reduced-form bivariate equation. We modelgovernance, performance and the constraints on the firm’s investment decisions as …

gather information on investment projects. The initial owner has two tasks: monitoring the manager and supervising project …

Using an agency model of firm behavior, the paper analyzes whether the cost of investment should be tax exempt. The … findings suggest that, when managers engage in wasteful capital expenditures, welfare may decline if the cost of investment is … tax deductible, as commonly advocated. The extent to which the return on investment should be taxed depends on how the …

governance problems distort firm behavior. The estimation strategy recovers discount rates used by executives from the pattern of … their actual investment spending. Our empirical work is based on panel data for 193 Canadian firms. For the firms most … likely to be affected by Free Cash Flow agency problems, investment behavior appears to be guided by discount rates that are …

on new investment projects without reducing the large shareholder’s incentive to monitor the manager. This results in …

benefits of diversification which causes a higher investment by the controlling shareholder in his asset and a lower investment …