Asymmetric information, managerial opportunism, financing, and payout policies

Article Abstract:

We examine corporate issuance and payout policies in the presence of both adverse selection (in capital markets) and managerial opportunism. Our results establish the importance of the locus of decision control in the firm. When shareholders determine policies, debt financing is always optimal in the presence of either adverse selection or managerial opportunism. However, when both of these problems are simultaneously present, equity issuance can become an optimal signaling mechanism. Shareholders' most preferred signaling mechanism is restricting dividends, followed by equity financing, an finally underpricing securities. When managers determine policies, a reversed hierarchy may be obtained. (Reprinted by permission of the publisher.)

Economics, Financial management, Information theory, Debt financing (Corporations), Debt financing, Information theory in economics

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Corporate board composition, protocols, and voting behavior: experimental evidence

Article Abstract:

The authors present a model demonstrating that institutionally preferred policies are implemented when boards have a majority of uninformed by trustworthy "watchdogs." The model also emphasizes the need for insider penalties when dissension among board members is present.

United States, Science & research, Comparative analysis, Organizational behavior, Boards of directors, Organizational behaviour

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Corporate financing: an artificial agent-based analysis

Article Abstract:

An analysis of corporate stock offerings is provided.

Methods, Stock offerings

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