How Do Firms Behave?, joint with Swiss Finance Institute

David Thesmar, MIT, NBER & CEPR

June 10 – 14, 2024

This course focuses on recent empirical research on the behavior of firms in the economy. This research is diverse and lively. The standard neoclassical model assumes that the typical firm maximizes its profits. The research discussed in this class documents deviations from this behavior: capital-labor conflict, corporate social responsibility, the irrationality of managers, and financing constraints. The methodological challenge consists of showing that firm behavior sometimes cannot be described by pure profit maximization. We will use a variety of approaches: simple theory, reduced-form econometrics, surveys, experiments, and structural estimation.

David Thesmar is the Franco Modigliani Professor of Financial Economics and a Professor of Finance at the MIT Sloan School of Management. He is an expert in corporate finance, financial intermediation, entrepreneurship, and behavioral economics. Recently, he has studied the impact of financing constraints on the real economy. Thesmar also investigates risk management and systemic risk in banking. He has also researched firm organization and non-rational decision making on corporate strategies. His work makes systematic use of large datasets but emphasizes a parsimonious modelling approach to address economic questions. A native of France, Thesmar has been involved in policy advising both at the French and European level. He was a member of the council of economic advisors to the French prime minister from 2007 to 2013, and is currently a scientific adviser to the European Systemic Risk Board. An active participant in the public debate, Thesmar is the author of several books, and a regular columnist for the French daily newspaper Les Echos. He has also held numerous consulting positions in the private sector, with a focus on big data related topics. Thesmar holds a BA in physics and economics from École Polytechnique, and a PhD from the Paris School of Economics. Current Research Focus: Thesmar's research is in corporate finance. One first area is valuation, with an emphasis on forecasting rules and valuation methods. This line of research employs survey data as well as laboratory experiments in order to shed light on the efficiency of the capital budgeting process. Another related area is corporate governance: He  shows that ESG investment does not contradict value creation. A third line of research argues that finance benefits the economy by allocating capital to the right projects: He finds that this contribution is very large.

Application

The application deadline ended on March 15, 2024.

Admission and Registration

The Study Center communicates admission decision by the end of April, 2024, and sends participants the corresponding invoice. The registration form will be sent after the Center receives the payment of the course fee.