Working Paper: CEPR ID: DP2551
Authors: Luigi Zingales
Abstract: In this paper I argue that corporate finance theory, empirical research, practical applications, and policy recommendations are deeply rooted in an underlying theory of the firm. I also argue that while the existing theories have delivered very important and useful insights, they seem to be quite ineffective in helping us cope with the new type of firms that are emerging. I outline the characteristics that a new theory of the firm should satisfy and how such a theory could change the way we do corporate finance, both theoretically and empirically.
Keywords: Corporate Finance; Foundations; New
JEL Codes: G30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| theory of the firm (D21) | corporate finance (G30) |
| changes in the nature of firms (D21) | governance choices (D72) |
| changes in the nature of firms (D21) | financing choices (G11) |
| firm characteristics (L20) | valuation methods (D46) |