An Agenda for More Effective Research in Corporate Finance

Much of the current research in corporate finance does not deal with problems that are central to the subject. Research has failed to consider all the internal constraints in financial decisions and decision interdependencies rather than just decision tradeoffs, for example. Academics and financial managers need to recognize that the former uses abstractions in trying to help explain, predict and control the systems. Financial managers should encourage scholars to combine theory with decision tools arrived at from a working knowledge of corporate finance. Scholars' agendas of research subjects should include such areas as the influence of decision strategies and information flows on value-seeking financial models, the impact of signaling on capital markets and corporate decisions, evaluation systems for capital budgeting, etc.