We develop and test a model in which managerial overconfidence offsets the underinvestment problem arising from managerial myopia. Using a three-period investment model in which we capture managerial myopia by hyperbolic discounting, we show that both overconfident owner-managers and...

International trade generates higher overall output by redirecting jobs to those who create the most added value, that is, to those who maximize their productive abilities. Put simply, the benefits of free trade can be summarized as: quot;Do what you do best. Trade for the rest.quot; But times...

One of the central uses of stakeholder theory, in its original form, was as a counterpoint to the idea that corporations should be managed in the interests of shareholders. As the theory developed the debate was often framed in terms of quot;shareholders vs. stakeholders.quot; While developing...

This paper examines the Team Production and Director Primacy Models of corporate governance, finds them wanting, and explains why corporate governance is moving toward shareholder primacy and why this will benefit not only investors but the whole American economy.The director primacy model...

Despite evidence that delayed exit is a pervasive and consequential problem, relatively little is known about its causes. Moreover, the study of exit delay is confounded by the fact that behavioral theories arising in the literature on escalation of commitment and economic theories that...

This study sets up a compound option approach for evaluating pharmaceutical R&D investment projects in the presence of technical and economic uncertainties. Technical uncertainty is modeled as a Poisson jump that allows for failure and thus abandonment of the drug development. Economic...

This paper investigates the impacts of superstar firms and their cash hoarding behaviors on capital misallocation through the lens of an endogenous firm-market boundary. Empirically I find that since the 1980s, capital allocation efficiency has been deteriorating in the United States. To explain...

This paper studies the effectiveness of lifetime employment as a strategic commitment in a three-stage Cournot model with two identical labour-managed income-per-worker-maximizing firms. In the first stage, one labour-managed firm is allowed to offer lifetime employment. In the second stage, the...

This research introduces an agent-based simulation model representing the dynamic processes of cooperative R&D in the manufacturing sector of South Korea. Firms' behavior is defined according to empirical findings on the Korean Innovation Survey 2005 and captured in a multivariate probit...

Investments in Ramp;D can influence a firm's ability to develop new products and to create and adopt innovative technologies that may enhance productivity. However, due to uncertainty regarding the outcome, investments in Ramp;D may lead to an agency problem between the owners and the managers...