This is a past event
The seminar will be held in person in University Office Court Room and via Teams on Wednesday 18th October from 15:00-16:15.
Join Dr Hai Zhang (the University of Strathclyde) to hear more on Robust investment timing, incentive costs and debt overhang.
Abstract: We develop a dynamic agency model of investment with model uncertainty to investigate the impact of endogenous belief heterogeneity on the salary contract, corporate investment and agency cost. Our model facilitates a comprehensive exploration of robust investment timing and scales in a dynamic agency setting and identifies four driving forces of corporate investment, namely, robustness costs, incentive costs, ambiguity sharing benefit, and debt overhang. We find ambiguity aversion has heterogeneous impact on corporate internal and external innovations, i.e., it monotonically increases corporate internal capital while shows an "U" relation between ambiguity uncertainty and lumpy investment (such as Mergers \& Acquisitions) due to the effect of ambiguity sharing. Our model further shows that debt overhang plays a positive role regarding corporate investment.
- Speaker
- Dr Hai Zhang
- Hosted by
- University of Aberdeen Business School
- Contact
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No booking required.