What is Corporate Finance?
Corporate finance is the study of how firms finance themselves. As such most University Corproate finance classes involve capital budgeting (what assets to own), capital structure (how to pay for the assets--debt or equity), whether the firm should give money back to investors (dividends and buybacks), and corporate governance (Boards of Directors, Executive compensation, etc). Other topics that are often part of corporate finance are the market for corporate control (takeovers, spin-offs, divestitures etc), derivative use (risk management), and short term working capital management.
In my classes we also spend much time talking about how firms are composed (a nexus of contracts) and the model of a financial system before jumping to valuation and capital budgeting.
Some past blog posts on these topics:
- Capital Budgeting
- Capital Structure
- Agency Costs
- Corporate Governance
- Executive Compensation
- Mergers and Acquistions
- Derivatives
Some important papers across all finance arenas (but mainly corporate can be found on my I^3 page.
