A Compulsory Corporate Finance: Reflections on the Scope and Method

Abstract

The importance of social norms and legal regulation for organizing contemporary economy impacts on theoretical discussion of the scope and method of corporate finance. The term of “a compulsory corporate finance” is coined to pay more attention to novel approach to both financing and investment decision taken by firms. This paper identifies the scope and the method of compulsory corporate finance based on discovering territories of the confluence of social norms and the economics of corporate finance. The scope of compulsory corporate finance should embrace the influence of social norms on financial decisions made by firms and complement the well-investigated relations between legal regulations and corporate finance. The methodology of compulsory corporate finance finds the cooperation but not competition as the essence of the theory of financial decisions. The promotion of Buchan symbiotics should be provided to make the theory of corporate finance closer to contemporary economy and society.