Investment Decisions under Majority Rule

C. Carrera and J. Richmond

Working Paper from Economics Department, Queen's University

Abstract: This paper analyzes the relation between stock market valuations of firms and the optimal choice of capital stock when markets are incomplete and firms act in the interests of a majority shareholders. No spanning assumptions are made. The standard unanimity results emerge as a special case when marginal spanning holds. A simple stochastic model of shareholder voting determines under, two assumptions about ownership, the probability distribution of the firm's optimal capital stock when the number of shareholders is large.

Pages: 26
Date: 1982
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:475

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