Incentives and Information in Finance
Course, Sciences Po Strasbourg
Overview
Incentives and Information in Finance examines how asymmetric information and incentive conflicts shape corporate financing and financial markets. It opens with the foundations of corporate governance and corporate financing, then builds on the basic model of corporate finance developed by Tirole (2006) to analyze incentives and the role of asymmetric information between insiders, investors, and lenders. From there, the course works through core frictions and mechanisms — overborrowing and debt overhang, diversification, collateral, and monitoring — alongside further topics including liquidity, accounting manipulation, and credit rationing and its effects on economic activity. Throughout, theory is paired with empirical evidence: students are introduced to the applied tools used to test these ideas, notably regression analysis via investment–cashflow sensitivity and the event-study methodology. The course combines models with real data, emphasizing how information problems and incentives translate into observable financing and market outcomes, and how empirical work can credibly identify them. It targets students seeking a rigorous, application-oriented understanding of the economics of corporate finance and financial intermediation.
Reference: Tirole, J. (2006). The Theory of Corporate Finance. Princeton University Press.
Schedule
Coming soon.