Empirical Corporate Finance: Volumes I, II, III and IV

Abstract

To most economist's the words ‘empirical corporate finance' conjure up memories of countless papers either testing the empirical relevance of the Modigliani and Miller theorem or analysing the impact of corporate events on shares' evaluations. This is no longer true. Nowadays, empirical corporate finance (and corporate finance, for that matter) is a very exciting research area where the focus has shifted towards the study of the relationships among the several agents involved in the life of a company (shareholders, bondholders, managers and so on) and the impact of these relationships on its performance. The ‘mantra' today is ‘information': financial economists have now acknowledged that asymmetric information is pervasive in every aspect of a company's life. Shareholders and other outsiders to the firm do not have complete information on whether investment opportunities are really value‐enhancing; in turn, managers can exploit this asymmetric information to divert resources for their own advantage. Because of these informational problems, common events in the life of a company (like debt issuance or dividends announcements) are now perceived as the main conveyors of information about a company available to outsiders. All this has redefined the research agenda for corporate finance in such a manner as to strongly increase its appeal to mainstream economists.