Corporate Finance

Endogeneity in Empirical CorporateFinance ArXiv ID: ssrn-1748604 “View on arXiv” Authors: Unknown Abstract This chapter discusses how applied researchers in corporate finance can address endogeneity concerns. We begin by reviewing the sources of endogeneity - omitted Keywords: Endogeneity, Corporate Finance, Instrumental Variables, Quasi-Natural Experiments, Omitted Variables Bias, Equity Complexity vs Empirical Score Math Complexity: 7.0/10 Empirical Rigor: 4.0/10 Quadrant: Lab Rats Why: The paper is highly technical, covering advanced econometric techniques like instrumental variables, panel data methods, and regression discontinuity designs, which places it firmly in high math complexity. However, it is a theoretical survey/review focused on methodology rather than presenting backtest-ready data or specific implementations, leading to low empirical rigor. flowchart TD A["Research Goal<br>Address Endogeneity in Corporate Finance"] --> B["Identify Endogeneity Source<br>e.g., Omitted Variables"] B --> C{"Choose Methodology"} C --> D["Instrumental Variables<br>IV Approach"] C --> E["Quasi-Natural Experiments<br>DID / RD Designs"] D --> F["Data & Inputs<br>Equity Data, Instrument Validity"] E --> F F --> G["Computational Process<br>2SLS / Regression Analysis"] G --> H["Key Findings<br>Validated Causal Inferences<br>Reduced Bias in Equity Studies"]

Equity Risk Premiums (ERP): Determinants, Estimation and Implications – The 2013 Edition ArXiv ID: ssrn-2238064 “View on arXiv” Authors: Unknown Abstract Equity risk premiums are a central component of every risk and return model in finance and are a key input in estimating costs of equity and capital in both cor Keywords: Equity Risk Premiums, Cost of Equity, Risk and Return Models, Capital Budgeting, Corporate Finance, Equity Complexity vs Empirical Score Math Complexity: 5.0/10 Empirical Rigor: 3.0/10 Quadrant: Lab Rats Why: The paper discusses theoretical risk-return models (like CAPM and multi-factor models) which involve mathematical formulas, but the excerpt shows conceptual explanation rather than dense derivations. Empirical rigor is low as it focuses on conceptual discussions, historical data limitations, and forward-looking estimates without providing backtesting, code, or implementation-heavy datasets. flowchart TD A["Research Goal<br>Determine & estimate the Equity Risk Premium (ERP)<br>for corporate finance & valuation"] --> B["Key Inputs & Data<br>• Historical Market Returns (Equity & Bonds)<br>• Implied ERP from Valuation Models<br>• Macroeconomic Factors (Inflation, Interest Rates)"] B --> C["Methodology<br>1. Historical Approach<br>2. Forward-Looking/Implied ERP<br>3. Macroeconomic Determinants"] C --> D["Computational Process<br>• Estimate Historical ERP<br>• Forecast future ERP<br>• Adjust for risk & macro conditions"] D --> E["Key Findings & Outcomes<br>• ERP varies over time (not constant)<br>• Influenced by macroeconomic factors<br>• Crucial for Cost of Equity & Capital Budgeting"]

