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SUMMARY:The Dynamics of Investment\, Payout and Debt - Professor Bart Lamb
 recht\, Cambridge Judge Business School
DTSTART:20170126T130000Z
DTEND:20170126T140000Z
UID:TALK68647@talks.cam.ac.uk
CONTACT:CERF/CF Admin
DESCRIPTION:We develop a dynamic agency model of a public corporation. Man
 agers underinvest because of risk aversion and a binding governance constr
 aint. They smooth rents and payout. They do not exploit interest tax shiel
 ds fully. The interactions of investment\, debt and payout decisions can c
 hange drastically depending on managers' preferences. Managers with\npower
  utility set investment\, debt and payout proportional to the firm's net w
 orth\, generating a constant debt ratio. With exponential utility\,\ninves
 tment decisions are separated from decisions about debt and payout.More pr
 ofitable firms become cash cows and less profitable firms accumulate\ndebt
 \, as in a pecking order model.\n
LOCATION:Room W4.03 Judge Business School
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