The course analyzes economic and financial characteristics of small and medium sized firms (SMEs) and compares them with those of large firms. In detail, the course aims at:
1) defining the concept of SMEs in Italy and abroad with a focus on the birth and development of industrial districts
2) analyzing the contribution of SMEs to the growth of Italian economy
3) identifying the economic and financial peculiarities of SMEs
4) extending to SMEs the traditional theories of corporate finance and adjusting these theories if required
5) explaining the financial decision making of SMEs in terms of investment choices, capital structure choices and risk
1) defining the concept of SMEs in Italy and abroad with a focus on the birth and development of industrial districts
2) analyzing the contribution of SMEs to the growth of Italian economy
3) identifying the economic and financial peculiarities of SMEs
4) extending to SMEs the traditional theories of corporate finance and adjusting these theories if required
5) explaining the financial decision making of SMEs in terms of investment choices, capital structure choices and risk
Curriculum
teacher profile teaching materials
1) The role of entrepreneur: unique abilities, risk aversion and agency costs
2) Violation of the separation theorem: breaking NPV and value additivity rules in valuing investments; underinvestment problems.
The risk of SMEs
3) Asymmetric information and asset substitution problems
4) Small size as systematic risk and multifactor models in cost of capital estimation
5) The effect of economic cycle on risk and return of small and large firms
SMEs’ financing decisions: peculiarities and differences between small and large firms
6) Private equity and private debt: how SMEs raise outside financing; the financial cycle of SMEs
7) Venture capital: theory and empirical evidence
8) Failures in accessing outside financing channels
9) Capital structure determinants: differences between small and large firms
10) How small firms differ from large firms in tapping into different financing channels around the world
b) Pettit, R.R., Singer, R.F., 1985. Small business finance: A research agenda. Financial Management 14 (3), pp. 47-60
c) Berger, A.N., Udell, F.G., 1998. The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle, Journal of Banking and Finance 22 (6-8), pp. 613-673 [§1, §2, §2.2, §2.3, §2.4, §2.5, §5 e sottoparagrafi, §6]
d) Beck, T., Demirguc-Kunt, A., Maksimovic, V., 2008. Financing patterns around the world: Are small firms different?. Journal of Financial Economics 89 (3), pp. 467-487
e) Del Colle, D.M., Finaldi-Russo, P., Generale, A., 2006. The causes and consequences of venture capital financing. An analysis based on a sample of Italian firms, Temi di discussione del servizio studi, Banca d’Italia, Nr. 584
f) Berk, J., De Marzo, P., 2018. Finanza Aziendale 1, 4th edition, Pearson, §13.1, §13.2, §13.3, §13.5, §13.6, §13.7 and appendix)
g) Fidanza, B., 2003. Le determinanti del rendimento delle attività rischiose, Morlacchi Editore (§1.3, §1.3.1, §2.1, §2.2, §2.3, §2.3.1, §2.3.2, §2.3.4, §2.3.9, §2.4.1, §2.4.2, §2.4.3)
h) Venanzi, D., 2010. Il puzzle della struttura finanziaria, Pearson-Prentice Hall (§3.9, §3.10)
i) Switzer, L.N., 2010. The behaviour of small cap vs. large cap stocks in recessions and recoveries: Empirical evidence for the United States and Canada, North American Journal of Economics and Finance 21, pp. 332-346
j) Cole, R.A., 2013. What do we know about the capital structure of privately held US firms? Evidence from the Surveys of Small Business Finance, Financial Management 42 (4), pp. 777-813
Programme
SMEs’ investment decisions: peculiarities and differences between small and large firms1) The role of entrepreneur: unique abilities, risk aversion and agency costs
2) Violation of the separation theorem: breaking NPV and value additivity rules in valuing investments; underinvestment problems.
