Journal of
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Volume 28 CONTENTS Fall/Winter 2002 |
SPECIAL TOPICS
#1 - AN EMPIRICAL FRAMEWORK AND TEACHING NOTE FOR
INTRODUCING
FINANCIAL MANAGEMENT IN THE FIRST MBA CORE CLASS
Paul Laux and Betty J. Simkins
The purpose of this teaching note is to introduce MBA students to the issues: "What do firms do about financing, investing, profiting and payout?" during the first week of a core MBA class. By introducing the students to these financial management issues together with economy-wide financial ratios at the beginning of the course, we strive to provide students intuition and insight into the theory and practice of financial management and remove some of the naïveté about the subject. As a result, students better understand the ‘what, why and how’ of financial decision making as it is covered throughout the course.
Pages 1-27
EDUCATIONAL RESEARCH
#2 - STUDENT PERFORMANCE IN THE INTRODUCTORY CORPORATE FINANCE COURSE
Andy Terry
Using a sample (956 students) larger than most of the samples used in previous research projects, this paper explores the determinants of performance in the introductory corporate finance class. We find that student performance is significantly related to gender, major, exam-type, grades in prerequisite classes, GPA and to whether or not the course was taken during the summer. When the sample is stratified into classes where a professor used multiple-choice exams and classes where multiple-choice exams were not used, gender and major (other than accounting) cease to be significant explanatory variables in the classes involving multiple-choice exams.
Pages 28-41
#3 - OUTCOMES ASSESSMENT AND OPPORTUNITIES TO MODIFY STUDENT
INVESTMENT STRATEGIES:
THE USE OF PRE- AND POST TESTS IN A BASIC FINANCE COURSE
Jeff Heinfeldt and Fran Wolf
The use of a pre- and post-test instrument in a Basic Finance course assisted the instructors by 1) providing outcomes assessment and 2) identifying opportunities to provide students with practical information concerning investment strategies and financial instruments. The results indicated the following: 1) Students, in the aggregate, did not have a good working knowledge of basic, financial instrument characteristics when entering the class. 2) A significant improvement in the understanding and recognition of basic, financial instrument characteristics took place as measured by the instrument when exiting the course. 3) Distinct differences in investment strategies and opportunities for instructor intermediation were identified when allowing for gender and age.
Pages 42-53
#4 - IS STUDENT PERFORMANCE ENHANCED BY PERCEIVED TEACHING QUALITY?
Jean L. Heck, Janet Todd and Dale Finn
This study compares the evaluations given to two instructors teaching the same course, using the same text and syllabus. The performance measure of learning was based upon a common final exam that was prepared jointly by the instructors. Although the students rated one instructor significantly better than the other, we found no significant difference in the learning that took place, as measured by exam scores. This study supports the notion that students’ perceptions of "better" teaching may not be associated with enhanced learning.
Pages 54-62
FINANCE PEDAGOGY
#5 - DETERMINATION OF MEAN-VARIANCE EFFICIENT PORTFOLIOS USING AN ELECTRONIC SPREADSHEET
David A. Carter, William H. Dare and William B. Elliott
We present a method to quickly set-up and solve for mean-variance efficient portfolios in a Microsoft Excel spreadsheet using data downloaded from the Internet. As a pedagogical tool, this exercise provides several benefits. First, it stimulates student interest because of the use of ‘real’ data from the Internet, it builds their spreadsheet and general computer skills, and improves their understanding of financial concepts. The method can solve for mean-variance efficient portfolios equivalent to the Markowitz method but requires considerably less effort to formulate in a computer spreadsheet.
Pages 63-78
#6 - AN OPTIMAL-CAPITAL-STRUCTURE PROBLEM GENERATOR
Les Scruggs
A simple model can be used to create problems illustrating optimization of capital structure. A simple formula is derived for computing the optimal leverage.
Pages 79-81
FINANCE CASES
#7 - INVESTING IN BN.com: CAN BREAKEVEN BE ACHIEVED?
Harlan D. Platt and Marjorie B. Platt
Struggling to survive in an increasingly competitive environment, BN.com’s cash holding are substantial but will only cover expenses for six quarters at the current "burn-rate." A junior analyst at an investment firm is intrigued by the upside possibilities but is warned to consider risks before recommending BN.com to the investment committee. Students perform a break-even analysis based on data from a company’s income statement after grouping costs into variable and fixed components. Familiarity with the internet promotes a discussion of how e-commerce companies can reduce expenses to effect a company turnaround. Better students should use Altman’s Z-score to predict future bankruptcy.
Pages 82-92