Title: Earning Requirement and Investment Decision
Abstract: We analysis the impact of earning requirement on corporate investment decision and compare the results with social optimal outcome. Our analysis shows that a higher earning requirement would induce managers to take risky investment projects, even if the expected return of the risky investment projects may not be higher than those of riskless ones. The impact of earning requirement on social welfare depends on the investment environment and the nature of investment projects corporate face.
Publication Year: 2003
Publication Date: 2003-01-01
Language: en
Type: article
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