INVESTOR-MANAGER HETEROGENEOUS BELIEFS AND CORPORATE FINANCING DECISION

Jian Ma, Zhixin Liu

Abstract

This paper considers a firm that may issue common stock or debt to undertake an investment opportunity when the investors and the manager have different estimates of the expected return from the investment. Firstly, an equilibrium model is developed to reveal the impact of investor-manager heterogeneous beliefs on corporate financing decision, and the model concludes that the greater the investors’ belief relative to the manager, the more likely the firm is to choose to issue equity rather than debt. Secondly, using a sample of debt and seasoned equity issues from Chinese listed firms we empirically analyze the conclusion above. We find empirical results support for the conclusion.

References

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Paper Citation


in Harvard Style

Ma J. and Liu Z. (2011). INVESTOR-MANAGER HETEROGENEOUS BELIEFS AND CORPORATE FINANCING DECISION . In Proceedings of the 13th International Conference on Enterprise Information Systems - Volume 4: ICEIS, ISBN 978-989-8425-56-0, pages 384-388. DOI: 10.5220/0003434203840388


in Bibtex Style

@conference{iceis11,
author={Jian Ma and Zhixin Liu},
title={INVESTOR-MANAGER HETEROGENEOUS BELIEFS AND CORPORATE FINANCING DECISION },
booktitle={Proceedings of the 13th International Conference on Enterprise Information Systems - Volume 4: ICEIS,},
year={2011},
pages={384-388},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0003434203840388},
isbn={978-989-8425-56-0},
}


in EndNote Style

TY - CONF
JO - Proceedings of the 13th International Conference on Enterprise Information Systems - Volume 4: ICEIS,
TI - INVESTOR-MANAGER HETEROGENEOUS BELIEFS AND CORPORATE FINANCING DECISION
SN - 978-989-8425-56-0
AU - Ma J.
AU - Liu Z.
PY - 2011
SP - 384
EP - 388
DO - 10.5220/0003434203840388