Econometric tests of firm decision making under dual sources of uncertainty

Article Abstract:

The most widely analyzed case in the theory of firm behavior under certainty has been that of a company operating under a single source of risk, research on which has been extended to either multiple sources of risk, initial wealth uncertainty or output/hedging decisions under spot/futures price uncertainty. A study extends this case by considering the scenario of an international firm operating under uncertainty in both the domestic and foreign markets. It is shown that ad hoc assumptions about risk-averse behavior are unwarranted.

Economics, Research and Development in the Social Sciences and Humanities, Multinational Corporations, Decision-making, Decision making, Management, Case studies, International business enterprises, Risk (Economics), Uncertainty, Utility theory, Utility functions

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Evidence on equity private placements and going-out-of business information release

Article Abstract:

A study was conducted on announced private placements of 86 companies from 1988 to 1993 using the cross-sectional regression analysis. Results showed that firms going out of business had abnormally high initial income until the 15th day because when managers and private investors anticipate closure they maximized earnings by allowing outsiders to buy securities. However, when closure became inevitable the company income fell due to investors selling off company assets.

Financial Management NEC, Economic aspects, Financial management, Disclosure statements (Accounting), Private placements (Securities)

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