Managerial Optimism and Corporate Finance
Two dominant features emerge from a simple model of corporate finance with excessively optimistic managers and efficient capital markets.First,optimistic managers believe that capital markets undervalue their firm ’s risky securities,and may decline positive net present value projects that must be financed externally.Second,optimistic managers overvalue their own corporate projects and may wish to invest in negative net present value projects even when they are loyal to shareholders.These results establish an underinvestment- overinvestment tradeoff related to free cash flow without invoking asymmetric information or rational agency costs.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 31 (2002)
Issue (Month): 2 (Summer)
|Contact details of provider:|| Postal: University of South Florida 4202 E. Fowler Ave. COBA #3331 Tampa, FL 33620|
Web page: http://www.fma.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:fma:fmanag:heaton02. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Courtney Connors)
If references are entirely missing, you can add them using this form.