and that you diversify the geographical and language skills of your group. It is best to start thinking about the case well before the class begins in Term 3.

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