Corporate Finance: Origins and Evolution

Modigliani and Miller’s 1958 seminal article, “The Cost of Capital, Corporation Finance, and the Theory of Investment,” is widely considered the starting point of modern corporate finance. Although some might argue that corporate finance is not a discipline in its own right but rather a subset of finance, its role from a managerial perspective has expanded significantly since the 1960s. In larger firms, the Chief Financial Officer (CFO) has become a key partner to the Chief Executive Officer (CEO), responsible for developing financial strategy, managing resources, and driving value creation. This chapter explores corporate finance as a modern discipline and highlights the seminal contributions that have shaped its identity. It also emphasizes the use of case-based research, which positions corporate finance as both a managerial field and a bridge to finance and economics.