The Department of Finance at the LSE has been using the case study method of teaching for over 12 years. It is used primarily in their Master’s courses, and the department is amongst the heaviest users of cases among Master’s in Finance programmes internationally. Following their success in the postgraduate programmes, in 2017, the case study method of teaching was introduced in an undergraduate course, Introduction to Finance, to highly positive feedback from the students.
Why did Finance adopt the case study approach to teaching?
The case study approach meshes well with the teaching philosophy of the department. The traditional lecture-and-class format prevalent at the LSE is based on one-way communication, from the lecturer or teacher to the student. Classes are taught by teaching assistants and the lead faculty are at a distance. In the case study method, students are expected to read, prep, write up and contribute to the session. They have moved on from the lecture-class format to a three-hour ‘interactive lecture’ taught entirely by full faculty members. This has reduced the distance between lead faculty and students and allows for greater dialogue and communication in both directions.
It helps that the applied nature of finance is well suited to the case study method. It calls for problem-solving using messy, real-world, ill-structured problems which lends itself well to the nature of content covered in most of their Finance courses. The rigorous use of the case study method in teaching perfectly complements the inherent academic nature of the Master’s programmes in Finance. This equips their students to apply theoretical principles or technical skills to real-world problems, thereby setting them up well to compete against MBA graduates.
As a department they are committed to continuing with case teaching as the pedagogic suitability of the method has been vindicated by persistent demand from their students.
Different approaches to teaching and assessing with case studies
- Teaching – In some courses, every session is taught using a case study (eg. FM410 Private Equity), whereas others are taught using a combination of case study teaching and other methods.
- Summative assessment – In FM414 Corporate Investment and Financial Policy, all summative assessment is done through case studies. The final grade is made up of class participation, memos, coursework and a final exam based on an unseen case study.
- Formative assessment – In some courses (eg. FM421 Applied Corporate Finance), students complete case write-ups and give a group presentations based on a case study.
- In combination – Several finance courses (eg. FM100 Introduction to Finance) use case studies as one of the components their teaching and assessment mix alongside other methods of teaching and assessment.
Advantages of using the case study method
Pedagogy: As a pedagogic tool, the case study method allows for the study of multi-faceted problems in all their complexity. The case study is seen as an ill-structured, untidy problem that needs to be decluttered. It is in confronting the messiness and the complexity that the key points emerge, often through the process of elimination. The key difference between the use of case studies and real-world examples in teaching (though the case study is a type of real-world example) is that real-world examples tend to be one-dimensional, whereas case studies permit multi-strand inquiry.
Class interaction: The case study teaching method as popularised by Harvard involves extensive participation by the students. In fact, the role of the lecturer is that of the facilitator eliciting student contributions and asking questions that open lines of enquiry. The facilitator is expected to enable the students to do most of the intellectual heavy lifting. In some case-teaching courses at Harvard, as much as 50 per cent of the student’s grade comes from class participation. At LSE, the Finance department also sees student preparation and participation as vital, with class participation accounting for 20 per cent of the student’s final grade in some courses. As Professor Daniel Ferreira, an experienced case-teaching method practitioner puts it, “The case study method is an exercise in collective problem-solving."
Impact
Teaching using cases has been well received by students in Finance. Data collected by the department show that case-heavy courses perform better in student surveys with students citing the use of the case study method in their feedback.
The Department has had three of its faculty, Dr Ashwini Agarwal, Professor Daniel Ferreira and Dr Dirk Jenter highly commended for Inspirational Teaching at the LSE SU Teaching Excellence Awards, in all three cases for teaching case-intensive courses. The case study method has also been successfully used in the executive summer school, in particular the short courses, Finance for Executives and Corporate Finance and Strategy.
I use the case study method across all the courses I teach – undergraduate, postgraduate and Executive Master’s. While the case study method does call for intensive preparation the part of the teacher, it is a highly versatile tool and I have used the same case with my FM100 (Introduction to Finance) and my Executive Master’s students (FM475 Financial Management). The start and end points are the same, but there is a difference in the level and nature of delivery and interaction:
- Executive Masters approach a case by appealing to students' experience and intuition, and teaching delivery is highly participatory, inviting stduents to tell the academic how to do it.
- Undergraduate teaching introduces students to first principles and formatlism, and the delivery is more didactic.
Similarly, I could use the same case in different courses, but focus on different aspects or different processes. For instance, valuation is done one way in private equity and another way in mergers and acquisitions.
Having seen how well the case study method worked for our postgraduate students, I was keen for our first incoming undergraduate cohort to get a taste of this. The student feedback has been overwhelming:
- They gain an edge over other students (LSE and non-LSE) who have not been exposed to this method teaching especially in terms of analytical and problem-solving skills.
- The kind of practical knowledge the students develop in the course of learning through the case method has turned out to be good preparation for job interviews.
