nep-cfn New Economics Papers
on Corporate Finance
Issue of 2012‒04‒23
two papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Delegation and Limited Liability in a Modern Capitalistic Economy By Tetsuya Shinkai; Takao Ohkawa; Makoto Okamura; Kozo Harimaya
  2. Determinants of Corporate Investment in China: Evidence from Cross-Country Firm Level Data By Papa N'Diaye; Nan Geng

  1. By: Tetsuya Shinkai (School of Economics, Kwansei Gakuin University); Takao Ohkawa (Faculty of Economics, Ritsumeikan University); Makoto Okamura (Economics Department, Ritsumeikan University and Hiroshima University); Kozo Harimaya (Faculty of Business Administration, Ritsumeikan University)
    Abstract: We examine an effect of limited liability on strategic delegation in a Cournot duopoly with demand uncertainty. We establish that owners of each firm always delegate their tasks, decisions, and responsibility to a manager under limited liability, while they do not always do so under unlimited liability. This result is consistent with the fact that separation of ownership and management as well as limited liability prevail in many modern large companies.
    Keywords: limited liability, delegation, managerial incentives, and Cournot duopoly
    JEL: G32 L13 L12
    Date: 2012–04
  2. By: Papa N'Diaye; Nan Geng
    Abstract: This paper analyzes the evolution of investment in China, its main features, and its key determinants. In recent years, manufacturing, real estate, and infrastructure have been the main drivers of investment. Investment remains largely concentrated in coastal areas, but there has been a shift to greater investments inland in recent years. The empirical analysis of the determinants of investment indicates that financial variables, such as interest rates, the exchange rate, and the depth of the domestic capital market are important determinants of corporate investment. The results suggest in particular that financial sector reform, including that which deregulates and raises real interest rates as well as appreciates the real effective exchange rate, would lower investment and help rebalance growth away from exports and investment toward private consumption.
    Keywords: Capital markets , Corporate sector , Exchange rate appreciation , Investment , Real effective exchange rates ,
    Date: 2012–03–20

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