Capital Allocation in Decentralized Businesses

Stuart M. Turnbull
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Stuart M. Turnbull: Bauer College of Business, University of Houston, TX 77004, USA

JRFM, 2018, vol. 11, issue 4, 1-11

Abstract: This paper described a theory of capital allocation for decentralized businesses, taking into account the costs associated with risk capital. We derive an adjusted present value expression for making investment decisions, that incorporates the time varying profile of risk capital. We discuss the implications for business performance measurement.

Keywords: risk capital; capital allocation; decentralization; performance measurement; RAROC (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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