Positive hurdle rates without asymmetric information
Publication
, Journal Article
Chen, Q; Jiang, W
Published in: Finance Research Letters
April 1, 2004
We present a simple model where a firm will commit to a strictly positive hurdle rate on investment proposals by managers even though the two parties are symmetrically informed about the investments' profitability. Facing a positive hurdle rate, a manager who derives partial benefits from the investment profits will have more incentive to collect information about the projects. The optimal hurdle rate trades off the benefit of more information with the cost of foregoing ex post positive Net Present Value (NPV) projects. © 2004 Elsevier Inc. All rights reserved.
Duke Scholars
Published In
Finance Research Letters
DOI
ISSN
1544-6123
Publication Date
April 1, 2004
Volume
1
Issue
2
Start / End Page
106 / 112
Related Subject Headings
- Finance
- 1502 Banking, Finance and Investment
Citation
APA
Chicago
ICMJE
MLA
NLM
Chen, Q., & Jiang, W. (2004). Positive hurdle rates without asymmetric information. Finance Research Letters, 1(2), 106–112. https://doi.org/10.1016/j.frl.2004.03.001
Chen, Q., and W. Jiang. “Positive hurdle rates without asymmetric information.” Finance Research Letters 1, no. 2 (April 1, 2004): 106–12. https://doi.org/10.1016/j.frl.2004.03.001.
Chen Q, Jiang W. Positive hurdle rates without asymmetric information. Finance Research Letters. 2004 Apr 1;1(2):106–12.
Chen, Q., and W. Jiang. “Positive hurdle rates without asymmetric information.” Finance Research Letters, vol. 1, no. 2, Apr. 2004, pp. 106–12. Scopus, doi:10.1016/j.frl.2004.03.001.
Chen Q, Jiang W. Positive hurdle rates without asymmetric information. Finance Research Letters. 2004 Apr 1;1(2):106–112.
Published In
Finance Research Letters
DOI
ISSN
1544-6123
Publication Date
April 1, 2004
Volume
1
Issue
2
Start / End Page
106 / 112
Related Subject Headings
- Finance
- 1502 Banking, Finance and Investment