2 edition of Asset sales, firm performance, and the agency costs of managerial discretion found in the catalog.
Asset sales, firm performance, and the agency costs of managerial discretion
Larry H. P. Lang
|Statement||Larry Lang, Annette Poulsen, René M. Stulz.|
|Series||NBER working paper series -- working paper no. 4654, Working paper series (National Bureau of Economic Research) -- working paper no. 4654.|
|Contributions||Poulsen, Annette Brinch, 1955-, Stulz, René M., National Bureau of Economic Research.|
|The Physical Object|
|Pagination||51 p. ;|
|Number of Pages||51|
Glossary of Financial and Business Terms Over 2, Entries Asset/liability management (average AR/sales * ). Average cost of capital A firm's required payout to the bondholders and to the stockholders expressed as a percentage of capital contributed to the firm. Average cost of capital is computed by dividing the total required cost. 12b-1 Fees: This is a fee that covers things like advertising and distribution, is charged on mutual funds, and is typically between % and %. Investment Management Fees | Percentage of AUM (Asset Under Management) When you’re doing a financial advisor fees comparison, you’ll find that the most common fee structure imposes charging. Recent studies suggest that agency costs of managerial discretion are lower in Japan than in the United States. This suggests that A. the cost of capital can be lower in Japan than in the United States, but only if international financial markets are not fully integrated. B. the cost of capital can be lower in Japan than in the United States, even if international financial markets . Managers use it to monitor their firm’s current performance, analyze prospective investment opportunities, and to determine appropriate financing policies. Boards of directors use it to create compensation packages for the firm’s managers and to monitor the managers’ : Cfa Steven R. Ferraro, Cpa Charles J. McPeak.
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The sample has 40 asset sales by 35 firms with proceeds paid out to creditors and/or shareholders and 53 sales by 43 firms with proceeds retained by the firm (one firm makes one sale of each type).
We call the sample of 40 sales the 'payout sample' and the sample of 53 sales the 'reinvest' sample throughout the by: Asset Sales, Firm Performance, and the Agency Costs of Managerial Discretion Larry Lang, Annette Poulsen, Rene M.
Stulz. NBER Working Paper No. Issued in February NBER Program(s):Asset Pricing, Corporate Finance We argue that management sells assets when doing so provides the cheapest funds to pursue its objectives rather than for operating Cited by: The sample has 40 asset sales by 35 firms with proceeds paid out to creditors and/or shareholders and 53 sales by 43 firms with proceeds retained by the firm (one firm makes one sale of each type).
We call the sample of 40 sales the ‘payout sample’ and the sample of 53 sales the ‘reinvest’ sample throughout the paper. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): We argue that management sells assets when doing so provides the cheapest funds to pursue its objectives rather than for operating efficiency reasons alone.
This hypothesis suggests that (1) firms selling assets have high leverage and/or poor performance, (2) a successful asset sale is good. Downloadable.
We argue that management sells assets when doing so provides the cheapest funds to pursue its objectives rather than for operating efficiency reasons alone. This hypothesis suggests that (1) firms selling assets have high leverage and/or poor performance, (2) a successful asset sale is good news and (3) the stock market discounts asset sale proceeds retained by the selling firm.
Asset Sales, Firm Performance, and the Agency Costs of Managerial Discretion. By Larry Lang, find that the typical firm in our sample performs poorly before the sale and that the average stock-price reaction to asset sales is positive only when the proceeds are paid : Larry Lang, Annette Poulsen and Rene M.
Stulz. ASSET SALES, FIRM PERFORMANCE, AND THE AGENCY COSTS OF MANAGERIAL DISCRETION ABSTRACT We argue that management sells assets when doing so provides the cheapest funds to pursue its objectivesrather than for operating efficiency reasons alone.
This hypothesis suggests. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure Michael C. Jensen Harvard Business School and William H. Meckling* University of Rochester 1. Introduction Motivation of the Paper In this paper we draw on recent progress in the theory of (1) property rights, (2) agency,Cited by: This leads to agency costs, management entrenchment and most importantly the destruction of shareholders‟ wealth about which Jensen and Meckling () continue to talk.
