Corporate Finance: Origins and Evolution

This chapter delves into the origins and evolution of corporate finance, tracing its development from the 1960s to the present day. It highlights key contributions from influential figures such as Irving Fisher, John Burr Williams, and John Lintner, who laid the groundwork for modern valuation and dividend signaling theories. The chapter also explores the foundational works of Modigliani and Miller, which revolutionized the understanding of capital structure and dividend decisions. Additionally, it discusses the impact of Eugene Fama's efficient market hypothesis, the Black-Scholes-Merton option pricing model, and the agency theory of Jensen and Meckling. The chapter concludes by emphasizing the strategic role of corporate finance in modern enterprises, particularly in supporting decision-making and creating shareholder value. Readers will gain insights into the historical context, theoretical frameworks, and practical applications that have shaped corporate finance into the dynamic and strategic discipline it is today.