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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Managerial Discretion and Shareholder Capital at Risk |
| Organization Unit | |
| Authors |
|
| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Journal of Business Finance and Accounting |
| Publisher | Wiley-Blackwell Publishing, Inc. |
| Geographical Reach | international |
| ISSN | 0306-686X |
| Volume | 48 |
| Number | 7-8 |
| Page Range | 1215 - 1245 |
| Date | 2021 |
| Abstract Text | Managerial investment decisions put shareholder capital at risk. Shareholders respond either (i) by preserving the manager's discretion to choose among projects but decreasing the power of his (her) incentives, thereby decreasing the manager's gains from choosing risky projects, or (ii) by imposing a constraint on the type of project that the manager can undertake. We show that capital exposure-the extent to which managerial decisions put shareholder capital at risk-plays a central role in favoring the imposition of a constraint over the granting of discretion. We extend our analysis to consider other determinants of the choice between discretion and constraint. |
| Free access at | Official URL |
| Official URL | https://onlinelibrary.wiley.com/doi/10.1111/jbfa.12513 |
| Digital Object Identifier | 10.1111/jbfa.12513 |
| Other Identification Number | merlin-id:20052 |
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