期刊名称：Discussion Paper Series / Department of Economics, Monash University
出版年度：2011
卷号：1
出版社：Monash University
摘要：This paper analyzes how influence activities in the form of signal jamming affect the capital budgeting process of corporate organizations in Australia. First, the relationship between investment in the smallest division and its past performances is tested. The relationship is defined as investment sensitivity. Second, how the investment sensitivity varies as influence problems become more severe is examined. Finally, the relationship between compensation incentives for the large division manager and the investment sensitivity is reviewed. The findings suggest that investment sensitivity is positive for Australian firms. Mixed evidence is obtained between investment sensitivity and increase in the severity of influence problems when measures such as, relatedness and number of divisions are used. With increase in number of divisions, influence activity becomes more severe and headquarters relies more on public signal. However, with the increase in relatedness across divisions, influence problem increases and headquarters relies more on private information from manager of the large division. Evidence suggest that Australian firms provide high short term incentive payments to managers of large divisions to mitigate the influence activity problems and thus rely more on managerial recommendations for investing in smallest division as compared to noisy accounting measures
关键词：Influence activity; capital budgeting; compensation incentives
