In this article we use a real life case from an emerging country to illustrate the valuation with discounted cash flow methods, witch include complexities such as unpaid taxes, losses carried forward, foreign exchange debt, presumptive income and inflation adjustments to the Financial...

This article presents a formal derivation of general expressions for cost of equity (Ke) and weighted average cost of capital (WACC) in perpetuities with constant growth, which do not make any assumption on what the proper discount rate is to be applied to the firm's tax shield. The formulas are...

There is a lot of confusion among practitioners about valuing firms and investment projects. At the first sight, the discounting procedure is a simple and routine task which does not involve much effort. But actually even in simple cases accurate valuation requires attention to plenty of...

In this paper we analyze in which way the expansion strategy of a hotel chain is influenced by the environmental quality of both the domestic and the foreign region. We show that the environment (which is a public good, and determines the competitive advantage of hotels in a region) plays a...

This paper claims that the first-order approach to agency problems can only hold if the likelihood ratio is bounded from below. None of the classic sets of su cient conditions to validate it (Mirrlees-Rogerson (1979-1985) and Jewitt (1988)) guarantees such a condition.

Although we know there exists a simpleapproach to solve the circularitybetween value and the discount rate,known as the Adjusted Present Valueproposed by Myers, 1974, it seemsthat practitioners still rely on thetraditional Weighted Average Cost ofCapital, WACC approach of weightingthe cost of...

There have been a number of research projects which examined the issue of executive compensation with the objective of identifying the factors that influence executive compensation. However, despite those attempts there is yet to be a comprehensive paper that brings all the possible factors...

In this paper, we examine how retail store managers reduce their sales activity in response to target ratcheting. We find that managers with favorable sales performance in the first three quarters reduce their sales activity in the final quarter. We also document that managers who engage in...

We examine the economic consequences of the recent adoption of SFAS 123(R) in the United States. Consistent with the conjectures of prior research, our results show that the removal of favorable accounting treatment for stock options post SFAS 123(R) results in a switch from stock options to...

Organizations frequently try to incentivize employees to develop highly creative solutions. In this study, we examine self-set salaries as a specific type of incentive design. We investigate whether self-set salaries affect employees’ motivation and overall (creative) performance. Moreover,...