This modules inquires into the relevance of financing decisions in the real world. In particular, it takes a close look at the various costs and benefits of debt financing, including tax effects, distress costs, and potential "agency" problems. We also present a simple yet powerful model to better understand the incentive implications of debt financing as well as the valuation of debt and equity. Finally, the module presents the major capital structure theories and illustrates how firms can solve the various trade-off to find an optimal leverage range.

This module takes a closer look at one of the core elements of the firm's financial policy: the Payout Policy. The main purpose of the module is to present a systematic approach for managers to navigate the two key questions surrounding the payout policy: How much money should the firm return to its shareholders? And how should cash be returned? In the process, we discuss the key advantages and disadvantages of dividends and share buybacks and show how the firm's payout policy should be linked to its investment policy and financing policy.

This module focuses on the fascinating process that converts privately held firms into public corporations. The module starts with a discussion of the main advantages and disadvantages of going and being public. Then it discusses in detail the various ways of tapping into public equity markets. In particular, it takes a close look at Initial Public Offerings (IPOs), in which firms hire an underwriting syndicate of investment banks to help with the marketing, pricing, and allocation of the shares. We present a simple model to understand the total costs of an IPO as well as its implications for the value and ownership allocation of the firm. Next, we study alternative ways of going public, including Direct Listings and Direct Public Offerings. We conclude the module with an overview of recent trends in the context of "digitalization," where new platforms emerge to cut out the underwriters and open public equity to a much broader base of firms and investors (e.g., Crowd Financing). In this context, we also discuss the potential risks and benefits that the emerging blockchain technology poses when firms engage in crowd financing via Initial Coin Offerings (ICOs).