Capital Budgeting in Multidivision Firms: Information, Agency, and Incentives
نویسندگان
چکیده
منابع مشابه
Capital budgeting in multi-division firms: Information, agency, and incentives∗
We examine optimal capital allocation and managerial compensation in a firm with two investment projects (divisions) each run by a risk-neutral manager who can provide (i) (unverifiable) information about project quality and (ii) (unverifiable) access to value-enhancing, but privately costly, resources. The optimal managerial compensation contract offers greater performance pay and a lower sala...
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Theoretical approaches to information and incentive problems in analyzing multinational firms’ behavior remain under-examined. I present a model that explains a multinational firm’s choice of organizational form of its intermediate goods production in the south, which includes FDI and outsourcing. In the case of outsourcing in the south, the multinational firm is faced with an adverse selection...
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Corporations use a variety of processes to allocate capital. This paper studies the benefits and costs of several common budget procedures from the perspective of a model with agency and information problems. Processes that delegate aspects of the decision to the agent result in too many projects being approved, while processes in which the principal retains the right to reject projects cause t...
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ژورنال
عنوان ژورنال: Review of Financial Studies
سال: 2003
ISSN: 0893-9454,1465-7368
DOI: 10.1093/rfs/hhg050