Wharton@Work

September 2017 | Finance

Staying Ahead in a Disruptive Environment: Updated Financial Knowledge and Tools are Essential

Record-low interest rates are finally rising, regulatory reforms like Dodd-Frank may be fundamentally altered, and the ways banks operate and companies raise capital are being transformed by blockchain and other technologies. Because these kinds of disruptive changes offer opportunities as well as challenges, Wharton@Work sat down with Itay Goldstein, Wharton’s Joel S. Ehrenkranz Family Professor, Professor of Finance, to talk about the new Value Creation and Growth Through Innovative Corporate Finance program.

“The financial crisis of 2008—2009 — when many highly leveraged firms went under — made many firms realize that leverage and the costs of debt are important issues,” says Goldstein, academic director of the Value Creation and Growth Through Innovative Corporate Finance program. “At the same time, even as costly M&A activity remains elevated and valuation concerns grow, more companies have significant intangible assets like R&D and patents that cannot be easily quantified. So the economic environment, innovation, and other disruptions are changing the way people think about capital structure. Today, everyone who works in finance — inside and outside of banking — needs an update.”

Wharton@Work: Wharton Executive Education is launching several new executive programs in finance. Why is the Value Creation and Growth Through Innovative Corporate Finance program important now?

Itay Goldstein: Regardless of their industry, finance executives have to make decisions all the time, including how to finance their company, where to invest, how to structure their balance sheet, and how to analyze a planned acquisition. They’re constantly affected by macroeconomic issues, regulatory changes, competition, and emerging financial technology.

This program will help to bring executives up to date on issues and dimensions; developments across the business, regulatory and technology spectrum; and how these changes may affect their decisions. We’ll guide them through sophisticated analytical and other tools, including approaches to optimize their capital structure and option tools to help them make the best decisions.

W@W: What can participants expect to take away from the program?

IG: Participants will gain a thorough understanding about timely issues, including addressing capital structure decisions through debt, equity, or a combination of both; managing risk across borders in a global economy; utilizing real options to expand, change or curtail projects based on changing economic, technological or market conditions; and valuing and assessing the financial and risk implications of strategic decisions.

The program will also dig deeply into issues like peer-to-peer lending and financing, which is emerging as a competitor to conventional lending, and how financial regulations that were imposed after 2008 are now facing possible changes in light of the new presidential administration. We’ll look at where we are now, and where regulations are headed in the near future.

W@W: What kinds of executives will be interested in this program?

IG: Value Creation and Growth Through Innovative Corporate Finance will appeal to participants who have already attended our Wharton Finance for Executives program and want a closer look at the complexities of corporate finance where they can get a deep immersion in advanced topics. Additionally, finance executives who haven’t taken WFEX but already have an MBA or years of experience will also benefit from it. They’ll all be able to step away from their day-to-day duties and immerse themselves in the latest research surrounding corporate finance.

W@W: What distinguishes this program from others out there?

IG: This is unique on a number of levels. First, it’s a comprehensive look at the key areas of corporate finance, particularly as it pertains to capital structure, options, risk management, mergers and acquisitions, international finance, and financial technologies. Further, the program will provide a macroeconomic view of today’s current economy. The program also stands out because it will stimulate dialogue between faculty and participants about issues like where the global economy is headed, and how the specter of rising interest rates and regulatory changes will impact corporate financial decisions.

W@W: Is this new program complementary to other Executive Education offerings?

IG: Definitely. Some programs, like Wharton Finance for Executives, are basic, while this one goes deeper. Others, like our CFO program (The CFO: Becoming a Strategic Partner), are heavy on strategy management, while our recently introduced Corporate Valuation focuses on calculating the value of a firm from observable data and reported numbers. Overall, these programs help executives deal with a fast-paced environment that’s rapidly undergoing some significant changes.