| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5069263 | Finance Research Letters | 2017 | 8 Pages |
Abstract
We incorporate managers' time-inconsistent preferences into the DeMarzo et al. (2012) model of dynamic agency and the q theory of investment. Our model provides an alternative explanation for underinvestment from the perspective of managers' time inconsistency. It also shows that firms prefer delaying a cash payout due to managers' time-inconsistent preferences, and the corresponding distorted investment and payout decisions significantly decrease a firm's average q and marginal q.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Bo Liu, Congming Mu, Jinqiang Yang,