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The Economic Value of Flexibility when there is Disagreement

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

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

Persistent link: https://www.econbiz.de/10005137042

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

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

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

Persistent link: https://www.econbiz.de/10005137258

Go Public or Stay Private: A Theory of Entrepreneurial Choice

Boot, Arnoud W.A.; Gopalan, Radhakrishnan; Thakor, Anjan V. - Tinbergen Institute - 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/10005504882

A Real Options Perspective on R&D Portfolio Diversification

Bekkum, Sjoerd van; Pennings, Enrico; Smit, Han - Tinbergen Institute - 2007

portfolio risk, and changes diversification arguments when a portfolio is constructed. When R&D projects exhibit option …. Real option theory argues that research projects with conditional phases have option-like risk and return properties, and … are different from unconditional projects. We show that although the risk of a portfolio always depends on the correlation …

Persistent link: https://www.econbiz.de/10005016277

Welfare Effects of Distortionary Company Car Taxation

Gutiérrez-i-Puigarnau, Eva; Ommeren, Jos van - Tinbergen Institute - 2007

In Europe, company cars are offered by employers as fringe benefits to their employees at a lower price than employees pay in the car market, mainly due to favourable taxation of company cars. We analyse the welfare effects of favourable taxation of company cars for the Netherlands. The...

Persistent link: https://www.econbiz.de/10005209450

Performance Measurement, Expectancy and Agency Theory: An Experimental Study

Sloof, Randolph; Praag, Mirjam van - Tinbergen Institute - 2007

Theoretical analyses of (optimal) performance measures are typically performed within the realm of the linear agency model. This model implies that, for a given compensation scheme, the agent’s optimal effort is unrelated to the amount of noise in the performance measure. In contrast,...

Persistent link: https://www.econbiz.de/10005209530

Wage Structure and the Incentive Effect of Promotions

Herpen, Marco van; Cools, Kees; Praag, Mirjam van - Tinbergen Institute - 2004

This paper studies wage structure characteristics and their incentive effects within one firm. Based on personnel records and an employee survey, we provide evidence that wages are attached to jobs and that promotions play a dominant role as a wage determinant. We furthermore show that a...

Persistent link: https://www.econbiz.de/10005144477

The Effects of Performance Measurement and Compensation on Motivation

Herpen, Marco van; Praag, C. Mirjam van; Cools, Kees - Tinbergen Institute - 2003

This paper analyzes empirically the relationship between pay and performance. Economic and psychological theories predict that the design and implementation of a performance measurement and compensation system affect the motivation of employees. Our survey results demonstrate a positive...

Persistent link: https://www.econbiz.de/10005144489

The Effect of Noise in a Performance Measure on Work Motivation

Sloof, Randolph; Praag, C. Mirjam van - Tinbergen Institute - 2008

This paper reports the results of an individual real effort laboratory experiment where subjects are paid for measured performance. Measured performance equals actual performance plus noise. We compare a stable environment where the noise is small with a volatile environment where the noise is...

Persistent link: https://www.econbiz.de/10005144498

Recruitment in a Monopsonistic Labour Market: Will Travel Costs be reimbursed?

Rouwendal, Jan; Ommeren, Jos van - Tinbergen Institute - 2007

Reimbursement of commuting costs by employers has attracted little attention from economists. We develop a theoretical model of a monopsonistic employer who determines an optimal recruitment policy in a spatial labour market with search frictions and show that partial reimbursement of commuting...

Persistent link: https://www.econbiz.de/10005136890