EFFECT OF DISAGREEMENT ON CORPORATE FINANCING POLICY AND INVESTMENT LEVEL
Journal Title: Asian Economic and Financial Review - Year 2017, Vol 7, Issue 4
Abstract
This study models firm?s financing policy and investment level when manager and outside investors has disagreement. It shows that the firm is more likely to over invest when the level of disagreement is high, and prefers debt financing; while under invests with lower disagreement level and tends to equity financing. Compared with self-financing, investment at firm level decreases, the over (under) investment level also declines and the threshold of disagreement rises when the firm chooses external financing. The numerical simulation also verifies the theoretical findings.
Authors and Affiliations
Niu Weining| International School of Business, Beijing International Studies University, Beijing, China
Keywords
Related Articles
- EP ID EP2345
- DOI -
- Views 530
- Downloads 38
MARKET REACTION TO DIVIDEND INITIATION ANNOUNCEMENTS ON THE GHANA STOCK EXCHANGE: THE CASE OF INDUSTRIAL ANALYSIS
This study examines the market?s reaction to dividend initiation announcements. In particular, it considered the magnitude of abnormal returns during the days that surround announcements of dividend initiation. This stud...
GOING PUBLIC AND UNDERPRICING AS BRAND VALUE ENHANCING TOOLS
After the year 2000, a new trend in corporate finance-related research has been investigating the relationship between Initial public offerings ?IPOs? variables from one side and brand value on the other in order to come...
EXPORTS AND IMPORTS IN QATAR: EVIDENCE FROM COINTEGRATION AND ERROR CORRECTION MODEL
This paper investigates the existence of long-run relationship between exports and imports in Qatar’s economy using Johansen cointegration approach. Qatar is a small open economy that depends on the outside world for exp...
DO NEGATIVE INCIDENTS AND CORPORATE SOCIAL RESPONSIBILITY INFLUENCE ON SPONSORS’ STOCK ABNORMAL RETURNS?
This study aimed at introducing the panel data analysis to explore the determinants and the effect of ethics violations on the abnormal returns of the sponsors of Chinese Professional Baseball League (CPBL) by using the...
Return-Volatility Interactions in the Nigerian Stock Market
The study employed the GARCH (1, 1) and VAR models to ascertain the relationship between volatilities in the monetary policy variables and volatilities in the stock market returns in Nigeria between 1980 and 2010.The stu...