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Managerial Incentives And Internal Capital Markets
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Book Synopsis Managerial Incentives and Internal Capital Markets by : Adolfo de Motta
Download or read book Managerial Incentives and Internal Capital Markets written by Adolfo de Motta and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital budgeting in multidivisional firms depends on the external assessment of the whole firm, as well as on headquarters' assessment of the divisions. While corporate headquarters may create value by directly monitoring divisions, the external assessment of the firm is a public good for division managers who, consequently, are tempted to free ride. As the number of divisions increases, the free-rider problem is aggravated, and internal capital markets substitute for external capital markets in the provision of managerial incentives. The analysis relates the value of diversification to characteristics of the firm, the industry, and the capital market.
Book Synopsis Reallocation of Corporate Resources and Managerial Incentives in Internal Capital Markets by : Sandro Brusco
Download or read book Reallocation of Corporate Resources and Managerial Incentives in Internal Capital Markets written by Sandro Brusco and published by . This book was released on 2000 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Reallocation of Corporate Resources and Managerial Incentives in Internal Capital Markets by : Sandro Brusco
Download or read book Reallocation of Corporate Resources and Managerial Incentives in Internal Capital Markets written by Sandro Brusco and published by . This book was released on 2004 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Diversified firms often trade at a discount with respect to their focused counterparts. The literature has tried to explain the apparent misallocation of resources with lobbying activities or power struggles. We show that diversification can destroy value even when resources are efficiently allocated ex post. When managers derive utility from the funds under their purview, moving funds across divisions may diminish their incentives. The ex ante reduction in managerial incentives can more than offset the increase in firm value due to the ex post efficient reallocation of funds. This effect is robust to the introduction of monetary incentives. We apply our model to the analysis of the optimal reallocation policy and to the effect of the asymmetry among divisions. In general it is optimal for headquarters to commit not to reallocate at least a fraction of funds. As a result, the investment in a given division is more sensitive to the division's cash flow than to other divisions' cash flow. Asymmetries in size and growth prospects increase the diversification discount.
Book Synopsis Reallocation of Corporate Resources and Managerial Incentive in Internal Capital Markets by : Sandro Brusco
Download or read book Reallocation of Corporate Resources and Managerial Incentive in Internal Capital Markets written by Sandro Brusco and published by . This book was released on 2000 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Reallocation of Corporate Resources and Managerial Incentives in Internal Capital Markets ; Paper Presented at CESIFO Area Conference on Industrial Organisation, April 2002 by :
Download or read book Reallocation of Corporate Resources and Managerial Incentives in Internal Capital Markets ; Paper Presented at CESIFO Area Conference on Industrial Organisation, April 2002 written by and published by . This book was released on 2002 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Internal Capital Markets and Firm-Level Compensation Incentives for Division Managers by : Julie Wulf
Download or read book Internal Capital Markets and Firm-Level Compensation Incentives for Division Managers written by Julie Wulf and published by . This book was released on 2005 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Do multi-divisional firms structure compensation contracts for division managers to mitigate information and incentive problems in their internal capital markets? Using Compustat Segment financial data and compensation data from a proprietary survey, I find evidence that compensation and investment incentives are substitutes: firms providing a stronger link to firm performance in incentive compensation for division managers also provide weaker investment incentives through the capital budgeting process. Specifically, as the proportion of incentive pay for division managers that is based on firm performance increases, division investment is less responsive to division profitability. While these findings may be consistent with other explanations, they are generally consistent with a model of influence activities by division managers and the implied relative weights placed on imperfect, objective signals (i.e. accounting measures) versus distortable, subjective signals (i.e. manager recommendations) in inter-divisional capital allocation decisions.
Book Synopsis Incentives in Internal Capital Markets by : Roman Inderst
Download or read book Incentives in Internal Capital Markets written by Roman Inderst and published by . This book was released on 2002 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper considers the effect of competition for scarce financial resources on managers' incentives to generate profitable investment opportunities. Competition is only unambiguously beneficial if projects are symmetric. If divisions differ in their cash endowments or their growth potential, integration may reduce incentives for some managers, which may lower total firm value. Moreover, relaxing capital constraints, e.g., by integrating a cash cow project, may reduce incentives.We treat two different scenarios where contracts can either only specify monetary incentives or additionally the allocation of funds. While distorted capital allocations increase managers' incentives, they only survive renegotiations in integrated firms.
