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

COMPUTER SIMULATION AND PLANNING OF THE COMPANY PROFITABILITY

To achieve high job performance, the managers need to have information about the key activities of all sectors. If the flow of information is greater, the greater will be the knowledge and expertise in the company that a...

SUSTAINABILITY OF SMALL AND MEDIUM SCALE ENTERPRISES IN RURAL GHANA: THE ROLE OF MICROFINANCE INSTITUTIONS

This paper is based on a research work undertaken in 2012 on the dynamics of microfinance institutions (MFIs) and their contribution to the development of small and medium scale enterprises (SMEs) in Ghana. It investigat...

THE EFFECTS OF INFLATION AND OPERATING CYCLE ON CASH HOLDINGS (LIQUIDITY) OF LISTED COMPANIES IN TEHRAN STOCK EXCHANGE

This study aims at testing the relationship between inflation and the cash holdings. Moreover, the existence and the direction of the relationship between operating cycle and cash holdings have also been examined.

OVERSEAS R&D AND TAIWAN-BASED FIRM’S PRODUCTIVITY - DOES INTERNAL TECHNOLOGICAL CAPABILITY MATTER?

The purpose of this study is to examine the influence of overseas R&D on firm productivity. In particular, we further consider the moderating effect of internal technological capability. To provide more empirical evidenc...

THE CAUSAL RELATIONSHIPS BETWEEN COMPONENTS OF CUSTOMER-BASED BRAND EQUITY FOR A DESTINATION: EVIDENCE FROM SOUTH KOREAN TOURISTS IN DANANG CITY, VIETNAM

The main purpose of this study is to examine the causal relationships between components of customer-based brand equity for a tourist destination. We have collected data from 252 South Korean tourists in Danang City and...

Download PDF file
  • EP ID EP2345
  • DOI -
  • Views 476
  • Downloads 38

How To Cite

Niu Weining (2017). EFFECT OF DISAGREEMENT ON CORPORATE FINANCING POLICY AND INVESTMENT LEVEL. Asian Economic and Financial Review, 7(4), 349-357. https://europub.co.uk/articles/-A-2345