June 23, 2011
Corporate Finance Roundtable - The Unexpected Way the Financial Crisis Changed My Course Forever
Posted by Trey Drury

There are several ways we may want to change the way we teach corporate finance after the financial crisis.  Off the top of my head, it may make sense to include/increase the prominence of derivatives, securitization, systemic v. firm-specific risk, and/or moral hazard in our syllabi.  All of these seem like good ideas, but my primary response has been a different one - I leave an intentional gap in my syllabus, 3-4 classes where nothing at all is planned.

I was teaching a corporate finance class in the fall of 2008 as the financial system was imploding.  It was an unnerving but exhilirating time to be doing this, and we would spend the first 15 minutes of every class (and sometimes much longer) discussing the issues of the day.  I recognized fairly early on that this was wreaking havoc on my syllabus and did not want to lose the last part of it (where we talk about fundamental transactions, a particular interest of mine).  So, early on in the semester, I axed a substantial chunk of my syllabus - about 4-5 classes - to make room for our discussion of current events.

The following year, instead of re-inserting the old material, I left a 3 session gap designated as "Current Issues in Corporate Finance - materials to come."  During the semester, the students and I watch the news, and together we choose something to fill the gap with.  While I go into the semester with a couple of off-the-shelf ideas about what those current issues might be, I have never used the pre-prepared stuff.  Each year, something new and interesting comes along tht warrants in depth investigation.  

This spring, we dug into Facebook's offering - what does a $50 billion valuation mean?, who calculated it and how?, why did Goldman Sachs close the offering to US investors?, what are the SEC rules about going public, and how are they claiming to comply?, what are these private secondary markets that are operating in the meantime?  It has been a big success every year, and I am glad I resisted the temptation to stick the old stuff right back into my course.

Finance, Financial Crisis, Roundtable: Corp Fin, Teaching | Bookmark

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