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Why teach finance?

It is important to periodically re-evaluate the cause to which one has devoted one’s life.  This is certainly true for someone whose career is committed to the dubious world of financial markets.  One might easily construe the role of a finance professor as proselytizing a socially destructive devotion to personal gain and a determination to “buy low and sell high.” Yet, in evaluating my professional role, I maintain a deeply countervailing view.

I assert that business leaders and investment professionals maintain a highly privileged position as stewards of the productive assets of the world economy.  This position empowers the manager with the means to create tremendous welfare, or alternatively tremendous waste.  Recent case examples from business practice are plentiful. Massive corporate scandal and wealth misappropriation have crippled financial markets and fractured investor trust.  The resulting economic waste has been staggering.  Nevertheless, managers of other firms have simultaneously invested more prudently in business strategies that have quietly generated positive wealth implications that have been just as astounding. It is important to establish that wealth creation is not the same as wealth transfer (a zero sum game among counterparties). Moreover, good financial management never admonishes fictitious wealth creation.   Purveyors of good financial management create real economic gain. The variation in wealth impact resulting from business manager decisions is striking.  The same observation can be made of investment managers, who realize disparate success in magnifying or squandering the economy’s invested wealth.  Managing investment decisions is privileged and relevant.

For me, the curriculum of business school finance is that of building the capacity for good financial stewardship in deploying capital in value creating activities, in wisely managing risk exposure, and in providing the proper incentives at all levels of the organization that properly reinforce value creation.

 

Courses

First year Finance Course overview

Investment Strategy and Arbitrage Course overview

 

Teaching Materials

Broad Themes

Ben & Jerry's Homemade (UVA-F-1364)

Financial Forecasting

The Thoughtful Forecaster (UVA-F-1490)

Value Line Publishing, October 2002 (UVA-F-1403)

Horniman Horticulture (UVA-F-1512)

Valuation

A Primer on Valuing Simple Risk-free Bonds  (UVA-F-1443)

Methods of Valuation for Mergers and Acquisitions (UVA-F-1274)

JetBlue Airways IPO Valuation (UVA-F-1415)

eBay Inc. (A and B) (UVA-F-1357)

Bank of Tokyo (UVA-F-1018)

Pricing Models

Carrefour S.A. (UVA-F-1470)

Darden Capital Management, The Monticello Fund (UVA-F-1464)