Theoretical studies are later backed up with an extensive empirical proof of a nonlinear relationship between managerial ownership and a firm‟s performance. The. The firm is in need of new direction after suffering several years of declining performance and increasingly demoralized management and employees.
The board has decided it needs a CEO who can be a transformational leader. Introduction. The analysis of managerial discretion and its impact on performance has recently generated significant scholarly interest (Key,Peteraf and Reed, ).The most important issue is the assessment of those cultural traits that directly influence the effect of managers’ discretion on performance (Mueller & Yun, ).Managerial discretion refers Cited by: Managerial Ownership Matters for Firm Performance: Evidence from China Abstract We study the managerial ownership-performance relationship by examining a unique sample of non-listed Chinese firms, of which the ownership structure is essentially exogenously determined subject to government policies irrelevant to incentive contracting.
An agency cost is a type of internal company expense which comes from the actions of an agent acting on behalf of a principal. Agency costs typically arise in the wake of core inefficiencies, dissatisfactions and disruptions, such as conflicts of interest between shareholders and management.
Payment of the agency cost is to the acting : Andrew Bloomenthal. In summary, staff expenditure, managerial slack and discretionary investment spending will be larger for a firm that maximises utility than for a firm that maximises profits. However, no general conclusion can be drawn regarding the level of output in the two models.
managerial mergers and acquisitions (M&A) investment decisions as an identi cation mechanism, I nd that managerial discretion combined with corporate nancial exibility may lead to distortions in corporate investment and nancing policies, and those distortions cost the various stakeholders of the rm by: 1.
Managerial Discretion and Accounting for Research and Development Costs Article in Journal of Accounting, Auditing and Finance 18(1) December with Reads How we. We examine the relationship between CEO ownership and stock market performance. A strategy based on public information about managerial ownership delivers annual abnormal returns of 4 to 10%.
The effect is strongest among firms with weak external governance, weak product market competition, and large managerial by: CEO Ownership, Stock Market Performance, and Managerial Discretion Article in The Journal of Finance 69(3) May with Reads How we measure 'reads'.
Accounting for Intangible Assets, Firm Life Cycle and the Value Relevance of Intangible Assets managerial discretion in accounting for the assets has become more restrictive.
This allows the impacts of Value Relevance of Intangible Assets in the Pre-AIFRS Period:File Size: KB. CEO Ownership, Stock Market Performance, and Managerial Discretion ULF VON LILIENFELD-TOAL and STEFAN RUENZI Journal of Finance forthcoming Abstract We examine the relationship between CEO ownership and stock market performance.
A strategy based on public information about managerial ownership delivers annual abnormal re-turns of 4 to 10%.Cited by: Accounting Discretion, Corporate Governance, and Firm Performance CAR Vol. 25 No. 2 (Summer ) is positively associated with future operating cash ﬂows and return on assets (ROA), consistent with shareholders beneﬁting from earnings management, on average.
MARRIS MODEL OF MANAGERIAL DISCRETION Robin Marris is the developer of the model. It is developed in According to this theory, modern firms are managed by both the manager and the shareholders.
A manager aims to maximize the rate of growth of the firm and the shareholders will try to maximize the dividend and the increase the share price. unprofitable activities. That is, firms need to insure that agency costs are minimized. The relationship between and firm performance proposes that management’s managerial ownership ownership in the company would motivate them to act in the best interest of shareholders and thereby reduce agency by: 7.
An Introduction to Asset Management A simple but informative introduction to the management of physical assets By Robert Davis We are all asset managers. The last time you had your car serviced or decorated your house, you were managing an asset. This book explores the discipline of Asset Management and demonstrates how it can be used.
Managerial Discretion and the Capital Structure Dynamics Following Jensen and Meckling (), the influence of managerial incentives on capital structure choices has attracted considerable attention.
