Strategic Finance Institute
Finance as a discipline has undergone fundamental changes in recent years. In the past, researchers had focused their activities on extending the basic building blocks of the field, in particular portfolio theory, asset pricing, investment valuation, financial contracting and, more recently, risk management. Finance is however not a stand-alone science. Financial decision-making is heavily influenced by interactions with corporate strategy, the regulatory environment, industrial organization and even psychology. There is a growing need for substantive finance research emphasizing the connections with these related fields of scientific inquiry. In addition, while most finance research meets the criteria of academic rigor, it very often falls short of making valuable contributions to corporate practice.
The Strategic Finance Institute (SFI) has been established in the fall of 2007 to address these research needs. The SFI represents the merger of three formerly independent research institutes at the European Business School (EBS) International University, the Center for Entrepreneurial and Small Business Finance (ESBF), the Center for Mergers & Acquisitions (CMA) and the Institute for Restructuring and Business Portfolio Management (INREBE). The activities of these predecessor organizations will be carried on within SFI by distinct competence centers (CC).
- Strategy-Linked Corporate Finance
- Entrepreneurial and Small Business Finance
- M&A and Restructuring
- Capital Market Performance
While we chose a functional perspective when naming the institute and its competence centers, the majority of our research initiatives deal with financing aspects of privately held companies, in particular family-owned enterprises (FOBs). Even today, academics have only a very limited understanding of what differentiates family-controlled enterprises from publicly traded corporations. On the one hand, the corporate objective of FOBs is more concerned with maintaining family influence and ensuring the long-term survival of the firm than with short-term value maximization. On the other hand, FOBs have to increasingly play by the rules of international financial markets if they want to realize their full financing potential and to utilize all their opportunities for external growth. Thus, while traditional family business research falls short of accounting for newly developing constraints of FOBs, standard finance textbook approaches do not capture the true nature of family-controlled enterprises. The SFI sees its role in providing research insights reflective of the complex interplay between the unique features of privately-held companies and capital markets.