Title: Constrained signaling game models for dynamic investment-financing strategy under asymmetric information conditions
Abstract: The firm's dynamic ivestment and financing problem is studied and corresponding constrained signaling game model is established. The analysis shows that in the dynamic investment and financing process, the ratio of manager's investment amount to the total investment amount and the investment profit ratio have the function of transferring the manager's and the project's signals of what and how they should be to the investors. The investors can infer the degrees of the manager's adverse selection and moral hazard by analyzing these signals. With Mercurio utility function, we can conclude that, if the investors want to cooperative with the manager for a longer period, then there is an incentive for the manager to enhance his degree of moral hazard, and the maximum utility of the manager is the half of this expected investment earning.
Publication Year: 2004
Publication Date: 2004-01-01
Language: en
Type: article
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