The Swedish House of Finance organizes an annual conference on a theme in financial economics. This year's theme is "information flows between financial markets and firms". The conference is based on a dialogue between academic economists and representatives from the financial industry. We intend to touch on the following three, major issues:

1. How much do corporate decision-makers learn about the prices and quantities they observe in financial markets, and how valuable is this information? Has the flow of information from markets to firms changed over time, e.g. through an increased use of passive management and index products?
2. How important are company strategies and structure for investment decisions? Do e.g. hedge funds and pension managers use such characteristics for investment, and do classical valuation variables (such as size, profitability and value) capture the underlying corporate strategy of companies?
3. Business managers often use a discount rate (e.g. CAPM) to determine the cost of equity. A large literature has documented the CAPM's limited ability to explain real expected returns. What are the real-world consequences of policy makers using an outdated valuation model? How should companies best determine the cost of equity?