Download or read book Incentives and Investment Timing written by Steven R. Grenadier and published by . This book was released on 2011 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the standard real options approach to investment, the owner of the option decides when to exercise the investment option. However, in many real-world settings, investment decisions are delegated to managers. This article provides a model of optimal contracting in a continuous-time principal-agent setting in which there is both moral hazard and adverse selection. We show that the underlying option can be decomposed into two components: A manager's option and an owner's option. The specification of the manager's option is determined by a compensation contract, and must provide an incentive for the manager to both extend effort and to exercise as close to the value-maximizing stopping time as possible. The residual option payout goes to the owner. The implied investment behavior differs significantly from that of the first-best no-agency solution. In particular, there will be greater inertia in investment, in that the model leads to the manager having an even greater quot;option to waitquot; than the owner. The interplay between the twin forces of hidden information and hidden action leads to markedly different investment outcomes than when only one of the two forces is at work.
Download or read book Essays in Accounting Theory in Honour of Joel S Demski written by Rick Antle and published by Springer Science & Business Media. This book was released on 2007-02-15 with total page 334 pages. Available in PDF, EPUB and Kindle. Book excerpt: The integration of accounting and the economics of information developed by Joel S. Demski and those he inspired has revolutionized accounting thought. This volume collects papers on accounting theory in honor of Professor Demski. The book also contains an extensive review of Professor Demski’s own contributions to the theory of accounting over the past four decades.
Download or read book A State by State Guide to Investment Incentives and Capital Formation in the United States written by Walter H. Diamond and published by Kluwer Law International B.V.. This book was released on 2006-01-01 with total page 6 pages. Available in PDF, EPUB and Kindle. Book excerpt: In todays world of globalization, the United States generally is considered by foreign investors around the world to be the safest and most profitable location to invest their funds and from where to operate a headquarters or manufacturing site. After more than a decade of prosperity and a strong currency coupled with the traditional political stability, the United States has emerged as a net importer of capital for the first time in post World War II history. Increasing profit margins for multinationals, relatively low interest rates, incredible stock exchange prices and volume, a reduced level of inflation and record consumer spending resulting from sophisticated demands of the baby boomer age, as well as an accelerated rate of immigrant arrivals, all have inspired new private investment from abroad, now surpassing the USD 5 trillion mark in direct and indirect investment. Surveys consistently show that foreign businesspersons, like their American counterparts, seek locations from which to manufacture, assemble, or service their products where the tax or investment incentives are most attractive. This fact is reflected in the operations of the Fortune 500 in the United States where 80% of privately invested assets are located in the five states of New York, New Jersey, Delaware, Illinois, and California, all of which are leaders in providing trade and investment concessions to businesses. Investment incentives consist of a variety of inducements ranging from tax credits and cash grants and tax exemptions or reductions to accelerated depreciation, loan subsidies and property tax, sales tax and customs duty exclusions or reductions, as well as foreign trade and enterprise zone availability. Unlike the array of incentives offered by foreign countries, the charts reflect that most of the States rely on property tax concessions, loan subsidy financing, development project rewards, low or no sales taxes and foreign trade zone availability. As in the case of Part I relating to State Investment Incentives, Part II of the US State-by-State Guide to Investment Incentives and Capital Formation covering the steps required to organize an entity in the United States, reflects great similarity in incorporation in contrast to enterprises wishing to operate abroad. The authors of this Guide present the reader with a clear picture of all the differing rules and regulations between the states that govern investors. It is clear, concise, user-friendly, and invaluable.
Download or read book Investment Incentives written by J. B. Bracewell-Milnes and published by Springer. This book was released on 2013-11-21 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: Modern society cannot function without a high level of investment, just as it cannot function without a high level of taxation (or its equivalent in communist countries). Both investment and taxation (as a source of government revenue) are important for the level of production and employment. No wonder then that governments are faced with an increasing dilemma between higher taxation on the one hand and the need for stimulating investment by tax reductions or allowances on the other. Related to this is the choice between a market economy which is as free as possible and detailed governmental measures for monitoring and steering investments, not only with the intention to promote economic growth but to further a nu mb er of other social interests as weil. This is to some extent a political issue but the decisions it involves should still be based on sound economic facts and considerations. In many countries one of the important instruments for stimulating and steering investment is the introduction oi\modification of investment incentives within the framework of the tax system. The present book gives a lot of information on this subject. It endeavours to create a conceptual order in the somewhat chaotic multitude of incentives practised by the main industrial countries and studies their economic effects. The authors are weil equipped to do this because they were c10sely involved in the study on this subject made by Erasmus U niversity Rotterdam at the request of the Common Market Com mission.
Download or read book Incentive Problems and Investment Timing Options written by Rick Antle and published by . This book was released on 2001 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Understanding Investment Incentives Under Parallel Tax Systems written by and published by . This book was released on 1989 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Investment Tax Incentives and Their Big Time to build Fiscal Multiplier written by Dimitrios Bermperoglou and published by . This book was released on 2019 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Investment Timing Agency and Information written by Steven R. Grenadier and published by . This book was released on 2005 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides a model of investment timing by managers in a decentralized firm in the presence of agency conflicts and information asymmetries. When investment decisions are delegated to managers, contracts must be designed to provide incentives for managers to both extend effort and truthfully reveal private information. Using a real options approach, we show that an underlying option to invest can be decomposed into two components: a manager's option and an owner's option. The implied investment behavior differs significantly from that of the first-best no-agency solution. In particular, greater inertia occurs in investment, as the model predicts that the manager will have a more valuable option to wait than the owner.
