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Entrepreneurial Incentives in Stock Market Economies

Acharya, Viral V; Bisin, Alberto - C.E.P.R. Discussion Papers - 2002

which the objectives of managers and entrepreneurs in choosing the risk composition of their firms' returns are not aligned … managers and entrepreneurs to unhedgeable firm-specific risk, induces them to change the stochastic properties of firm cash … flows. Since they can trade in markets for aggregate risk but not for firm-specific risk, managers and entrepreneurs produce …

Persistent link: https://www.econbiz.de/10005124325

Preferred Risk Habitat of Individual Investors

Dorn, Daniel; Huberman, Gur - C.E.P.R. Discussion Papers - 2007

The preferred risk habitat hypothesis, introduced here, is that individual investors select stocks with volatilities … commensurate with their risk aversion; more risk-averse individuals pick lower-volatility stocks. The investors' portfolio … stocks are sold they are replaced by stocks of similar volatilities, and the more risk averse customers indeed hold less …

Persistent link: https://www.econbiz.de/10005067451

Tax-Adjusted Discount Rates with Investor Taxes and Risky Debt

Cooper, Ian; Nyborg, Kjell G - C.E.P.R. Discussion Papers - 2008

This paper derives a tax-adjusted discount rate formula with a constant proportion leverage policy, investor taxes, and risky debt. The result depends on an assumption about the treatment of tax losses in default. We identify the assumption that justifies the textbook approach of discounting...

Persistent link: https://www.econbiz.de/10005504394

Financing a Portfolio of Projects

Inderst, Roman; Mueller, Holger M; Muennich, Felix - C.E.P.R. Discussion Papers - 2006

This paper shows that investors financing a portfolio of projects may use the depth of their financial pockets to overcome entrepreneurial incentive problems. While competition for scarce informed capital at the refinancing stage increases the investor’s ex post bargaining position, it may...

Persistent link: https://www.econbiz.de/10005504454

Distributional Conflict in Organisations

Inderst, Roman; Mueller, Holger M; Wärneryd, Karl - C.E.P.R. Discussion Papers - 2002

Hierarchy can function as an instrument to channel influence activities or power struggles in organizations. Contrary to what has frequently been argued, we show that multi-divisional organizations may involve lower influence costs than single-tier organizations, even though they offer more...

Persistent link: https://www.econbiz.de/10005504716

Financial Development, Property Rights and Growth

Claessens, Stijn; Laeven, Luc - C.E.P.R. Discussion Papers - 2002

This Paper investigates how the legal framework not only affects the amount of external financing available, but also firms’ resource allocation among different types of assets. Using a simple model, we show that in a weaker legal environment a firm will get less financing, and thus invest...

Persistent link: https://www.econbiz.de/10005504760

Financial Markets and Wages

Michelacci, Claudio; Quadrini, Vincenzo - C.E.P.R. Discussion Papers - 2005

We study a labour market equilibrium model in which firms sign optimal long-term contracts with workers. Firms that are financially constrained offer an increasing wage profile: they pay lower wages today in exchange of higher wages once they become unconstrained and operate at a larger scale....

Persistent link: https://www.econbiz.de/10005497841

Capital Structure and Regulation: Do Ownership and Regulatory Independence Matter?

Bortolotti, Bernardo; Cambini, Carlo; Rondi, Laura; … - C.E.P.R. Discussion Papers - 2008

, and it also has a positive and significant effect on their market values. Our results are consistent with the theory that …

Persistent link: https://www.econbiz.de/10005497873

Agency Conflicts, Investment and Asset Pricing

Albuquerque, Rui; Wang, Neng - C.E.P.R. Discussion Papers - 2005

incentives to overinvest, lower Tobin’s q, higher return volatility, larger risk premium, and higher interest rate, consistent …

Persistent link: https://www.econbiz.de/10005497980

Corporate Liquidity

Dittmar, Amy; Mahrt-Smith, Jan; Servaes, Henri - C.E.P.R. Discussion Papers - 2002

Agency problems are an important determinant of corporate liquidity. For a sample of more than 11,000 firms from 45 countries, we find that corporations in countries where shareholders rights are not well protected hold up to twice as much cash as corporations in countries with good shareholder...

Persistent link: https://www.econbiz.de/10005498063