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For corporate finance to truly advance we need more genuinely testable models

Author

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  • Matthew Spiegel

Abstract

Corporate finance has turned into a field where researchers produce what seem like a constant flow of disconnected papers. Theories are never confirmed or refuted. At best, empirical papers confirm models without a realistic alternative to refute. The problem is that today's models are either static or have firms that never interact directly with other firms. Most industries are oligopolies. For firms in these industries the competition's actions in the product market are likely of paramount importance. If corporate finance is going to progress, we need papers with testable dynamic oligopoly models. Models where firms compete directly with each other.

Suggested Citation

  • Matthew Spiegel, 2023. "For corporate finance to truly advance we need more genuinely testable models," The Financial Review, Eastern Finance Association, vol. 58(4), pages 657-661, November.
    • Handle: RePEc:bla:finrev:v:58:y:2023:i:4:p:657-661
    DOI: 10.1111/fire.12346
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    References listed on IDEAS

    as
    1. Hajda, Jakub & Nikolov, Boris, 2022. "Product market strategy and corporate policies," Journal of Financial Economics, Elsevier, vol. 146(3), pages 932-964.
    2. Gan, Liu & Xia, Xin & Zhang, Hai, 2022. "Debt structure and debt overhang," Journal of Corporate Finance, Elsevier, vol. 74(C).
    3. Matthew Spiegel & Heather Tookes, 2020. "Why Does an IPO Affect Rival Firms?," The Review of Financial Studies, Society for Financial Studies, vol. 33(7), pages 3205-3249.
    4. Li, Xuelin & Liu, Tong & Taylor, Lucian A., 2023. "Common ownership and innovation efficiency," Journal of Financial Economics, Elsevier, vol. 147(3), pages 475-497.
    5. Huang, Jingong & Xie, Taojun, 2023. "Technology centrality, bilateral knowledge spillovers and mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 79(C).
    6. Jordan Martel & Kenneth Mirkin & Brian Waters, 2022. "Learning by Owning in a Lemons Market," Journal of Finance, American Finance Association, vol. 77(3), pages 1737-1785, June.
    7. Natalia Lazzati & Amilcar A. Menichini, 2015. "A Dynamic Model of the Firm: Structural Explanations of Key Empirical Findings," The Financial Review, Eastern Finance Association, vol. 50(3), pages 341-361, August.
    8. Matthew Spiegel & Heather Tookes, 2013. "Dynamic Competition, Valuation, and Merger Activity," Journal of Finance, American Finance Association, vol. 68(1), pages 125-172, February.
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    Cited by:

    1. David J. Denis, 2024. "Is corporate finance research in decline?," The Financial Review, Eastern Finance Association, vol. 59(2), pages 257-264, May.

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