IDEAS home Printed from https://ideas.repec.org/a/jfr/afr111/v8y2019i2p43.html
   My bibliography  Save this article

Investor Protection and Capital Expenditures under Endogenous Time Inconsistency

Author

Listed:
  • Richard P. Gregory

Abstract

Underinvestment in value-enhancing projects is considered a major problem in corporate management. It is usually blamed on information asymmetry and agency costs. In this paper, a model is proposed that shows that even without information asymmetry and agency costs, there is a pronounced tendency for managers to underinvest due to a positive probability of their being replaced. It is also shown that investor protection legislation, if it does not eliminate the possibility of being replaced, does not lower the likelihood of underinvestment.

Suggested Citation

  • Richard P. Gregory, 2019. "Investor Protection and Capital Expenditures under Endogenous Time Inconsistency," Accounting and Finance Research, Sciedu Press, vol. 8(2), pages 1-43, May.
    • Handle: RePEc:jfr:afr111:v:8:y:2019:i:2:p:43
    as

    Download full text from publisher

    File URL: https://www.sciedupress.com/journal/index.php/afr/article/download/15198/9424
    Download Restriction: no
    File URL: https://www.sciedupress.com/journal/index.php/afr/article/view/15198
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Akerlof, George A, 1991. "Procrastination and Obedience," American Economic Review, American Economic Association, vol. 81(2), pages 1-19, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Philippe Fevrier & Sebastien Gay, 2005. "Informed Consent Versus Presumed Consent The Role of the Family in Organ Donations," HEW 0509007, University Library of Munich, Germany.
    2. Hammar, Henrik & Carlsson, Fredrik, 2001. "Smokers' Decisions To Quit Smoking," Working Papers in Economics 59, University of Gothenburg, Department of Economics.
    3. Lillemo, Shuling Chen, 2014. "Measuring the effect of procrastination and environmental awareness on households' energy-saving behaviours: An empirical approach," Energy Policy, Elsevier, vol. 66(C), pages 249-256.
    4. Lurås, Hilde, 2009. "A healthy lifestyle: The product of opportunities and preferences," HERO Online Working Paper Series 2001:11, University of Oslo, Health Economics Research Programme.
    5. Sebastian Eichfelder & Mona Lau, 2015. "Capitalization of capital gains taxes: (In)attention and turn-of-the-year returns," FEMM Working Papers 150019, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    6. Eichfelder, Sebastian & Lau, Mona, 2014. "Capital gains taxes and asset prices: The impact of tax awareness and procrastination," arqus Discussion Papers in Quantitative Tax Research 170, arqus - Arbeitskreis Quantitative Steuerlehre.
    7. De Paola, Maria & Scoppa, Vincenzo, 2015. "Procrastination, academic success and the effectiveness of a remedial program," Journal of Economic Behavior & Organization, Elsevier, vol. 115(C), pages 217-236.
    8. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    9. Mwambi, Mercy & Depenbusch, Lutz & Bonnarith, Uon & Sotelo-Cardona, Paola & Kieu, Khemrin & di Tada, Nicolas & Srinivasan, Ramasamy & Schreinemachers, Pepijn, 2023. "Can phone text messages promote the use of integrated pest management? A study of vegetable farmers in Cambodia," Ecological Economics, Elsevier, vol. 204(PA).
    10. Alois Stutzer & Lorenz Goette & Michael Zehnder, 2011. "Active Decisions and Prosocial Behaviour: a Field Experiment on Blood Donation," Economic Journal, Royal Economic Society, vol. 121(556), pages 476-493, November.
    11. Malmendier, Ulrike M. & Della Vigna, Stefano, 2002. "Overestimating Self-Control: Evidence from the Health Club Industry," Research Papers 1880, Stanford University, Graduate School of Business.
    12. Svatopluk Kapounek & Zuzana Kučerová & Evžen Kočenda, 2022. "Selective Attention in Exchange Rate Forecasting," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 23(2), pages 210-229, May.
    13. Ronald Wintrobe, 2006. "Extremism, Suicide Terror, and Authoritarism," ICER Working Papers 8-2006, ICER - International Centre for Economic Research.
    14. Elizabeth Krauter & Herbert Kimura & Leonardo Fernando Cruz Basso, 2004. "Criação De Valor Através Da Estratégia De Procrastinação," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32nd Brazilian Economics Meeting] 092, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    15. Wang Ruqu, 2007. "The Optimal Consumption and the Quitting of Harmful Addictive Goods," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-38, February.
    16. Lorko, Matej & Servátka, Maroš & Zhang, Le, 2023. "Hidden inefficiency: Strategic inflation of project schedules," Journal of Economic Behavior & Organization, Elsevier, vol. 206(C), pages 313-326.
    17. Moreno-Okuno, Alejandro & Aguilera Navarrete, Natividad, 2014. "Distancia Psicológica [Psychological Distance]," MPRA Paper 60745, University Library of Munich, Germany.
    18. Mondino, Guillermo & Sturzenegger, Federico & Tommasi, Mariano, 1996. "Recurrent High Inflation and Stabilization: A Dynamic Game," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 981-996, November.
    19. Christopher Harris & David Laibson, 2013. "Instantaneous Gratification," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(1), pages 205-248.
    20. Claudia Cerrone, 2021. "Doing It When Others Do: A Strategic Model Of Procrastination," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 315-328, January.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    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:jfr:afr111:v:8:y:2019:i:2:p:43. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Sciedu Press (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    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.