Incremental cash flows, information sets and conflicts of interest

Rodolfo Apreda

No 220, CEMA Working Papers: Serie Documentos de Trabajo. from Universidad del CEMA

Abstract: This paper attempts to make of the standard incremental cash flow model (SICFM) a functional vehicle for coping with conflicts of interest. After outlining the model, residual rights to cash flows are linked to residual risks. Then, the underlying information sets to cash flows are brought to light, stressing the nurturing factors behind conflicts of interest: bounded rationality, asymmetric information, opportunistic behavior and transaction costs. Next, decision rights and organization forms are included into the frame of the paper. Finally, the core subject section shows how incremental cash flows come in handy to root out conflicts of interest, firstly by disclosing the residual information sets that divide managers, stockholders and creditors and, secondly, by advocating the design of ex~ante restrictive covenants on the uses and sources of incremental expected cash flows.

Keywords: cash flow; conflict of interest; information set; residual rights (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Date: 2002-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.ucema.edu.ar/publicaciones/download/documentos/220.pdf (application/pdf)

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: https://EconPapers.repec.org/RePEc:cem:doctra:220

Access Statistics for this paper

More papers in CEMA Working Papers: Serie Documentos de Trabajo. from Universidad del CEMA Contact information at EDIRC.
Bibliographic data for series maintained by Valeria Dowding ().