Revising my corporate finance course

I've been revising my corporate finance course over the last two weeks - I did the same earlier to my international business transactions course - getting ready for fall classes. I've been thinking that these two basic courses of mine had been getting a little bit stale and needed revising and tweaking.

I have always taught corporate finance essentially as a survey class, focused on capital raising, and focused on very classic instruments in capital raising, debt and equity fundamentally. (I used to have a special section on basic compound interest math, but with a 90 student class where some students had MBAs and some students had come trepidatiously from French literature, it was just unworkable. I now recommend to them either a class at the business school, or else our law school's new course on quantitative methods for lawyers.) I have long used Richard McDermott's Legal Aspects of Corporate Finance text - partly because it does not try to give the whole finance and business thing integrated into the text, but instead focuses on the legal aspects. Instead, I also assign Hamilton and Booth's great Business Basics for Law Students as background, and give a tough multiple choice midterm on the whole book.

The problems with this approach have been, first, it is too narrow - capital raising doesn't address the wide range of corporate finance issues anymore, and anyway, my school's BA courses do a better and better job at covering equity and even some basic M&A thoroughly. So I have decided to expand to something I used to teach as a specialized seminar, the risk management side of corporate finance - options, futures/forwards, swaps, a few other derivatives. And add to that securitization. At the same time, I've decided to simply use a handful of cases that were the basic use I got from the McDermott text - cases that mostly explained the process of LBOs, but drop the text book. Instead - and this is a big change for me - I intend to use the Hamilton Business Basics as the basic text, supplemented by a lot of other things, including explanatory materials from the exchanges on things like options trading, a lot of explanatory bar committee stuff on indentures, but on the whole much less case oriented.

But I've also decided to give the course, for the first time, a thematic basis. It has always been a survey course as I've taught it - essentially building a tool kit. This time around, I plan to build the course as a series of functional (not necessarily actual) markets - markets in capital raising, control, risk management, etc. And then to use as the thematic question the issue of private equity and hedge funds in the very broad sense - use the classic questions of public versus private capital, public versus private companies - issues that at least in the next year or two should have a lot of resonance with students - in this age of private equity and hedge funds.

That's what I'm thinking, anyways.