Book Synopsis Reallocation of Corporate Resource and Managerial Incentives in International Capital Markets by :
Download or read book Reallocation of Corporate Resource and Managerial Incentives in International Capital Markets written by and published by . This book was released on 2000 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Internal Capital Markets in Diversified Firms by : Julia Liebeskind
Download or read book Internal Capital Markets in Diversified Firms written by Julia Liebeskind and published by . This book was released on 1990 with total page 330 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Internal Capital Markets, Cross-subsidization and Product Market Competition by : Giacinta Cestone
Download or read book Internal Capital Markets, Cross-subsidization and Product Market Competition written by Giacinta Cestone and published by . This book was released on 2001 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Managerial Incentives for Risk-Taking and Internal Capital Allocation by : Lorenzo Casavecchia
Download or read book Managerial Incentives for Risk-Taking and Internal Capital Allocation written by Lorenzo Casavecchia and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we show that the option-like structure of equity-based compensation encourages managerial risk-taking and provide new evidence on the way in which CEO's risk-taking could manifest itself in a multi-segment firm. Our results show that a greater sensitivity of managerial compensation to shareholder wealth -- as proxied by CEO's portfolio vega -- leads to greater risk-taking through active capital allocation. We then analyze the impact of risk-taking on shareholder wealth and demonstrate that risk-taking is positively associated with future stock returns. Overall, this article contributes to the literature by providing evidence that equity-based compensation does actually promote the alignment of interests between shareholders and managers.
Book Synopsis Internal Versus External Capital Markets by : Robert H. Gertner
Download or read book Internal Versus External Capital Markets written by Robert H. Gertner and published by . This book was released on 1994 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a framework for analyzing the costs and benefits of internal vs. external capital allocation. We focus primarily on comparing an internal capital market to bank lending. While both represent centralized forms of financing, in the former case the financing is owner-provided, while in the latter case it is not. We argue that the ownership aspect of internal capital allocation has three important consequences: 1) it leads to more monitoring than bank lending; 2) it reduces managers' entrepreneurial incentives; and 3) it makes it easier to efficiently redeploy the assets of projects that are performing poorly under existing management.
Book Synopsis What Do Internal Capital Markets Do? by : Axel Gautier
Download or read book What Do Internal Capital Markets Do? written by Axel Gautier and published by . This book was released on 2001 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Firm Value and Managerial Incentives by : Michel Habib
Download or read book Firm Value and Managerial Incentives written by Michel Habib and published by . This book was released on 2000 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Research Handbook on Mergers and Acquisitions by : Claire A. Hill
Download or read book Research Handbook on Mergers and Acquisitions written by Claire A. Hill and published by Edward Elgar Publishing. This book was released on 2016-09-30 with total page 497 pages. Available in PDF, EPUB and Kindle. Book excerpt: Global in scope and written by leading scholars in the field, the Research Handbook on Mergers and Acquisitions is a modern-day survey of the state of M&A. Its chapters explore the history of mergers and acquisitions and also consider the theory behind the structure of modern transaction documentation. The book also address other key M&A issues, such as takeover defenses; judges and practitioners' perspectives on litigation; the appraisal remedy and other aspects of Federal and state law, as well as M&A considerations in the structure of start-ups. This Handbook will be an invaluable resource for scholars, practitioners, judges and legislators.
Book Synopsis Managerial Incentives and Financial Markets by : Atul Kumar Gupta
Download or read book Managerial Incentives and Financial Markets written by Atul Kumar Gupta and published by . This book was released on 2002 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Handbook of the Economics of Finance by : G. Constantinides
Download or read book Handbook of the Economics of Finance written by G. Constantinides and published by Elsevier. This book was released on 2003-11-04 with total page 698 pages. Available in PDF, EPUB and Kindle. Book excerpt: Arbitrage, State Prices and Portfolio Theory / Philip h. Dybvig and Stephen a. Ross / - Intertemporal Asset Pricing Theory / Darrell Duffle / - Tests of Multifactor Pricing Models, Volatility Bounds and Portfolio Performance / Wayne E. Ferson / - Consumption-Based Asset Pricing / John y Campbell / - The Equity Premium in Retrospect / Rainish Mehra and Edward c. Prescott / - Anomalies and Market Efficiency / William Schwert / - Are Financial Assets Priced Locally or Globally? / G. Andrew Karolyi and Rene M. Stuli / - Microstructure and Asset Pricing / David Easley and Maureen O'hara / - A Survey of Behavioral Finance / Nicholas Barberis and Richard Thaler / - Derivatives / Robert E. Whaley / - Fixed-Income Pricing / Qiang Dai and Kenneth J. Singleton.
