Erwan Morellec

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

Vita (pdf)
Contact details
Google Scholar


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.

Financing Cycles and Maturity Matching
(with Thomas Geelen, Jakub Hajda, and Adam Winegar)
Capital ages and must eventually be replaced. We propose a theory of financing in which firms finance new capital with debt and optimally deleverage to free up debt capacity as their capital ages, thereby generating debt cycles. Concurrently, firms shorten the maturity of their debt to match the remaining life of their capital, generating maturity cycles. We provide time series and cross-sectional evidence that strongly supports these predictions and highlights the key roles of capital age and asset life for both debt dynamics and debt maturity choices.

Screening and monitoring of corporate loans
(with Sebastian Gryglewicz and Simon Mayer)
How much of a loan should a lender dynamically retain and how does retention affect loan performance? We address these questions in a dynamic agency model in which a lender originates loans that it can sell to investors. The lender reduces default risk through screening at origination and monitoring after origination, but is subject to moral hazard. We show that the optimal lender-investor contract can be implemented by having the lender retain a stake in the loan that decreases over time, effectively rationalizing loan sales after origination, and use the model to generate new predictions linking loan characteristics to initial retention, sales dynamics and loan performance.

Relationship capital and financing decisions
(with Thomas Geelen and Natalyia Rostova)
Lending relationships matter for firm financing. In a model of debt dynamics, we study how lending relationships are formed and how they impact leverage and debt maturity choices, thereby rationalizing recent empirical findings and generating new testable predictions. In the model, lending relationships evolve through repeated interactions between firms and debt investors. 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. Debt contracts involving non-relationship investors, such as syndicated loans or bonds, have longer maturity than those exclusively issued to relationship investors.

Takeover protections and asset prices
with Assaf Eisdorfer and Alexei Zhdanov, Management Science Forthcoming

Can corporate debt foster innovation and growth?
with Thomas Geelen and Jakub Hajda, Review of Financial Studies 35(9): 4152-4200, 2022

Understanding cash flow risk
with Sebastian Gryglewicz, Loriano Mancini, Enrique Schroth, and Philip Valta, Review of Financial Studies 35(8): 3922-3973, 2022

Optimal financing with tokens
with Sebastian Gryglewicz and Simon Mayer, Journal of Financial Economics 142(3): 1038-1067, 2021

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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
with Pascal François, Journal of Business, 77(2): 387-411, 2004

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



Introduction to (MFE program): This course provides 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: Investment under Uncertainty; Optimal Financing, Optimal Liquidity Management through the length of dynamic models featuring moral hazard, adverse selection, financing frictions, taxes, and/or competition