Equity Risk Premiums (ERP): Determinants, Estimation and Implications – The 2015 Edition ArXiv ID: ssrn-2581517 “View on arXiv” Authors: Unknown Abstract Equity risk premiums are a central component of every risk and return model in finance and are a key input in estimating costs of equity and capital in both cor Keywords: Equity Risk Premiums, Cost of Equity, Risk and Return Models, Capital Budgeting, Corporate Finance, Equity Complexity vs Empirical Score Math Complexity: 6.0/10 Empirical Rigor: 4.0/10 Quadrant: Lab Rats Why: The paper introduces advanced financial models like CAPM and multi-factor models with formulas, indicating moderate math complexity. However, it focuses on conceptual frameworks and theoretical estimation approaches (historical, survey, implied) without providing specific backtests, code, or detailed empirical datasets. flowchart TD A["Research Goal: Determine ERP"] --> B{"Methodology & Inputs"}; B --> C["Data: Historical Market Returns<br>Risk-Free Rate<br>Implied ERP from Valuation"]; B --> D["Model: DCF & Risk Models"]; C --> E{"Computational Process"}; D --> E; E --> F["Estimate Base ERP<br>+ Adjust for Risk Factors"]; E --> G["Forward-Looking Analysis<br>vs. Historical Averages"]; F --> H["Key Outcomes"]; G --> H; H --> I["2015 ERP Estimate<br>5.5% - 6.5%"]; H --> J["Implications for:<br>Cost of Equity & Capital"];

Ten Badly Explained Topics in Most Corporate Finance Books ArXiv ID: ssrn-2079055 “View on arXiv” Authors: Unknown Abstract This paper addresses 10 corporate finance topics that are not well treated (or not treated at all) in many Corporate Finance Books. The topics are: 1. Where doe Keywords: Corporate Finance, Capital Budgeting, Cost of Capital, Valuation, Corporate Equity Complexity vs Empirical Score Math Complexity: 4.5/10 Empirical Rigor: 1.0/10 Quadrant: Philosophers Why: The paper focuses on conceptual clarification and critique of established financial theory (like WACC and equity premium) with moderate mathematical notation, but it lacks any empirical data, backtests, or implementation details, relying instead on reviewing textbook recommendations and theoretical arguments. flowchart TD R["Research Goal: Identify 10 topics<br>poorly explained in Corporate<br>Finance books"] --> M["Methodology: Content analysis of<br>leading Corporate Finance texts"] M --> D["Data: Leading corporate finance<br>textbooks and literature"] D --> C["Computational Process: Cross-referencing<br>concepts vs. explanations; gap analysis"] C --> F["Key Findings: Identified gaps in<br>Cost of Capital, Valuation,<br>Equity structures, and Capital Budgeting"]

Ten Badly Explained Topics in Most CorporateFinanceBooks ArXiv ID: ssrn-2044576 “View on arXiv” Authors: Unknown Abstract This paper addresses 10 corporate finance topics that are not well treated (or not treated at all) in many Corporate Finance Books. The topics are: Where the Keywords: Corporate Finance, Capital Budgeting, Cost of Capital, Valuation, Corporate Equity Complexity vs Empirical Score Math Complexity: 2.0/10 Empirical Rigor: 1.0/10 Quadrant: Philosophers Why: The paper is a conceptual critique of topics in corporate finance textbooks with no evidence of mathematical derivations or empirical backtesting, focusing on theoretical and pedagogical gaps. flowchart TD A["Research Goal: Identify & explain 10 corporate finance topics poorly covered in textbooks"] --> B["Methodology: Critical review & synthesis of leading corporate finance textbooks & academic literature"] B --> C["Data/Input: Common textbooks & their treatment of Capital Budgeting, Cost of Capital, Valuation"] C --> D["Computational Process: Comparative analysis of theoretical concepts vs. applied practice gaps"] D --> E["Outcome: 10 key topics identified & clarified (e.g., Cost of Capital, Equity Valuation)"] E --> F["Outcome: Revised frameworks for Capital Budgeting & Corporate Finance pedagogy"]

Introducing the PIT-plot – a new tool in the portfolio manager’s toolkit ArXiv ID: 2506.12068 “View on arXiv” Authors: Stig-Johan Wiklund, Magnus Ytterstad Abstract Project portfolio management is an essential process for organizations aiming to optimize the value of their R&D investments. In this article, we introduce a new tool designed to support the prioritization of projects within project portfolio management. We label this tool the PIT-plot, an acronym for Project Impact Tornado plot, with reference to the similarity to the Tornado plot often used for sensitivity analyses. Many traditional practices in portfolio management focus on the properties of the projects available to the portfolio. We are with the PIT-plot changing the perspective and focus not on the properties of the projects themselves, but on the impact that the projects may have on the portfolio. This enables the strategic portfolio management to identify and focus on the projects of largest impact to the portfolio, either for the purpose of risk mitigation or for the purpose of value-adding efforts. ...

