Erwan Morellec

Professor of Finance at EPFL
Swiss Finance Institute Professor
Head of the SFI PhD program
CEPR Research Fellow

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Erwan Morellec is a Full Professor of Finance at the Swiss Finance Institute (SFI) @ EPFL and the holder of a Swiss Finance Institute senior chair. He is the Head of the SFI nation-wide PhD Program and a CEPR Research Fellow.

Erwan is most active in the areas of corporate finance and banking and has taught courses on these subjects to undergraduate, MBA, and doctoral students. He is an expert on capital structure and financing decisions, real options, risk management, and liquidity management. His research has been presented at major academic conferences and seminar series around the world and is published in the top rated academic journals such as the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies. He has received several research and teaching awards. He holds a PhD in Finance summa cum Laude from HEC Paris.

Relationship capital and financing decisions
(with Thomas Geelen and Natalyia Rostova)
In a model of debt dynamics, we study how lending relationships are formed and how they impact leverage and debt maturity choices. Stronger lending relationships lead firms to adopt higher leverage ratios, issue longer term debt, and raise funds from non-relationship lenders when relationship quality is sufficiently high. The maturity of debt contracts issued to non-relationship investors is higher than that of relationship investors. Negative shocks to relationship lenders drastically affect the financing choices of firms with intermediate relationship quality.

Can corporate debt foster innovation, and growth?
(with Thomas Geelen and Jakub Hajda)
Debt overhang implies that debt hampers investment by levered incumbents. A second effect of debt is that it stimulates entry of new firms and, thus, innovation. This second effect always dominates in equilibrium, so that debt fosters innovation and growth at the aggregate level.

Takeover protections and stock returns
(with Assaf Eisdorfer and Alexei Zhdanov)
Takeover protections decrease shareholder value and increase equity risk and stock returns by removing the option to sell equity when firms approach financial distress. In line with our predictions, distressed firms experience a significant decrease in  value and increase in returns and market betas after the passage of anti-takeover laws, both domestically and internationally.

Understanding cash flow risk
Review of Financial Studies Forthcoming
(with Sebastian Gryglewicz, Loriano Mancini, Enrique Schroth, and Philip Valta)


Optimal financing with tokens
Journal of Financial Economics Forthcoming
with Sebastian Gryglewicz and Simon Mayer

Short-term debt and incentives for risk-taking
Journal of Financial Economics 137(1): 179-203, 2020
with Marco Della Seta and Francesca Zucchi

Agency conflicts and short- vs. long-termism in corporate policies
Journal of Financial Economics 136(3), 718-742, 2020
with Sebastian Gryglewicz and Simon Mayer

Product market competition and option prices
Review of Financial Studies 32(11): 4343-4386, 2019
with Alexei Zhdanov

Agency conflicts around the world
Review of Financial Studies, 31(11): 4232-4287, 2018
with Boris Nikolov and Norman Schuerhoff
Data: Firm level governance indices across 14 countries

Corporate policies with permanent and transitory shocks
Review of Financial Studies, 30(1): 162-210, 2017
with J-P Décamps, Sebastian Gryglewicz, and Stéphane Villeneuve

Bank capital, liquid reserves, and insolvency risk
Journal of Financial Economics, 125(2): 266–285, 2017
with Julien Hugonnier

Mathematical Appendix to the Paper

Debt enforcement, investment, and risk-taking across countries
Journal of Financial Economics,123(1): 22-41, 2017
with Giovanni Favara, Enrique Schroth, and Philip Valta

Capital supply uncertainty, cash holdings and investment
Review of Financial Studies, 28(2): 391–445, 2015
with Julien Hugonnier and Semyon Malamud
Mathematical Appendix to the Paper

Credit market frictions and capital structure dynamics
Journal of Economic Theory, 157: 1130–1158, 2015
with Julien Hugonnier and Semyon Malamud
Mathematical Appendix to the Paper

Financing investment: The choice between bonds and bank loans
Management Science, 61(11): 2580-2602, 2015
with Philip Valta and Alexei Zhdanov

Corporate governance and capital structure dynamics
Journal of Finance, 67(3): 803-848, 2012
with Boris Nikolov and Norman Schuerhoff

Corporate investment and financing under asymmetric information
Journal of Financial Economics, 99(2): 262-288, 2011
with Norman Schuerhoff

Dynamic investment and financing under personal taxation
Review of Financial Studies, 23(1): 101-146, 2010
with Norman Schuerhoff

Financing and takeovers
Journal of Financial Economics, 87(3): 556-581, 2008
with Alexei Zhdanov

Stock returns in mergers and acquisitions
Journal of Finance, 63(3): 1203-1242, 2008
with Dirk Hackbarth

Closed-form solutions to stochastic switching problems
Journal of Mathematical Economics, 44(11): 1072-1083, 2008
with Pascal François

Agency conflicts and risk management
Review of Finance, 11(1): 1-23, 2007
with Clifford W. Smith

Corporate control and real investment in incomplete markets
Journal of Economic Dynamics and Control, 31(5): 1781-1800, 2007
with Julien Hugonnier

Capital structure, credit risk, and macroeconomic conditions
Journal of Financial Economics, 82(3): 519-550, 2006
with Dirk Hackbarth and Jianjun Miao

On the debt capacity of growth options
Journal of Business, 79(1): 37-59, 2006
with Michael J. Barclay and Clifford W. Smith

Irreversible investment with regime shifts
Journal of Economic Theory, 122(1): 37-59, 2005
with Xin Guo and Jianjun Miao

The dynamics of mergers and acquisitions
Journal of Financial Economics, 77(3): 649-672, 2005
with Alexei Zhdanov

Can managerial discretion explain observed leverage ratios?
Review of Financial Studies, 17(1): 257-294.

Capital structure and asset prices: Some effects of bankruptcy procedures
Journal of Business, 77(2): 387-411, 2004
with Pascal François

Asset liquidity, capital structure, and secured debt
Journal of Financial Economics, 61(2): 173-206, 2001.

Principles of Finance

This course is intended to provide a market-oriented framework for analyzing the major types of financial decisions made by corporations. Lectures and readings will provide an introduction to present value techniques, capital budgeting principles and problems, asset valuation, the operation and efficiency of financial markets, the financial decisions of firms, and derivatives. Throughout the class, we will solve problems to enhance our understanding of the covered topics.

Dynamic Corporate Finance (SFI PhD program)

This course is designed to provide a framework for understanding the determinants of corporate financing, dividend, hedging, investment, and compensation policies. The course will provide both an economic analysis of the determinants  of each policy and a quantitative analysis of the effects of these determinants. There is no required textbook. Readings will be based on scientific articles. Topics covered: Real options; Dynamic contracting; Dynamic adverse selection; Financing frictions; Dynamic capital structure models with and without commitment; Runs