Ambiguity and the corporation: Group disagreement and underinvestment

• 成果类型: Article
• 署名作者: Garlappi, Lorenzo; Giammarino, Ron; Lazrak, Ali
• 署名单位: University of British Columbia
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.06.005
• 发表日期: 2017
• 页码: 417-433
• 关键词: Ambiguity; Group decisions; dynamic consistency; Dynamic real investment; Security issuance

摘要

We study a dynamic corporate investment problem where decisions have to be made collectively by a group of agents holding heterogeneous beliefs and adhering to a utilitarian governance mechanism in which each agent has a given influence in the decision. In this setting we show that: (i)group decisions are typically dynamically inconsistent, (ii)dynamic inconsistency leads to inefficient underinvestment, and (iii)the ability to trade securities among insiders or with outsiders may restore efficient investment decisions but it may, in some cases, lead to inefficient overinvestment. Our theory can help explain the empirical evidence on the effect of diversity of groups, such as corporate boards, on firms' outcomes and, more generally, on the difference between group and individual behavior. (c) 2017 Elsevier B.V. All rights reserved.