Dr Ashwini Agrawal, Prof Amil Dasgupta, Prof Dirk Jenter, Prof Martin Oemhke, and Dr Paul Voss

This course is compulsory on the MRes/PhD in Finance. 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.

This course is not capped; any eligible student that requests a place will be given one.

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 theory and contract theory to study incentive and information problems at the level of the firm, and examines 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 first reviews classic theories of banking while also introducing students to recent developments in the field. The course then introduces students to asset managers as financial intermediaries, examining their role in financial markets and corporate governance.

The second half of the course will consider empirical research in corporate finance.  Several lectures will be devoted to understanding and applying commonly used research methodologies, such as randomized control trials, instrumental variables in linear regressions, regression discontinuity designs, event studies, and structural estimation techniques. There will also be extensive discussion of subtopics within empirical corporate finance, such as firm financial policy, investment behaviour, control transactions, corporate governance, financial intermediation, household finance, consumer finance, and overlapping topics with industrial organization and labour economics. For each topic, time will be devoted to assessing current levels of active research and open questions for further work. A significant portion of time will also be spent critically evaluating empirical papers through referee reports and discussions. Students will also have the opportunity to consider various processes that different researchers follow to generate ideas, collect data, write papers, and manage the publication process.

30 hours of lectures in the AT. 30 hours of lectures in the WT.

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.

Continuous assessment (100%).