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We show that introducing an external capital market with information asymmetry into a product market model reduces opportunistic substitution of sub-standard goods and encourages producers to concentrate on long-run reputation building.  We test this result with a laboratory experiment.  We...
Persistent link: https://www.econbiz.de/10011004366
This paper links real investment policy to corporate risk management, endogenizing the costs of external financing. Previous literature finds investment efficiency linked to full hedging. In this model, a firm with proprietary information when deciding its investment in a valuable project, may...
Persistent link: https://www.econbiz.de/10010661425
, industries and regions, we find that corporate investment in China has become increasingly efficient over time.  However, based … good explanation for China's overinvestment, especially for the private sector, while in the sector, overinvestment is …
Persistent link: https://www.econbiz.de/10008763475
This paper reports a new test of capital structure theories. It uses a filtering technique to identify large investment spikes. We find that the spikes are predominantly financed with debt by large firms and with new equity by small firms. In the process of financing large projects, firms move...
Persistent link: https://www.econbiz.de/10010661434
This paper examines how foreign ownership affects the investment decisions of subsidiary firms using a new dataset of listed-parent - listed-subsidiary pairs.  We find that improvements in the investment opportunities of parent firms have a negative effect on the investment of their...
Persistent link: https://www.econbiz.de/10011004467
Whether they are financial, economic, or psychological, discount rates affect most economic decisions: investment and savings, hirings and firings, defaults and refinancing, financial and economic reforms, learning and experimentation, and any other decision with long-term consequences, such as...
Persistent link: https://www.econbiz.de/10009144004
How do firms finance large cash flow requirements?  We examine this in the context of firms that are subject to substantial cash flow requirements.  We find that trade credit, inventory and cash stock reductions are all important in the short term for mild requirements.  Larger and longer...
Persistent link: https://www.econbiz.de/10011004280
This article reports a unique analysis of private engagements by an activist fund.  It is based on data made available to us by Hermes, the fund manager owned by the British Telecom Pension Scheme (BTPS), on engagements with management in companies targeted by its U.K. Focus Fund (HUKFF).  In...
Persistent link: https://www.econbiz.de/10011004376
Sometimes shareholders are better off delegating to a CEO with different objectives than their own. A top manager motivated to share surpluses with workers can encourage union members to adopt efficient production methods. Bond covenants may constrain managers from acquiescing to union wage...
Persistent link: https://www.econbiz.de/10011146229
China has sought to improve enterprise performance not through privatisation as in other transition economies, but …
Persistent link: https://www.econbiz.de/10011146235