- The relatively high level of student participation this method calls for even from first-years (cold-calling, dealing with complexity, framing responses) has resulted in our students feeling and exuding greater confidence.
Practical tips
How to read a case: I adopt a two-pronged approach:
- What are the key points I want to extract or emphasise in the session: This would be based on the topic to be covered in and the learning outcomes of the session. These key points would lead to the solution which would go towards the content of my slides (and notes) and an accompanying spreadsheet.
- What are the other points that emerge: These additional points that come up when I am reading the case would be annotated, marked up and commented upon in my copy of the text. Depending on their importance, they might figure in my slides. These are the points that contribute to the ‘realness’ and 'muddiness' i.e. complexity of the problem, so they are often important to unpack with the students in class.
How to teach a case:
- For my first-years (FM100), I provide step-by-step instructions on how to approach the case. I call it “case study lite” as I do a lot of the intellectual heavy-lifting. I provide lecture slides and a spreadsheet that details the calculations. It’s not about following a recipe, but understanding the underlying theory and assumptions. In practice, financial analysts often misuse a formula because they do not understand how it works. For instance, how was WACC used in the wrong way; what were the underlying assumptions?
- With my postgraduates, I do not provide much scaffolding. I expect them to prepare notes in response to the case questions which they are expected to share in class.
How to choose a case:
In the Finance department, experienced practitioners mentor novice instructors as we have found observations and frank discussions really help, with one of our newly-minted case practitioners clocking very impressive student satisfaction scores. Here are points to bear in mind when choosing a case:
- Tweak: There is no dearth of cases to choose from especially in the fields of business, finance, management, accounting including the odd case study in international development, health and environment policy. Most cases especially by Harvard Business Review come with notes, guidance and questions for the instructors, which is a good jumping-off point especially for teachers who are new to teaching with cases. However, use the teaching notes cautiously. Ensure that the answers to the questions you pose are not available on the internet as is the case with some of the more popular Harvard case studies. I prefer to tailor the case to suit my course and students. I do not use the guidance and questions suggested by the case authors, but will use different models and assumptions and I will set different discussion questions.
- Funnel: I also look for cases that are multi-faceted with multiple strands of enquiry as that means I can have a long discussion that starts off with several aspects. I liken the in-class case discussion to a funnel: at the beginning the discussion is all over the place, and then it narrows down to one number or approach.
- Break it down: If every step of a case builds on previous steps, students who get one of the first parts wrong can end up on the wrong track. I prefer to use cases that can be broken down into independent units, so that students don’t get stuck.
- Read the cues: When students don’t engage with the case or they are floundering, the lecturer should step in and fill the gaps. This often occurs when the case is too difficult or the level is not right. The best advice I could offer in such a situation is to change the case.
- Commit: When I teach with a case, I go with the flow, letting the case serve as the narrative for teaching the class and determine the structure and order.
Ulf Axelson is a heavy user of the case study method of teaching, pioneering its use at LSE in 2011. In one of his courses, students are assigned a case every week and class participation accounts for 20 percent of their final grade. Ulf describes how this works in practice.
FM410 Private Equity has 60 enrolled students. We meet once a week and discuss a case in every session. Like a lot of Finance courses, this course differs from the typical LSE course, in that the lecture and class are combined into a three-hour session we call the interactive lecture. This format is best suited to the case study method which requires active and thoughtful participation from the students facilitated by the lecturer.
In my case study sessions, I expect students to come to class well-prepared and ready to engage with the case, their peers and me. For many students, this will be the first time they are receiving a summative grade for class participation, so I spend a portion of the first session explaining how it works.
Pre-session
Meaningful participation in a case study hinges on solid preparation. Students need to read the case study before the session and discuss the study questions either in a group or alone. There are optional supplementary readings provided such as a book chapter or a paper and students often will read these as well.
In-session
I start the three-hour session with an introduction to the case and establish the context. I will cold-call students who haven’t contributed and ask them to frame the situation. This is a good juncture to cold-call as students will not be under pressure as these are low-stakes, simple questions. I will tease out the key points and shift gear, moving to the meatier topics – the more complex and analytical topics. At this points, I will allow students to volunteer responses. I will probe a little more, present an alternative and invite them to explain how this might affect the situation. On the back of this information, I will draw the students to participate in a discussion about related principles, opportunities and threats. In this way, I use a back-and-forth method of engagement which allows them to build on each other’s’ responses keeping in mind.
In order for this to work fairly (it is being graded) and for students not to be intimidated, I always:
- Learn the names of the students and associate contributions with the person who made them
- Set the tone at the beginning – I start calling on students to contribute at the beginning of the session, so they get used to the idea and can contribute on a regular basis
- Distribute the questions evenly, so that everyone gets a chance to respond
- Am mindful of diversity among my students – the loquacious ones, the more thoughtful ones, students with different educational backgrounds – and aim to incorporate their needs in my teaching