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MBA · Craig Dunbar, Ivey Finance Professor

Can You Really Learn Finance With Cases?

Sep 10, 2018

Craig-Dunbar teaching.jpg

Craig Dunbar, Ivey Finance Professor

I started my academic life as an engineering student at the University of Toronto. From there I went to MIT to study Technology and Policy. Finally, I pursued my PhD in finance and statistics at the University of Rochester. My first academic job in 1992 was at the University of Pittsburgh where I taught courses in corporate finance, investments, and financial institutions.

When I moved to Ivey in 1997 as an untenured Assistant Professor I had never taught a single case class. I had never taken a single case class. All of my post-secondary education and all of my own teaching experience involved lectures. My job as a student was to come to class and ferociously try to record every word uttered by the professor. My job as a professor up to that point had been to, as clearly and succinctly as possible, pass on my knowledge to those in my class.

A Good Case Teacher is Like an Orchestra Conductor

It is perhaps because of my background that the most common questions I get from prospective students thinking about applying to the Ivey Business School go something like the following: “how is it possible to learn Finance through case discussion? Aren't there just too many tools and concepts that need to be taught?”

These are good questions. I had these same questions when I arrived at Ivey and took my first “teaching with cases” seminar with legendary Ivey faculty Jim Erskine and Mike Leenders. While excellent, that seminar left me a little bit frightened. I learned that an important part of case learning was student discovery. While the instructor could talk about concepts and theories, deeper learning was argued to occur when students discover and make meaning of those concepts and theories themselves. The Socratic Method, a key part of case teaching, involves asking a series of questions. Through responding to that questioning, a deeper understanding would arise. I was told that a good case teacher was like an orchestra conductor, and the quality of a class could be evaluated based on how much the instructor spoke: less is better.

While self-discovery through questioning sounded wonderful and made logical sense, I saw many of the tools and concepts in my field of Finance to be too complex. How could one discover the Black-Scholes option pricing formula? Without first explaining some of the complicated theories or tools, how could students meaningfully make decisions in case studies? Fortunately, I had a number of wonderful mentors over the years* that helped me understand the power of case learning in my discipline of Finance.

How Application Supports Theory

In a case course, knowledge is conveyed to students but only very occasionally in the form of a traditional lecture. More often, students are given readings and videos to pass on important institutional knowledge and management theories. Students are expected to do some work to acquire necessary knowledge before coming to class. As a result, the majority of class time is spent on application, where students take their knowledge and apply it to real business decisions. Focusing class time on application has a number of benefits. First, application can give students a deeper understanding of theory. Every theory has limitations and trying to apply theory to a decision gives students a greater sense of those limitations.

Application can also give students a greater appreciation of theory. Many theories are not inherently interesting or obviously useful. The language of much of financial theory is math and some students face challenges with that. They tell themselves “I’m not a numbers person” and resist learning concepts that involve math. In finance, that can be a real problem. While the math needed to access some financial theory is very complex (e.g. option pricing), the vast majority of useful financial tools come from theories that involve the use of high school level algebra at most. Cases can help many students get past their initial resistance to quantitative tools.

As an example, we use a case where a company is considering different financing options and ask students to decide which option is best. When things are going to plan, the class discussion flounders as students struggle in grasping which issues are most important to consider. Late in the discussion the instructor stops things and says, “We’re floundering — perhaps a theory would help.” At this point, a lecture on the Modigliani and Miller theory of capital structure becomes engaging. By the end of it, students appreciate how the theory can be really useful, and they are more likely to put in the effort to learn it more deeply.

With Case Study the Focus is on the Student not the Professor

By focusing on application, an important benefit of the case class is that the focus is on the student. Instead of walking through how to analyze a case, the instructor mostly asks students what they’ve done. The role of the instructor is first to ensure students apply concepts and tools properly. Errors can be a great opportunity for learning. When covering a case where students attempt to use discounted cash flow to value a firm, for example, it can be a wonderful learning opportunity when a student mistakenly double counts a cash flow as this error can be hugely consequential (the firm appears to be much more valuable and you significantly overpay).

The other reality is that the quality of any financial decision depends on the inputs used in an analysis. In valuing a company, do you expect growth in cash flows to be 3% or 4%? There is no “correct answer” to such a question in that nobody knows today what will happen in the future. There are facts and arguments in most cases that can support both assumptions. Spending time struggling with this issue has two really important benefits. First, students spend time thinking about and challenging their assumptions, developing judgment. Second, students appreciate the true degree of uncertainty facing business managers and learn to make decisions in the face of that uncertainty.

Real-Time Feedback

The feedback students receive on the quality of their application of financial tools can have a huge impact on their ability to apply those tools. In a lecture-based course, the student may get one opportunity to apply concepts and generally only gets feedback once through faculty evaluation of their work. In a case class, there are dozens of opportunities to apply concepts and feedback occurs in real time and not just from faculty. Other students provide useful feedback though questioning and arguments made in a class discussion.

Coming back to the original questions posed, perhaps the right focus should not be on whether Finance can be taught through the case method, but whether financial concepts and tools can be learned. By focusing on “know how” rather than “know what” competencies, I believe students leave a case-oriented course better prepared to take financial tools and concepts and actually apply them wisely to real business decisions.

*I would be remiss in not thanking Larry Wynant, Jim Hatch, Steve Foerster, and Bob White for all they taught me.

For more information on Ivey Business School cases, please visit