Asymmetric information and agency costs between the firm and its investors affect the firm’s cost of capital, capital allocation and risk policies. This research area investigates how corporate governance mechanisms affect firms’ investment and financing policies and long-term profitability.
Research on internal governance focuses on, e.g., managerial incentives and monitoring by owners and boards of directors, efficiency of risk management, and the effectiveness of reporting and auditing.
Research on external governance focuses on, e.g., investor activism, media coverage, country and cultural norms, political system, legal protection, and executive labour market conditions.
Finally, research of financial reporting quality investigates how reporting standards build trust and reduce contracting costs between key decision makers within the firm and the firm’s investors by narrowing informational gaps and asymmetric information.
- Key non-scientific/managerial question: Which types of internal and external governance mechanisms help firms to achieve their financial goals? What kind of financial reporting facilitates effective company management and communication to stakeholders?
- Scientific sub-disciplines: corporate finance, accounting, corporate governance, financial management
- Scientific research topics: governance, investor relations, investment and financial policies, governance mechanisms, managerial incentives and structures, payout policies, ownership structure, boards of directors, ethical reputation, macro conditions of corporate policy, political uncertainty, financial reporting quality, sustainable value creation, profitability, growth, investments, resource utilization, auditing, earnings management
- Scientific research methods: logistic estimations, time-series analysis, matching estimators, machine learning, regression discontinuity, non-parametric estimations, textual analysis.