The risk of SMEs
3) Asymmetric information and asset substitution problems
4) Small size as systematic risk and multifactor models in cost of capital estimation
5) The effect of economic cycle on risk and return of small and large firms
SMEs’ financing decisions: peculiarities and differences between small and large firms
6) Private equity and private debt: how SMEs raise outside financing; the financial cycle of SMEs
7) Venture capital: theory and empirical evidence
8) Failures in accessing outside financing channels
9) Capital structure determinants: differences between small and large firms
10) How small firms differ from large firms in tapping into different financing channels around the world
Core Documentation
a) Fama, E.F., Jensen, M.C., 1985. Organizational forms and investment decisions. Journal of Financial Economics 14 (1), pp. 101-119 (§1, §2, §3, §5, §5.1, §5.4)b) Pettit, R.R., Singer, R.F., 1985. Small business finance: A research agenda. Financial Management 14 (3), pp. 47-60
c) Berger, A.N., Udell, F.G., 1998. The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle, Journal of Banking and Finance 22 (6-8), pp. 613-673 [§1, §2, §2.2, §2.3, §2.4, §2.5, §5 e sottoparagrafi, §6]
d) Beck, T., Demirguc-Kunt, A., Maksimovic, V., 2008. Financing patterns around the world: Are small firms different?. Journal of Financial Economics 89 (3), pp. 467-487
e) Del Colle, D.M., Finaldi-Russo, P., Generale, A., 2006. The causes and consequences of venture capital financing. An analysis based on a sample of Italian firms, Temi di discussione del servizio studi, Banca d’Italia, Nr. 584
f) Berk, J., De Marzo, P., 2018. Finanza Aziendale 1, 4th edition, Pearson, §13.1, §13.2, §13.3, §13.5, §13.6, §13.7 and appendix)
g) Fidanza, B., 2003. Le determinanti del rendimento delle attività rischiose, Morlacchi Editore (§1.3, §1.3.1, §2.1, §2.2, §2.3, §2.3.1, §2.3.2, §2.3.4, §2.3.9, §2.4.1, §2.4.2, §2.4.3)
h) Venanzi, D., 2010. Il puzzle della struttura finanziaria, Pearson-Prentice Hall (§3.9, §3.10)
i) Switzer, L.N., 2010. The behaviour of small cap vs. large cap stocks in recessions and recoveries: Empirical evidence for the United States and Canada, North American Journal of Economics and Finance 21, pp. 332-346
j) Cole, R.A., 2013. What do we know about the capital structure of privately held US firms? Evidence from the Surveys of Small Business Finance, Financial Management 42 (4), pp. 777-813
Reference Bibliography
a) Fama, E.F., Jensen, M.C., 1985. Organizational forms and investment decisions. Journal of Financial Economics 14 (1), pp. 101-119 (§1, §2, §3, §5, §5.1, §5.4) b) Pettit, R.R., Singer, R.F., 1985. Small business finance: A research agenda. Financial Management 14 (3), pp. 47-60 c) Berger, A.N., Udell, F.G., 1998. The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle, Journal of Banking and Finance 22 (6-8), pp. 613-673 [§1, §2, §2.2, §2.3, §2.4, §2.5, §5 e sottoparagrafi, §6] d) Beck, T., Demirguc-Kunt, A., Maksimovic, V., 2008. Financing patterns around the world: Are small firms different?. Journal of Financial Economics 89 (3), pp. 467-487 e) Del Colle, D.M., Finaldi-Russo, P., Generale, A., 2006. The causes and consequences of venture capital financing. An analysis based on a sample of Italian firms, Temi di discussione del servizio studi, Banca d’Italia, Nr. 584 f) Berk, J., De Marzo, P., 2018. Finanza Aziendale 1, 4th edition, Pearson, §13.1, §13.2, §13.3, §13.5, §13.6, §13.7 and appendix) g) Fidanza, B., 2003. Le determinanti del rendimento delle attività rischiose, Morlacchi Editore (§1.3, §1.3.1, §2.1, §2.2, §2.3, §2.3.1, §2.3.2, §2.3.4, §2.3.9, §2.4.1, §2.4.2, §2.4.3) h) Venanzi, D., 2010. Il puzzle della struttura finanziaria, Pearson-Prentice Hall (§3.9, §3.10) i) Switzer, L.N., 2010. The behaviour of small cap vs. large cap stocks in recessions and recoveries: Empirical evidence for the United States and Canada, North American Journal of Economics and Finance 21, pp. 332-346 j) Cole, R.A., 2013. What do we know about the capital structure of privately held US firms? Evidence from the Surveys of Small Business Finance, Financial Management 42 (4), pp. 777-813Type of delivery of the course
commented slideAttendance
attendance recommendedType of evaluation
oral exam