Erwan Morellec 

Professor of Finance at EPFL   (Ecole Polytechnique Fédérale de Lausanne)

Head of the Swiss Finance Institute at EPFL

Research Fellow at the Center for Economic Policy Research

Working Papers

"Dynamic capital structure under managerial entrenchment: Evidence from a structural estimation"

(with B. Nikolov and N. Schuerhoff) [download pdf]

Shows that small conflicts between managers and shareholders can explain observed financing decisions.

 

"Cash holdings and competition"

(with B. Nikolov) [coming soon]

Shows that competition increases cash holdings, especially when firms face financing constraints. Explains the time trend in cash holdings.

 

"Investment timing and financing under asymmetric information"

(with N. Schuerhoff) [download pdf]

Dynamic signalling game. Asymmetric information (1) speeds up investment and (2) may not lead to a financing hierarchy or pecking order.

Some Recent Publications

"Dynamic investment and financing under personal taxation"

(with N. Schuerhoff) Forthcoming Review of Financial Studies [download pdf]

Theory and evidence on the effects of personal taxation on firms' investment and financing decisions.

 

"Financing and takeovers"

(with A. Zhdanov) Journal of Financial Economics 87, 556-581, 2008.

Explains the relation between the outcome of takeover contests and the financing structure of bidding firms.

 

"Stock returns in mergers and acquisitions"

(with D. Hackbarth) Journal of Finance 63, 1203-1242, 2008.

Explains the patterns in stock returns around merger announcements and provides empirical support.

 

"Agency conflicts and risk management"

(with C. Smith) Review of Finance 11, 1-23, 2007.

Examines the effects of manager-shareholder conflicts on firms' risk management strategies.

 

"Capital structure, credit risk, and macroeconomic conditions"

(with D. Hackbarth and J. Miao) Journal of Financial Economics 82, 519-550, 2006.

Relates dynamic financing decisions and credit spreads to the business cycle. Explains the countercyclicality of leverage ratios.

 

"On the debt capacity of growth options"

(with M. Barclay and C. Smith) Journal of Business 79, 37-59, 2006.

Shows that the debt capacity of growth options is negative and provides empirical support.

 

"Irreversible investment with regime shifts"

(with X. Guo and J. Miao) Journal of Economic Theory 122, 37-59, 2005.

Examines the effects of macroeconomic conditions on optimal investment policies.

 

"The dynamics of mergers and acquisitions"

(with A. Zhdanov) Journal of Financial Economics 77, 649-672, 2005.

Explains firms' bidding strategies and the observed patterns in abnormal announcement returns.

 

"Can managerial discretion explain observed leverage ratios?"

Review of Financial Studies 17, 257-294, 2004.

Managerial discretion reduces leverage and creates a link between financing and growth options.

 

"Capital structure and asset prices: Some effects of bankruptcy procedures"

(with P. François) Journal of Business 77, 387-411, 2004.

Examines the effects of bankruptcy procedures on credit spreads and leverage ratios.

 

"Asset liquidity, capital structure, and secured debt"

Journal of Financial Economics 61, 173-206, 2001. (Lead Article)

Asset liquidity can reduce a firm's debt capacity if assets are not pledged as collateral."

 

Teaching in the MFE program

 

Cases in Finance

This course introduces students to a number of advanced topics in corporate finance such as the design and valuation of corporate securities as well as the issuing process for these securities, real options and their implications for valuations and returns, and financial structuring. Some parts of the course will make heavy use of the methods of continuous time finance. The course provides a number of applications of the theory through case studies.

Resources: Course website

Prerequisites: Stochastic Calculus 1&2, Introduction to Finance, Derivatives.