Economics at your fingertips  

Investment and financing choices by time-inconsistent managers

Liu Gan, Xin Xia and Yifei Chen

The North American Journal of Economics and Finance, 2018, vol. 46, issue C, 29-48

Abstract: This paper provides an analytically tractable continuous-time model in which a time-inconsistent manager can divert part of the firm’s cash flows as private benefits at the expense of outside shareholders. We endogenously determine the investment scale, investment threshold, optimal coupon and default threshold under managerial discretion. We demonstrate that time-inconsistent managers each have a trade-off between the timing and scale of investment.

Keywords: Agency conflicts; Investment; Financing policy; Time inconsistency (search for similar items in EconPapers)
JEL-codes: D92 G02 G32 G33 G34 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

The North American Journal of Economics and Finance is currently edited by Hamid Beladi

More articles in The North American Journal of Economics and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2018-12-08
Handle: RePEc:eee:ecofin:v:46:y:2018:i:c:p:29-48