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The Economic Value of Flexibility when there is Disagreement

Boot, Arnoud W.A.; Thakor, Anjan V. - Tinbergen Instituut - 2003

We develop an economic theory of “flexibility”, which we interpret as the discretion orability to make a decision that others disagree with. We show that flexibility is essentiallyan option for the decisionmaker, and can be valued as such. The value of the flexibilityoption is decreasing in...

Persistent link: https://www.econbiz.de/10011249540

Go Public or Stay Private: A Theory of Entrepreneurial Choice

Boot, Arnoud W.A.; Gopalan, Radhakrishnan; Thakor, Anjan V. - Tinbergen Instituut - 2003

In this paper we analyze an entrepreneur /manager's choice between private and public ownership in a setting in which management needs some "elbow room" or autonomy to optimally manage the firm. In public capital markets, the corporate governance regime in place exposes the firm to exogenous...

Persistent link: https://www.econbiz.de/10011256028

Disagreement and Flexibility: A Theory of Optimal Security Issuance and Capital Structure

Boot, Arnoud W.A.; Thakor, Anjan V. - Tinbergen Instituut - 2003

In this paper we introduce flexibility as an economic concept and apply it to the firm’ssecurity issuance decision and capital structure choice. Flexibility is the ability to makedecisions that one thinks are best even when others disagree. The firm’s management valuesflexibility because it...

Persistent link: https://www.econbiz.de/10011242147

Market Liquidity, Investor Participation and Managerial Autonomy: Why do Firms go Private?

Boot, Arnoud W.A.; Gopaian, Radhakrishnan; Thakor, Anjan V. - Tinbergen Instituut - 2006

ownership relative to private ownership lie in the liquidity of public ownership. While the liquidity of public ownership lets … shareholders trade easily and supply capital at a lower cost, the liquidity-engendered trading also results in stochastic shocks to … a firm's shareholder base. This exposes management to uncertainty regarding the identity of future shareholders and …

Persistent link: https://www.econbiz.de/10011256406