We study optimal incentive contracts offered to a research and development (R&D) manager, who can propose an innovative project and is in charge of conducting this project. The manager has private information about the project profitability and he exerts unobservable levels of different kinds of...

Am 28. Januar 2014 veranstaltete das ifo Institut gemeinsam mit dem Bayerischen Handwerkstag ein Symposium unter dem Titel »Energiewende 2.0 – Was getan werden muss, um unsere Energieversorgung wieder auf ein sicheres Fundament zu stellen!«. Die Veranstaltung unter der Moderation von Ursula...

Real world investment decisions are generally made sequentially, over time. Management must consider the possibility of subsequent decisions like suspending a project when an initial investment decision is made. This consideration seems to be particularly important in the case of investments,...

Performance measures based on residual income are increasingly popular. The academic lit-erature shows that residual income has important incentive properties when management bases investment decisions on the net present value (NPV) rule. My analysis focuses on the case in which investment...

The Berger and Ofek (1995) excess value measure, comparing a conglomerate’s actual market value to an imputed value based on standalones, has become the standard method to determine value effects of diversification. In this paper, we address a significant bias in this procedure stemming from...

In this paper we aim to verify the existence of costs of financial distress (cfd) for a sample of German CDAX firms using an ex-post approach originally due to Opler/Titman (1994). In contrast to this US-based study we do not find a significant interaction between high leverage and distress for...

type="main" <p>In 2008 the German government enacted a measure designed to curb excessive leverage in LBOs by limiting tax-deductible interest to 30% of EBITDA. And in the U.S., legislators are currently reviewing several regulatory measures, including limits on tax-deductible interest, that are...</p>