IDEAS home Printed from https://ideas.repec.org/a/wsi/rpbfmp/v04y2001i02ns0219091501000395.html
   My bibliography  Save this article

Financial Liberalization and Managerial Discretion in the Security Issue Decision: Evidence from an Emerging Economy

Author

Listed:
  • Saumitra N. Bhaduri

    (Madras School of Economics, Gandhi Mandapam Road, Chennai-25, India)

Abstract

This paper investigates the Managerial Discretion Hypothesis in the context of the Indian corporate sector. The hypothesis postulates that if the interests of the managers and the other stakeholders of the firm are not perfectly aligned, then the managers tend to issue equity which might be contrary to the latter's interest. We have examined a sample of 216 manufacturing firms, which have opted for external finance during the year 1994–1995. Our findings reveal that for many firms, particularly those with poor investment opportunities, managers issue equity even when they are not expected to do so. This paper, as a policy recommendation, highlights the importance of creating appropriate institutions prior to pursuing financial liberalization in developing countries like India.

Suggested Citation

  • Saumitra N. Bhaduri, 2001. "Financial Liberalization and Managerial Discretion in the Security Issue Decision: Evidence from an Emerging Economy," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 4(02), pages 221-234.
    • Handle: RePEc:wsi:rpbfmp:v:04:y:2001:i:02:n:s0219091501000395
    DOI: 10.1142/S0219091501000395
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0219091501000395
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0219091501000395?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:rpbfmp:v:04:y:2001:i:02:n:s0219091501000395. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/rpbfmp/rpbfmp.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.