Information Systems, Incentives and the Timing of Investment
AbstractThe purpose of this paper is to study the effects of introducing information systems into a model featuring managerial incentive problems and investment opportunities that are mutually exclusive over time. In a principal-agent model in which a manager (agent) has superior information about investment costs, we introduce information systems, the signals from which are available to both the manager and the owner of the investment opportunity, which allow the owner to decrease the manager's informational advantage. We examine (i) the characteristics of the optimal information systems; (ii) the effects of such information systems on the owner's investment and compensation choices and on the value of the investment opportunity to the owner; (iii) the effects of such information systems on the timing of investment; (iv) the effects of such information systems on the overall probability of investment; and (v) when the owner might want to improve the information system at a particular point in time.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Royal Veterinary and Agricultural University, Food and Resource Economic Institute in its series Unit of Economics Working papers with number 24201.
Date of creation: 2000
Date of revision:
Labor and Human Capital;
Other versions of this item:
- Antle, Rick & Bogetoft, Peter & Stark, Andrew W., 2001. "Information systems, incentives and the timing of investments," Journal of Accounting and Public Policy, Elsevier, Elsevier, vol. 20(4-5), pages 267-294.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rick Antle & Peter Bogetoft & Andrew W. Stark, 1997. "Selection among Mutually Exclusive Investments with Managerial Private Information and Moral Hazard," CIE Discussion Papers, University of Copenhagen. Department of Economics. Centre for Industrial Economics 1997-06, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Rees, Ray, 1986. "Incentive compatible discount rates for public investment," Journal of Public Economics, Elsevier, vol. 30(2), pages 249-257, July.
- Jonathan C. Glover & Anil Arya & Shyam NMI Sunder, 1999. "Earnings Management and the Revelation Principle," Yale School of Management Working Papers, Yale School of Management ysm120, Yale School of Management.
- Antle, Rick & Bogetoft, Peter & Stark, Andrew W., 2001. "Incentive Problems and Investment Timing Options," Unit of Economics Working papers, Royal Veterinary and Agricultural University, Food and Resource Economic Institute 24192, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
- Harris, Milton & Raviv, Artur, 1996. " The Capital Budgeting Process: Incentives and Information," Journal of Finance, American Finance Association, American Finance Association, vol. 51(4), pages 1139-74, September.
- Holmstrom, Bengt R & Weiss, Laurence, 1985. "Managerial Incentives, Investment, and Aggregate Implications: Scale Effects," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 52(3), pages 403-25, July.
- Rick Antle & Gary D. Eppen, 1985. "Capital Rationing and Organizational Slack in Capital Budgeting," Management Science, INFORMS, INFORMS, vol. 31(2), pages 163-174, February.
- Boetoft, Peter, 2005. "An Information Economic Rationale for Cooperatives," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24476, European Association of Agricultural Economists.
- LÃ¶ffler, Clemens & Pfeiffer, Thomas & Schneider, Georg, 2012. "Controlling for supplier switching in the presence of real options and asymmetric information," European Journal of Operational Research, Elsevier, Elsevier, vol. 223(3), pages 690-700.
- Anthon, Signe & Bogetoft, Peter & Thorsen, Bo Jellesmark, 2007. "Socially optimal procurement with tight budgets and rationing," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1625-1642, August.
- Clemens LÃ¶ffler & Thomas Pfeiffer & Georg Schneider, 2013. "The irreversibility effect and agency conflicts," Theory and Decision, Springer, Springer, vol. 74(2), pages 219-239, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.