Corporate Finance: Research Insights

Corporate finance has been rising to new heights each day. Many new challenges are faced by the modern-day financial executives. However, the most important objective of a finance manager remains the same – maximizing shareholder value. This creation of value depends on various decisions taken by the managers during their normal course of activities. Some of the important decisions include those related to capital structure, capital budgeting, dividend policies, margers and acquisitions, corporate governance, among others. A firm can choose any form of financing for its investments. This form of financing determines the capital structure. The choice of capital structure plays a crucial role in determining the company’s prospects. The capital structure and dividend policy of a firm are inter-related. Firm give due weightage to the dividend decisions because they enable them to determine the proportion of funds retained for reinvestment and paid out to investors. Many researchers have explored the determinants of a firm’s capital structure and dividend decisions and have presented their results with evidence from the real life. Initial Public Offerings (IPOs) of a company, and mergers and acquisitions have also given scope for new research in the fields, which challenged some of the traditional theories. In the wake of corporate scandals of huge magnitude in the last two years, corporate governance has assumed the top priority in the area of corporate finance and has opened new research. This book endeavors to capture some of the major research work in the above-mentioned areas of corporate finance.