Equity Risk Premiums (ERP): Determinants, Estimation, and Implications – The 2025 Edition ArXiv ID: ssrn-5168609 “View on arXiv” Authors: Unknown Abstract The equity risk premium is the price of risk in equity markets, and it is not only a key input in estimating costs of equity and capital in both corporate Keywords: equity risk premium, cost of equity, valuation, corporate finance, risk and return, Equities Complexity vs Empirical Score Math Complexity: 4.0/10 Empirical Rigor: 6.0/10 Quadrant: Street Traders Why: The paper focuses on practical estimation methods (historical, survey, implied) and uses empirical data from multiple markets, but relies on conceptual frameworks and regression analysis rather than advanced mathematical derivations. flowchart TD A["Research Goal: Determine 2025 Equity Risk Premium"] --> B["Methodology & Data Inputs"] B --> C["Computational Processes"] C --> D["Key Findings & Implications"] subgraph B ["Methodology & Data Inputs"] B1["Historical Market Returns"] B2["Inflation & Treasury Yields"] B3["Valuation Multiples<br>P/E, Dividend Yields"] end subgraph C ["Computational Processes"] C1["Historical Averages"] C2["Build-Up Models<br>ERP = RiskFree + Equity Risk Compensation"] C3["Inverse P/E Implied ERP"] end subgraph D ["Key Findings & Implications"] D1["Updated Cost of Equity<br>Estimates"] D2["Valuation Adjustments<br>for 2025"] D3["Strategic Asset Allocation<br>Guidance"] end

Considerations on the use of financial ratios in the study of family businesses ArXiv ID: 2501.16793 “View on arXiv” Authors: Unknown Abstract Most empirical works that study the financing decisions of family businesses use financial ratios. These data present asymmetry, non-normality, non-linearity and even dependence on the results of the choice of which accounting figure goes to the numerator and denominator of the ratio. This article uses compositional data analysis (CoDa) as well as classical analysis strategies to compare the structure of balance sheet liabilities between family and non-family businesses, showing the sensitivity of the results to the methodology used. The results prove the need to use appropriate methodologies to advance the academic discipline. ...

Financial Performance and Economic Implications of COFCO’s Strategic Acquisition of Mengniu ArXiv ID: 2410.16299 “View on arXiv” Authors: Unknown Abstract This paper examines the merger and acquisition (M&A) process between COFCO and Mengniu Dairy, exploring the motivations behind this strategic move and identifying its key aspects. By analyzing both the financial and non-financial contributions of Mengniu Dairy to COFCO, this study provides valuable insights and references for future corporate M&A activities. The theoretical significance of this research lies in its focus on the relatively underexplored area of M&A within the dairy industry, particularly in terms of M&A contributions. Using the COFCO-Mengniu case as a model, the study broadens current research perspectives by assessing the impact of M&A from financial and non-financial standpoints, enriching the body of literature on dairy industry M&As. ...

The Impact Of Interest Rates On Firms Financial Decisions ArXiv ID: 2311.14738 “View on arXiv” Authors: Unknown Abstract Financial decisions are the decisions that managers take with regard to the finances of a company. This article aims to examine and explain the effect of interest rates on economic and financial decisions such as investment, funding, and dividend in a firm. This research uses the correlation coefficient analysis methods and descriptive methods to illustrate the relationship between interest rates and financial decisions. The data used in this research was obtained from several government reports and leading economic sources. The results of this research show that interest rates have a negatively insignificant effect on investment and funding decisions, but positively moderate effect on dividend decisions. ...