Theories have posited that managers prefer to keep debt ratios low to reduce risk and protect their. Accounting for Managerial Decisions Page 8 The following table shows the main points of distinction between the two: Sl.
Item Cost Accounting Management Accounting 1. Object To record cost of producing a product or rendering a service To provide information to the management for planning and coordinating the activities. Scope Narrow File Size: KB. Oliver E. Williamson hypothesised () that profit maximization would not be the objective of the managers of a joint stock organisation.
This theory, like other managerial theories of the firm, assumes that utility maximisation is a manager’s sole objective.
However it is only in a corporate form of business organisation that a self-interest seeking manager maximise his/her own utility. Discretionary investment management is a form of investment management in which buy and sell decisions are made by a portfolio Author: Will Kenton.
the connections that might be identified between managerial ownership, board structure and performance, using various methodological approaches applied on larges samples, trying to explain as rigorously as possible if and how different corporate governance mechanisms may be interrelated with the firm’s performance.
Determinants of the Managerial Behavior of Agency Cost and its influential extent and the impact of this relationship on firm performance from the other.
In order for this study in relation to ownership variable confirm there is a significant and non-linear correlation between managerial ownership and agency cost of ownership; and such.
Scope of part. Availability of accounting guide. Scope of subpart. Fixed-price contracts. Contracts with commercial organizations.
Contracts with educational institutions. Construction and architect-engineer contracts. Contracts with State, local, and federally recognized Indian tribal.
contingent-claims approach to show that debt can reduce agency costs of free-cash-flow. The optimal capital structure is then determined by the trade-off between the agency cost shield, i.e.
the benefits of reducing the cash flow subject to managerial discretion, and the implicit bankruptcy costs arising from the loss of the agency cost shield. Resolving Agency Problems Burton (): limiting management discretion through establishment of structures to monitor and control management behavior Structures: Independent board of directors and independent board chair (Dalton et.
al ) Independent board subcommittees- audit, remuneration and nomination (Ellstrand et. al ). management, operations management, capital asset management - and competencies. Metrics and/or cost models that can be used to measure the level of performance of each industry and competency are identified.
This paper focuses on an important issue, which has generally received less attention in corporate governance literature, being the effect of managerial ownership on the relationship between debt and firm performance. By employing a sample of Egyptian listed firms, the generalized least squares method, as a panel data technique, is used to examine the joint effect of debt and managerial Cited by: Financial Restraint Managerial restraint denotes to the strength of the managerial team and their skills.
Financial restraint denotes to the subsequent three financial proportions: 1. Debt to Total Assets Ratio, which is merely termed as Debt Ration or D/A 2.
Liquid Assets of the firm to Total Assets, is termed as Liquidity Ratio L/A 3. Ratio. strategic performance driv-er) is illustrated at left.
3 The HR Scorecard— SUMMARY Soundview Executive Book Summaries® How HR Destroyed Value What HR should not do is illustrated by the actions of a banking business that attempted to cut costs by moving to a part-time teller staffing model.
When the company let go its full-time tellers andFile Size: KB. At the same time, ROA is a better metric of financial performance than income statement profitability measures like return on sales. ROA explicitly takes into account the assets. The revision of Government Auditing Standards is effective for financial audits, attestation engagements, and reviews of financial Accepted Government Auditing Standards Performance Audit Page vi GAOG Government Auditing Standards.
OMB Office of Management and Budget.For simplicity we may assume that there is no lump-sum tax so that T = t Π. Thus the managerial utility function becomes. U =ƒ [S, (1 – t) Π – Π 0]. where (1 — r)Π — Π 0 = Π D is the discretionary profit.
The graphical presentation of the equilibrium of the firm in Williamson’s model requires the construction of the indifference curves map of managers, and the curve showing.Managerial accounting helps managers and other decision-makers understand how much their products cost, how their companies make money, and how to plan for profits and growth.
To use this information, company decision-makers must understand managerial-accounting terms. When planning for the future, they follow a master budgeting process.
To prepare this budget, and to .