Download or read book Tax Incentives for Investment written by Richard Miller Bird and published by Association canadienne d'études fiscales. This book was released on 1980 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Investment Incentives written by Kenneth P. Thomas and published by . This book was released on 2007-01-01 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Temporary Investment Tax Incentives written by Christopher L. House and published by . This book was released on 2006 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investment decisions are inherently forward-looking. The payoff of acquiring capital goods, particularly long-lived capital goods, is governed almost exclusively by events in the far future. Because the timing of the investment itself does not affect future payoffs, there are strong incentives to delay or accelerate investment to take advantage of predictable intertemporal variations in cost. For sufficiently long-lived capital goods, these incentives are so strong that the intertemporal elasticity of investment demand is nearly infinite. As a consequence, for a temporary tax change, the shadow price of long-lived capital goods must reflect the full tax subsidy regardless of the elasticity of investment supply. While price data provide no information on the elasticity of supply, they can reveal the extent to which adjustment costs are internal or external to the firm. In contrast, the elasticity of investment supply can be inferred from quantity data alone. The bonus depreciation allowance passed in 2002 and increased in 2003 presents an opportunity to test the sharp predictions of neoclassical investment theory. In the law, certain types of long-lived capital goods qualify for substantial tax subsides while others do not. The data show that investment in qualified properties was substantially higher than for unqualified property. The estimated elasticity of investment supply is high--between 10 and 20. Market prices do not react to the subsidy as the theory dictates. This suggests either that internal (unmeasured) adjustment costs play a significant role or that measurement problems in the price data effectively conceal the price changes. While the policy noticeably increased investment in types of capital that benefited substantially from bonus depreciation, the aggregate effects of the policy were modest. The analysis suggests that the policy may have increased output by roughly 0.1 percent to 0.2 percent and increased employment by roughly 100,000 to 200,000 jobs
Download or read book Incentive Fees and Mutual Fund Volatility Timing written by Erasmo Giambona and published by . This book was released on 2008 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper shows that compensation incentives partly drive fund managers' market volatility timing strategies. Larger management fees are associated with less counter-cyclical or more pro-cyclical volatility timing. Fund investment objectives and styles also partly determine volatility timing. Funds with more aggressive styles time volatility more counter-cyclically. Thus, managers may try to outperform the general market by adopting aggressive styles, while dynamically hedging portfolio volatility using counter-cyclical volatility timing. We also find that fund managers systematically change their portfolio betas in response to aggregate equity fund cash flows. The average effects of volatility timing and fund flow timing on fund performance are mostly positive for funds that increase their betas when conditional volatility and fund flows increase (i.e., pro-cyclical timers).
Download or read book Time Limited Property Rights and Investment Incentives written by Thomas J. Miceli and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Although it is axiomatic that property rights of infinite duration are necessary for owners to make efficient long term investments in their property, time limits on property rights are pervasive in the law. This paper provides an economic justification for such limits by arguing that they actually enhance property values in the presence of imperfect information. In so doing, the analysis offers a coherent approach for understanding what otherwise appear to be unrelated doctrines in the law.
Download or read book Investment Timing and Capital Structure with Loan Guarantees written by Hua Xiang and published by . This book was released on 2015 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: The equity-for-guarantee swap (EGS) is a new popular financial derivative. We derive closed-form solutions for the interaction of the optimal investment and financing with the swap in a real-options framework. We find that there is an U-shaped relationship between investment timing and the coupon payment. In contrast to the classical model, EGS induces different investment and financing strategies. In particular, it delays investment. Whether the swap leads to debt overhang distortion depends on guarantee cost and the profitability of the project but it induces the borrower's risk-shifting incentive. The larger the guarantee cost, the stronger the incentive.
Download or read book Tax Law Design and Drafting Volume 1 written by Mr.Victor Thuronyi and published by International Monetary Fund. This book was released on 1996-08-23 with total page 534 pages. Available in PDF, EPUB and Kindle. Book excerpt: Edited by Victor Thuronyi, this book offers an introduction to a broad range of issues in comparative tax law and is based on comparative discussion of the tax laws of developed countries. It presents practical models and guidelines for drafting tax legislation that can be used by officials of developing and transition countries. Volume I covers general issues, some special topics, and major taxes other than income tax.
Download or read book Investment Timing Agency and Information written by Steven R. Grenadier and published by . This book was released on 2009 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides a model of investment timing by managers in a decentralized firm in the presence of agency conflicts and information asymmetries. When investment decisions are delegated to managers, contracts must be designed to provide incentives for managers to both extend effort and truthfully reveal private information. Using a real options approach, we show that an underlying option to invest can be decomposed into two components: a manager's option and an owner's option. The implied investment behavior differs significantly from that of the first-best no-agency solution. In particular, greater inertia occurs in investment, as the model predicts that the manager will have a more valuable option to wait than the owner.
Download or read book Time Consistency and Investment Incentives in Environmental Policy written by Bouwe R. Dijkstra and published by . This book was released on 2002 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:
