A Model of Myopic Corporate Behaviour with Efficient Stock Markets and Optimal Management Incentive Programs
AbstractExisting models of corporate "short-termism" rely on an exogenously imposed, suboptimal management objective function. This paper endogenizes both managers' concern for short-term stock prices and the resulting distorsions. We consider a standard agency problem between corporate managers and investors in which the short-term share price is determined before the manager has made her effort choice and therefore cannot be informative in the standard principal-agent sense.
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Bibliographic InfoPaper provided by Australian National University - Department of Economics in its series Papers with number 307.
Length: 17 pages
Date of creation: 1996
Date of revision:
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Postal: THE AUSTRALIAN NATIONAL UNIVERSITY, DEPARTMENT OF ECONOMICS, RESEARCH SCHOOL of PACIFIC STUDIES, RESEARCH SCHOOL OF SOCIAL SCIENCES, G.P.O. 4, CANBERRA ACT 2601 AUSTRALIA..O. BOX 4 CANBERRA 2601 AUSTRALIA.
Web page: http://economics.anu.edu.au/economics.htm
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MODELS; STOCK MARKET; FINANCIAL MARKET;
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- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
- G19 - Financial Economics - - General Financial Markets - - - Other
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