What’s Hot In Corporate Finance (2011-2015)?

What’s Hot In Corporate Finance (2011-2015)?

Utpal Bhattacharya

Hong Kong University of Science & Technology (HKUST) – HKUST School of Business and Management

Ailin Dong

Hong Kong University of Science & Technology (HKUST) – Department of Finance

Frank Weikai Li

Hong Kong University of Science and Technology

Fangyuan Ma

Hong Kong University of Science & Technology (HKUST)

Beichen Wang

Hong Kong University of Science & Technology (HKUST)

March 3, 2016

Abstract:

To catalyze my fourth-year Ph.D. students in the Hong Kong University of Science and Technology to think of new ideas after their comprehensive examinations, I asked each one of them to read the abstracts of finance articles published in the last 5 years in JF, JFE, RFS and JFQA. Here are some general observations from the hard data in the attached slides and the soft data generated in our discussion: 1) The journals are not as US-centric as commonly believed in Asia. Empirical papers using non-US data have risen to about 17% of all empirical papers, and this number is about the same in all 4 journals. 2) The number of authors per article is trending up, with the mean being about 2.6. 3) Classification is very difficult. There are more papers published which are not only intra-discipline but also inter-disciplinary. Macro-banking-finance is the hottest inter-disciplinary topic. 4) The ratio between theory to empirical is highest in RFS (about 1:2) and lowest in JFQA (about 1:6). No trends are discernible in asset pricing, but less theory papers are being published in corporate finance. 5) In corporate finance, the dominance of the old chestnuts – capital structure and corporate governance – is trending down. M&A is popular. Links between markets, banks and firms is a hot new area. 6) In asset pricing, identification of new sources of risk, and pricing of non-equity assets are hot new areas. 7) In investments, hedge funds, venture capital and private equity are hot. 8)) High frequency trading has resuscitated the market microstructure area. 9) Niche areas like household finance, culture and finance, politics and finance, labor and finance, media and finance, networks and finance, are not niche anymore. 10) Amongst finance journals, JF is No 1 followed by the RFS. 11) Top non-finance journals like the AER, JPE, QJE and Management Science publish many finance papers. With the notable exception of QJE, these journals now have lower impact factors than the top 3 finance journals.

What’s Hot In Corporate Finance (2011-2015)? – Summary

• Asset pricing and corporate finance are the hottest areas.
• In corporate finance, traditional topics (capital structure, agency and corporate governance) are still dominant.
• Research in new finance areas are getting popular, such as hedge fund, venture capital.
• Market microstructure is getting “warmer”, especially topic in trading strategy.
• Empirical research dominates in JFQA; there is a slightly downward trend in theoretical papers.
• Research solely on financial intermediaries seems “cold”, though intradisciplinary study (relation between banking system and other financial systems) is becoming “warmer”.

Corporate Finance

• Capital Structure: dividends, cash, optimal capital structure, diversification, adjustment, repurchase, international studies, cost of equity, bankruptcy, tax, financial constrain, credit
• Corporate Governance: labor union, shareholder rights, ownership (geographic distance, foreign, inside), product market competition, network, independent director, board, family firms, shareholder activism
• Executive: managerial characteristics, compensation, earnings management, network, turnover, entrenchment, pension plan, geographic distance, inside debt
• IPO: listing choices, IPO timing
• Mergers & Acquisitions
• Venture Capital, Real Assets, Others

Asset Pricing

• Risk Premium: macro factors, liquidity risk, default risk, long-run risk, volatility risk, downside risk, time constrain, consumption risk
• Derivatives: CDS, CDO, option pricing (warrants), bond pricing, LETF, convertibles, credit spread
• Interest Rate: term structure
• Behavioral: heterogeneous beliefs, experiment, anchoring bias, sentiment, optimistic, religion
• Methodologies
• CAPM & GARCH
• Stochastic
• Others

See full PDF below.