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on Project, Program and Portfolio Management |
| By: | Ohlendorf, Susanne; Schmitz, Patrick W. |
| Abstract: | We consider a repeated moral hazard problem, where both the principal and the wealth-constrained agent are risk-neutral. In each of two periods, the principal can make an investment and the agent can exert unobservable effort, leading to success or failure. Incentives in the second period act as carrot and stick for the first period, so that effort is higher after a success than after a failure. If renegotiation cannot be prevented, the principal may prefer a project with lower returns; i.e., a project may be "too good" to be financed or, similarly, an agent can be "overqualified." |
| Keywords: | Dynamic moral hazard; hidden actions; limited liability |
| JEL: | C73 D86 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6725&r=ppm |
| By: | Poulsen, Thomas (Department of Business Studies, Aarhus School of Business) |
| Abstract: | This paper studies how large shareholders with bene…ts of control a¤ect …rms’ equity issue behavior and investment decisions. I introduce an explicit agency cost structure based on the large shareholder’s bene…ts of control. In a simple extension of Myers and Majluf [1984], I show that underinvestment is aggravated when there are bene…ts of being in control, and these bene…ts are diluted if equity is issued to …nance the investment project. I assume that large shareholders are constrained from further investments in their …rms, and that they maximize their own wealth, which includes the value of security bene…ts paid to all shareholders in proportion of ownership stake plus the value of private bene…ts from voting rights. Potential loss of control is calculated as the di¤erence in the largest shareholder’s voting power before and after a hypothetical equity issue. I use voting power as a representation of the large shareholders’expected private bene…ts. Using a large panel of U.S. data, I …nd that large shareholders’ concern with dilution of ownership and control cause …rms to issue less equity and to invest less. I also …nd that it has no signi…cant e¤ect whether new shares are issued to old shareholders or new shareholders. |
| Keywords: | Underinvestment; equity issue; ownership structure; influence; voting power; private benefits of control; potential loss of control; |
| Date: | 2008–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhb:aarbfi:2008-02&r=ppm |
| By: | Marijke Verpoorten |
| Abstract: | Farmers in developing countries are confronted with imperfect markets. This has an impact on their production activities. When implementing developing projects these market imperfections should be taken into account. This paper is an attempt to discuss the impact of imperfect markets in the context of an irrigation project in village Pata, Senegal. The first section models the production decision of the agricultural household. The second section presents the irrigation project in Pata. The third section tests for the presence of imperfections in the credit and labour markets of Pata. I conclude by discussing the implications for the project. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0120&r=ppm |
| By: | Costa, Ionara (UNU-MERIT); Doranova, Asel (UNU-MERIT); Eenhoorn, Geert-Jan (World Wide Recycling) |
| Abstract: | This paper analyses the participation of firms without GHG emission liabilities as technology providers in CDM and JI projects, the flexibility mechanisms of the Kyoto Protocol. It argues that the motivations for those firms to engaging in CDM and JI projects is based on market stimuli beyond those related to the emission market itself. Instead, their motivations are largely associated with search for new markets where their technological resources and expertise can be exploited. The analysis is based on three firms from the Dutch waste management industry. These cases suggest that the Kyoto's mechanisms compensate to some extent the weakness of the underdeveloped waste management sector in developing and transition economies. |
| Keywords: | Waste Management Industry, Kyoto Protocol, International Expansion, Firm-specific advantages |
| JEL: | L19 L22 L59 L98 Q28 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2008020&r=ppm |