In modern boardrooms, financial strategy is no longer just the domain of CFOs and corporate treasurers. Shareholders, regulators, and markets demand that directors understand how corporate financing choices affect enterprise value, liquidity, and long-term competitiveness. The balance between debt and equity financing, and the implications of capital structure decisions, is central to a company’s ability to fund growth, manage risk, and withstand market shocks.
The course “Debt and Equity Financing & Cost of Capital – Boardroom Finance: Strategy for Directors”, offered by the Oxford Training Centre, provides senior decision-makers with a strategic framework for evaluating financing structures. This program focuses not on classroom-style education, but on boardroom-level application: how directors should assess the weighted average cost of capital (WACC), determine the optimal mix of debt and equity, and exercise oversight in decisions that define corporate resilience.
Global events—from interest rate volatility and inflationary pressures to shifting capital market conditions—underscore why boards must be equipped to oversee financing strategies. A well-designed capital structure is not simply an accounting construct; it shapes investor confidence, drives valuation multiples, and safeguards liquidity. Conversely, poor financing choices expose companies to interest rate risk, credit rating downgrades, and reputational damage.
This program reframes financing and cost-of-capital analysis as strategic governance issues. Directors will engage in case-driven discussions, scenario simulations, and boardroom debates to explore how financial structure influences shareholder trust, enterprise value, and corporate flexibility.
At its core, debt and equity financing reflects a company’s trade-off between risk and return. Boards must understand how borrowing affects gearing ratios, how equity issuance dilutes ownership but enhances stability, and how shifts in market conditions redefine the “optimal” balance.
Equally, the cost of capital is a board-level issue. The WACC is not merely a formula; it defines the hurdle rate for corporate investments and acquisition strategies. A company that misjudges its WACC risks overinvesting in low-return projects or rejecting profitable growth opportunities.
From a governance standpoint, directors must ensure financing decisions are:
- Aligned with shareholder expectations.
- Resilient to capital market volatility.
- Supportive of long-term enterprise value creation.
Boards do not calculate derivative pricing models or compute exact IRRs; management does. But directors must ask the right questions, interpret the metrics, and prioritize risks. That is the essence of boardroom finance strategy.
Objectives
By the end of this program, participants will be able to:
- Interpret the strategic trade-offs between debt and equity financing.
- Understand how capital structure affects shareholder value, enterprise resilience, and market perception.
- Assess WACC, cost of equity, and cost of debt in board-level decision-making.
- Evaluate financial metrics such as IRR, payback period, and DCF in the context of capital allocation.
- Prioritize risks using KRIs, risk metrics, and stress testing when reviewing financing strategies.
- Apply cost-benefit analysis to leverage decisions, dividend policies, and equity issuances.
- Make boardroom decisions on resource allocation, ensuring liquidity and financial flexibility are preserved.
- Oversee management’s adherence to regulatory and fiduciary obligations in financing and capital structure decisions.
Target Audience
This program is tailored for:
- Board Directors and Non-Executive Directors overseeing financing strategy.
- CEOs and CFOs presenting capital structure recommendations to their boards.
- Risk and Audit Committee Members evaluating gearing, leverage, and liquidity risk.
- Private Equity Partners and Investors balancing cost of capital with enterprise value creation.
- Senior Executives involved in funding strategy, M&A decisions, and treasury management.
Course Modules
Module 1: Strategic Role of Debt and Equity Financing
- Debt financing: benefits of leverage, tax shields, and increased ROE.
- Risks of debt: interest rate risk, refinancing risk, and credit downgrades.
- Equity financing: preserving liquidity and balance sheet stability.
- Dilution, dividend expectations, and investor relations.
- Boardroom Focus: How debt/equity choices shape strategic flexibility and valuation multiples.
Module 2: Cost of Capital as a Board-Level Metric
- Understanding WACC as the benchmark for investment appraisal.
- Cost of equity: shareholder expectations, risk premia, and beta.
- Cost of debt: credit spreads, ratings, and capital market conditions.
- Capital market cycles and their effect on WACC.
- Boardroom Focus: Asking the right questions—“Is our WACC realistic, and does it align with shareholder value creation?”
Module 3: Capital Structure and Enterprise Value
- The Modigliani–Miller theorem: theory vs. corporate reality.
- Trade-off theory and the balance between tax shields and distress costs.
- Market timing and pecking-order theory in financing decisions.
- Boardroom Focus: Ensuring that capital structure supports sustainable enterprise value.
Module 4: Dividend Policy and Shareholder Value
- Residual dividend theory and its strategic application.
- Dividend signaling and investor confidence.
- Balancing payout ratios with reinvestment needs.
- Boardroom Focus: How dividend policies affect valuation and capital allocation flexibility.
Module 5: Risk Management in Financing Decisions
- Identifying key risk indicators (KRIs) for leverage and liquidity.
- Stress testing capital structures under adverse scenarios.
- Hedging strategies for interest rate and currency exposure.
- Boardroom Focus: Aligning financing risk appetite with enterprise resilience.