What are current research topic related to finance?


In order to have an accurate knowledge about the recent research topics related to finance one should first of all know that what exactly finance is. So finance is basically a management of money which includes activities like investing, borrowing, lending, budgeting, saving, and forecasting. It is a broader term that describes activities associated with banking, leverage or debt, credit, capital markets, money, and investments. Profession in the field of finance is taking an edge over almost all the courses available for the students. This not only opens gate for the highest paying jobs but offers the most respectable and desired job positions. So as a result of which there are many current research topics coming into the era of knowledge.

Firstly researcher must be completely aware of the source of data collection and the statistical techniques used therein.

So, some of the common research topics related to finance:-

Firm performance- Firm performance also known as financial stability or financial health is a measure of performance of a company that not only depends on the efficiency of the company itself but also on the market where it operates. The main aim is to analyze the performance of the firm where common financial measures are revenue, return on equity, return on assets, profit margin, sales growth, capital adequacy, liquidity ratio, and stock prices. It not only includes organizational performance but is also responsible for functioning of the firm and outcomes of its operations. Firm performance is generally taken in association with managerial ownership, institutional ownership, family ownership, dispersed and concentrated ownership, corporate group association, corporate governance, board independence, directors’ gender, founders’ political connections, controlling shareholders, board structure, CEO decision horizon, CEO compensation, compensation structure, mangers incentive scheme, managerial participation in directors selection, management succession.
Dividend decision- The Dividend Decision is one of the crucial decisions made by the finance manager relating to the payouts (proportion of Earning Per Share given to the shareholders in the form of dividends) to the shareholders. Dividend decision is in association with capital gain tax, individual taxes, tax reforms, dividend taxes, legal restrictions, transaction costs of external financing, liquidity policy of the firm (cash holdings, A/R), leverage/capital structure/debt maturity, investment/growth opportunities, debt covenants, earning management and earning smoothing, information contents, insiders trading laws, industry effects, industry influence, dividend repurchase, stock market liquidity, firms assets structure, financial distress. The optimal dividend decision is when the wealth of shareholders increases with the increase in the value of shares of the company. Therefore, the finance department must consider all the decisions viz. Investment, Financing and Dividend while computing the payouts.
Capital structure- The capital structure is the particular combination of debt and equity used by a company to finance its overall operations and growth. Debt comes in the form of bond issues or loans, while equity may come in the form of common stock, preferred stock, or retained earnings. short term debt such as working capital requirements is also considered to be part of the capital structure. This is in association with its determinants, tests of pecking order theory, tests of trade off theory, tests of static and dynamic trade off theories, personal and corporate taxation, marginal tax rates, tests of agency theory, firm dividend policies, firm investment decisions, firm growth opportunities, free cash flow hypothesis. Not only this a company’s proportion of short-term debt versus long-term debt is considered when analyzing its capital structure.

§ Cost of equity capital- The cost of equity is the return a firm theoretically pays to its equity investors, i.e. shareholders, to compensate for the risk they undertake by investing their capital. Firms need to acquire capital from others to operate and grow. Individuals and organizations who are willing to provide their funds to others naturally desire to be rewarded. How Cost of Equity Capital is Related to customer concentration risk, market structure uncertainty, risk disclosures, voluntary disclosures, intellectual capital disclosures, financial reporting frequency, corporate social responsibility disclosure, foreign shocks, CEO general managerial skill, agency cost, management earning forecasts etc.

§ Access to finance- Access to finance is the ability of individuals or enterprises to obtain financial services including credit, deposit, payment, insurance, and other risk management services. Those who involuntarily have no or only limited access to financial services are referred to as the unbanked. The lack of financial access limits the range of services and credits for household and enterprises.

Corporate social responsibility- Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship. companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.
Expected returns- The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return. It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these results.

Though there are few more topics which can be studied but these were the most common being discussed in answer.

Hope it helps!!!

Author: JohnF

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