Professor Michael Burkart CON 1.01, Prof Daniel Paravisini Maggi CON 1.01 and Dr Ashwini Agrawal CON 1.01

Professor Frederic Malherbe CON 1.01

This course is compulsory on the MRes/PhD in Finance. This course is available on the MPhil/PhD in Accounting. This course is available with permission as an outside option to students on other programmes where regulations permit.

Doctoral students in the Departments of Finance and Economics, and other students with the permission of the PhD Finance Programme Director

The first half of this course focuses on the theory of corporate finance. The theory half of the course can, in turn, be subdivided into two parts. The first part reviews some of the classical concepts in corporate finance, using tools from game and contract theory to study incentive and information problems at the level of the firm, examining how financial contracts can be designed to mitigate these problems. This part of the course also considers how takeovers and ownership concentration can help to mitigate conflict of interests among insiders and investors in firms. The second part focuses on the theory of financial intermediation. This component reviews classic theories of financial intermediation and will introduce students to some recent work in this field. The second half of the course will consider empirical research in corporate finance.  Several lectures will be devoted to research methodologies, such as data collection methods, randomized control trials, the use of instrumental variables in linear regressions, regression discontinuity designs, event studies, and structural estimation techniques. There will also be extensive discussion of current and established topics within empirical corporate finance, such as firm financing decisions, investment behaviour, control transactions, corporate governance, financial intermediation, household finance, and overlapping topics with industrial organization and labour economics.

30 hours of lectures in the MT. 30 hours of lectures in the LT.

Readings will be mainly based on books and journal articles including:

Tirole, Jean, The Theory of Corporate Finance, 2006, Princeton University Press.

Freixas, X. and Rochet, J.C., The Microeconomics of Banking, 1997, MIT Press.

J. Wooldridge, Econometric Analysis of Cross-Section and Panel Data, Cambridge: The MIT Press, 2002.

M. Roberts and T. Whited: "Endogeneity in Empirical Corporate Finance," Handbook of the Economics of Finance, vol. 2.

Exam (75%, duration: 3 hours) in the summer exam period.
Project (25%) in the LT.