Capital Structure, Managerial Incentives and Corporate Governance PDF Download
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Author: Christian M. Pfeil
Publisher: Peter Lang Gmbh, Internationaler Verlag Der Wissenschaften
ISBN: 9783631385746
Category : Capital investments
Languages : en
Pages : 0
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Book Description
What factors determine a firm's financing decision? Informational economics and contract theory have contributed a great deal to answer this question. This book contains three essays that further contribute to this strand of literature with the focus on theories that view capital structure as a disciplining instrument for a self-interested management. Some of the existing theories abstract from other disciplining devices such as ordinary incentive wages to justify debt as a mean to mitigate a moral hazard problem between managers and owners of a firm. Two of the models presented here turn to the question of whether debt can play a role as an incentive device when other incentive mechanisms are available as well. A third model revisits the signaling literature on capital structure in the light of new empirical evidence. All models are embedded into a corporate governance framework that allows to set the conclusions into a broader perspective.
Author: Christian M. Pfeil
Publisher: Peter Lang Gmbh, Internationaler Verlag Der Wissenschaften
ISBN: 9783631385746
Category : Capital investments
Languages : en
Pages : 0
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Book Description
What factors determine a firm's financing decision? Informational economics and contract theory have contributed a great deal to answer this question. This book contains three essays that further contribute to this strand of literature with the focus on theories that view capital structure as a disciplining instrument for a self-interested management. Some of the existing theories abstract from other disciplining devices such as ordinary incentive wages to justify debt as a mean to mitigate a moral hazard problem between managers and owners of a firm. Two of the models presented here turn to the question of whether debt can play a role as an incentive device when other incentive mechanisms are available as well. A third model revisits the signaling literature on capital structure in the light of new empirical evidence. All models are embedded into a corporate governance framework that allows to set the conclusions into a broader perspective.
Author: Musbau Kolawole Kayode
Publisher: GRIN Verlag
ISBN: 3668035822
Category : Business & Economics
Languages : en
Pages : 18
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Book Description
Research Paper (undergraduate) from the year 2015 in the subject Business economics - Accounting and Taxes, grade: A, ( Atlantic International University ) (SCHOOL OF BUSINESS AND ECONOMICS), language: English, abstract: Corporate governance involves different checks and balances with the ability to influence the incentives and monitoring of a firm’s management. Sound corporate governance is predominantly essential when a firm’s management is different from its ownership. Randall (2009) argued that in the absence of appropriate corporate governance, managers who are separate from a company’s ownership may not be incentivized to work hard towards achieving shareholders’ goal of maximizing profits. Instead, non-owner managers might end up lavishly spending money and other resources in ways that directly benefits themselves, for example on perks, and living an expensive life. Surprisingly, some other managers may be tempted to spend firm’s money to accumulate personal wealth through frauds or theft.
Author: Musbau Kolawole Kayode
Publisher:
ISBN: 9783668035836
Category :
Languages : de
Pages : 20
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Book Description
Research paper from the year 2015 in the subject Business economics - Accounting and Taxes, grade: A, Atlantic International University (SCHOOL OF BUSINESS AND ECONOMICS), language: English, abstract: Corporate governance involves different checks and balances with the ability to influence the incentives and monitoring of a firm's management. Sound corporate governance is predominantly essential when a firm's management is different from its ownership. Randall (2009) argued that in the absence of appropriate corporate governance, managers who are separate from a company's ownership may not be incentivized to work hard towards achieving shareholders' goal of maximizing profits. Instead, non-owner managers might end up lavishly spending money and other resources in ways that directly benefits themselves, for example on perks, and living an expensive life. Surprisingly, some other managers may be tempted to spend firm's money to accumulate personal wealth through frauds or theft.
Author: Chinmoy Ghosh
Publisher:
ISBN:
Category :
Languages : en
Pages : 45
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Book Description
We investigate the effect of corporate governance on equity carve-out decisions during the period of 1990 to 2014. Consistent with the notion that managerial incentives drive corporate decisions, we find that firms where the CEO and management have larger stock ownership are more likely to carve-out their subsidiaries. Larger firms with prior poor performance are also more likely to carve-out their divisions. Among equity carve-out parents, larger firms with higher profitability, higher managerial ownership and CEO incentive-based compensation tend to retain higher portions of their subsidiaries. We finally demonstrate that for wealth-enhancing strategic decisions such as equity carve-outs CEO tenure and classified board are negatively related to value, while outsider dominated boards are perceived positively by the investors. Our results offer new insights on the role of managerial incentive and corporate governance in asset restructuring.
Author: Xinping Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 284
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Book Description
Author: Hae Jin Chung
Publisher:
ISBN:
Category :
Languages : en
Pages : 134
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Book Description
Author: Ray Ball
Publisher:
ISBN:
Category :
Languages : en
Pages : 380
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Book Description
Author: Mahmoud Agha
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We combine the incentive schemes offered to managers in practice into a single incentive package and construct a governance index to analyze the role of governance and the incentive package in addressing the agency costs of free cash flow. Using US based data, we find empirical evidence that managers in practice do not consume perks but make a tradeoff when they allocate the cash flows of the firm between investment and dividends. In general, managers in practice underinvest and overpay dividends; an increase in their incentive package would retract both investment and dividends toward the optimal levels; hence, firm performance would improve. We also find that governance is used as a control mechanism rather than as a substitute for the incentive package. Principals employ governance to slow down investment and increase dividends when there is a high informational asymmetry between the manager and the investors, and set these variables close to the optimal levels otherwise. Moreover, we find that firms in practice do not use dividends as a substitute for governance. Furthermore, we find monotone relations between investment, firm performance and dividends on the one hand, and governance and the incentive package on the other hand.
Author: M. Andrew Fields
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Recent corporate events have brought a heightened public awareness to corporate governance issues. Much work has been accomplished to date, but it is clear that much more remains to be done. This paper provides a review of empirical research in four relevant areas of corporate governance. Specifically, the paper provides an overview of (a) the role that outside directors play in monitoring managers, (b) the emerging literature on the impact of board diversity, (c) the existence of and incentives for corporate executives to manage firm earnings, and (d) managerial incentives to bear risk.
Author: Lin Peng
Publisher:
ISBN:
Category :
Languages : en
Pages : 62
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Book Description
We present a rational expectations model of optimal executive compensation in a setting where managers are in a position to manipulate short-term stock prices and the manipulation propensity is uncertain. We analyze the tradeoffs involved in conditioning pay on long- versus short-term performance and show how manipulation, and investorsņuncertainty about it, affects the equilibrium pay contract and the informativeness of prices. Firm and manager characteristics determine the optimal compensation scheme: the strength of incentives, the pay horizon, and the use of options. We consider how corporate governance and disclosure regulations can help create an environment that enables better contracting.
