Corporate Finance

Corporate finance is the study and practice of how companies make financial decisions to create and sustain value. It evaluates investment opportunities through capital budgeting, selects funding from debt, equity, or retained earnings, and manages working capital while balancing risk, return, liquidity, and cost of capital. These decisions use tools such as discounted cash flow analysis, financial forecasting, valuation, and performance measurement to guide resource allocation. Corporate finance supports strategic planning, mergers and acquisitions, financial risk management, and capital structure design, helping organizations assess growth opportunities, meet obligations, and adapt to changing market conditions.

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JoVE Business - Finance

An Overview of Behavioral Corporate Finance

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2026

Behavioral corporate finance integrates psychological principles with traditional financial theories to explain how cognitive biases and emotions influence decision-making. While traditional finance assumes that managers and investors act rationally to maximize shareholder value, behavioral finance recognizes that real-world decisions often deviate from rationality, leading to suboptimal financial choices.Traditional corporate finance is grounded in rational decision-making, where financial...

Features of a Corporation

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2024

A notable feature of corporations is the transferability of shares, enabling shareholders to sell or transfer their ownership stakes without impacting the corporation's operations. This ease makes investment and liquidity simpler, as demonstrated by the dynamic trading of Apple Inc. shares on the stock market. Corporations benefit from centralized management, typically overseen by a board of directors and executive officers. This structure allows for specialized decision-making, enhancing the...

Corporation

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2024

A corporation has unique characteristics that extend beyond its status as a separate legal entity. One notable feature is the ability to transfer ownership easily. Shares of a corporation can be bought and sold without impacting its operations, allowing ownership to change easily without disrupting business activities. For example, Amazon.com, Inc. has capitalized on the ability to issue shares to raise significant funds. This capital access has enabled Amazon to invest in extensive logistics...

S Corporation

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2024

An S corporation, defined under Subchapter S of the Internal Revenue Code, is a distinct entity that combines the legal benefits of incorporation with the tax advantages of a partnership. This classification enables a corporation to pass corporate income, losses, deductions, and credits to shareholders for federal tax purposes. Advantages of an S Corporation Key advantages include pass-through taxation, which prevents the issue of double taxation seen in C corporations. Additionally, S...

Areas of Finance

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2024

Finance is a broad field with several key domains, including business or corporate finance, investments, and financial markets. Corporate finance deals with the financial activities related to running a corporation. It maximizes shareholder value through long-term and short-term financial planning and various strategies. The goal is to balance risk and profitability while attempting to maximize an entity's value. Investment finance concerns the purchase of assets and securities. Often,...

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