search query: @author Schnabel, J. A. / total: 8
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| Author: | Schnabel, J. A. |
| Title: | Optimal output in an option pricing framework: An agency-theoretic perspective |
| Journal: | Journal of Business Finance and Accounting
1990 : WINTER, VOL. 17:5, p. 745-749 |
| Index terms: | OUTPUT PRICING DECISION MAKING SHAREHOLDERS MICROECONOMICS ECONOMIC THEORY |
| Language: | eng |
| Abstract: | It is an attempt to provide an agency-theoretic explanation for the results of Conine, Jensen, Tamarkin(CJT) on the effects of parameter changes on the optimal output decision of the firm. In CJT's formulation, the shareholders incur all of the cost of the output but capture only a fraction of the increment in the value of the firm induced by the output. This results in two effects. Firstly, the firm's optimal output is less than the one that would maximize the firm's market value. Secondly, parameter changes which increase (decrease) that fraction which the shareholders capture induce increases (decreases) in the firm's optimal output. |
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