Corporate Finance, Market Structure and the Theory of the Firm

This project, founded by the Swiss National Science Foundation (SNSF), is part of the national center of competence in finance and is coordinated by the University of Zurich. The research conducted within this project can be grouped under four main headings, which can briefly be entitled as such: (i) controlling agency problems in corporations: the roles of analysts, boards and the institutional environment; (ii) cash flow and cash holdings: implications for corporate investment and systematic risk; (iii) skills, know-how and core capabilities in corporate finance; (iv) liquidity and financial institutions.

One focus of the project lies on the analysis of a classical issue in corporate finance: motivating management and controlling misbehaviour. Professors Degeorge, Fahlenbrach, and Wagner take an empirical approach to examine the role of external governance mechanisms such as analyst coverage and the institutional and legal environment as well as internal mechanisms such as board structure and effectiveness.