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 …

We present a dynamic agency model of investment, borrowing and payout decisions by a mature corporation operating in … perfect financial markets. Risk-averse managers implement an inter-temporal strategy that maximizes their lifetime utility of … managerial rents. They under-invest and smooth payout and rents. Debt is the shock-absorber for operating income and investment …

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

investment and payout policies. We develop a dynamic general equilibrium model to study the asset pricing and welfare … incentives to overinvest, lower Tobin’s q, higher return volatility, larger risk premium, and higher interest rate, consistent …: countries with higher investment-capital ratios have both larger variance of GDP growth and larger variance of stock returns. …

that generally drive the need for liquidity, such as investment opportunities and asymmetric information, actually become …

theory of investment and dividend policy, where dividends are paid by self-interested CEOs to maintain a balance between …

capital to units with better investment opportunities, state groups do the opposite. Minority shareholders in state owned … groups’ tendency to ignore investment opportunities. We conjecture that capital allocations at state groups reflect the …