Giacinta Cestone Inaugural Lecture

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How finance shapes product market rivalry

Firms’ financial and governance decisions have major effects on labour and product markets, what we like to think of as the real economy. This is not surprising: academic research has unveiled the many ways in which financial management and corporate governance shape a firm’s relationship with its competitors, suppliers, clients, and employees.

Giacinta Cestone will guide us through this area of research, drawing lessons from her work at the intersection between finance, labour economics and industrial organisation. She will discuss how firms’ financial decisions and ownership structures affect product market rivalry. She will argue that companies should be concerned about how their product market competitors combine debt and equity financing, what trade credit terms they offer to their customers, and whether they are owned by diversified corporate groups. The lesson for policy makers is that corporate finance and governance are key determinants of competition that cannot be overlooked.

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