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25862 Empirical Corporate Finance

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2020 is available in the Archives.

UTS: Business: Finance
Credit points: 6 cp

Subject level:


Result type: Grade and marks

There are course requisites for this subject. See access conditions.


The purpose of this subject is to understand the investment and financing decisions made by firms. The main issue is how the delegation of decision-making power and information asymmetry affect outcomes, and how deviations from optimality can be mitigated through various incentive mechanisms. The subject involves game theory and covers some classic papers in finance as well as their empirical tests.

For more information, contact your PhD supervisor.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. Analyze data and test hypotheses.
2. Read and critically assess papers in the finance literature.
3. Construct written work which is logically and professionally presented.
4. Communicate ideas in a succinct and clear manner.
5. be able to work in teams

Teaching and learning strategies

In order to obtain the full benefit from the subject, students are required to follow the following points below.

  1. Read the assigned reading for each class and be prepared to ask critical questions and to answer specific questions about the readings.
  2. Attend all seminar classes and arrive on time.
  3. Actively participate in class: Answer questions posed by the instructor, and ask your own questions.
  4. If issues are still not clear, first ask your classmates, then ask me, send me a mail, or come to my office during the consultation hours.

The design of the subject presupposes that students are interested in the topics and will endeavour to learn the material presented. Lectures and class discussions and presentations are allaimed to facilitate your learning. However, ultimately, the time and effort each student devotes to the course will determine how much he or she learns from it.


Assessment task 1: Empirical Assignment (Individual)

Weight: 20%

This assignment will involve the analysis of some financial data allowing students to evaluate their progress on the early sections of the subject.

Assessment task 2: Referee Report

Weight: 25%

A standard referee report on a paper that will be assigned should be submitted. The purpose of this report is to test students’ ability to think critically.

Assessment task 3: Project (Group)

Weight: 35%

You will be divided into small groups or perhaps two or three and asked to select a corporate finance research topic in consultation with the subject co-ordinator. You will be provided with a dataset closely related to your chosen research topic for the purposes of econometric estimation of your model, or your group may decide to create its own database with my approval.

Each group will be assigned (or will discover for themselves) a related academic paper to their chosen research topic and asked to replicate, as close as possible, the methodology employed. The group will then endeavour to improve on the methodology employed. Alternatively, groups may with approval find an original topic. Each group will choose a topic area as one of the topics to be covered in the course. Your write-up should follow closely the structure of your related academic paper, if you have one, and should be submitted in Week 11. As a group, you will be awarded a mark based on the content of your paper. The length is a maximum of 25 double-spaced pages plus appendicies if necessary. In addition to submitting your project, you must also submit your data and programs you have written to analyse the data on a USB device, CD, or upload to a dropbox.

Your grade will depend on the originality of your critique of the methodology of the paper you intend to replicate if you go down this subject, your ability to replicate it and your justification for any “improvements” you made to either the model or its estimation. If you choose your own original topic then it will be evaluated for its originality and other attributes applicable to a working paper.

A larger group will be expected to perform at a higher level than a smaller group but the maximum is three. Since most projects are empirical, your group will need the ability to manipulate generally large databases unsuitable for Excel. All project members will require programming skills. the best language for this is SAS, and an introductory course in SAS taught by an expert early in the semester to help prepare you for the project. To discourage “free-riding” on the project and to ensure that everyone is equipped to write a thesis, the course is compulsory for those without the necessary programming skills.

A simple test involving the importing and merging of databases and the setting up of regression analysis will be in the first class for those seeking exemption (can use another language) and in the last SAS class for the remainder. The individual group member’s project grade can be substantially reduced for anyone not exempted or not passing the SAS course test. Too further discourage free-riding, a maximum of one appendix page should be used to describe the contribution to the project by each team member, as agreed by the group. Disproportionately small or zero contributions by one or more team members can result in severe assessment penalties for the non-contributing team member(s).discourage “free-riding” on the project and to ensure that everyone is equipped to write a thesis, the subject is compulsory for those without the necessary programming skills.

Assessment task 4: In-class Multiple Choice Test

Weight: 10%

In-class multiple choice test in Week 12 on material covered in weeks 7-11.

Assessment task 5: Class Participation

Weight: 10%

Students will be assessed on participation in discussions either formally or informally

Minimum requirements

In order to pass this course, you must:

  • achieve a composite mark of at least 50; and
  • successfully satisfy all assessment tasks and course requirements


Journal articles and other readings will be made available via Blackboard.