Abstract

http://ssrn.com/abstract=114568
 
 

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Capital Budgeting and Delegation


Milton Harris


University of Chicago - Finance

Artur Raviv


Northwestern University - Kellogg School of Management

November 1997

U. of Chicago Finance Working Paper No. 452

Abstract:     
As part of our ongoing research into capital budgeting processes as responses to decentralized information and incentive problems, we focus in this paper on when a level of a managerial hierarchy will delegate the allocation of capital across projects and time to the level below it. In our model, delegation is a way to save on costly investigation of proposed projects. Therefore, it is more extensive the larger are the costs of such investigations. This delegation takes advantage of the fact that the lower-level manager's preferences are assumed to be similar (though not identical) to those of the higher level.

Number of Pages in PDF File: 39

JEL Classification: G31

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Date posted: August 14, 1998  

Suggested Citation

Harris, Milton and Raviv, Artur, Capital Budgeting and Delegation (November 1997). U. of Chicago Finance Working Paper No. 452. Available at SSRN: http://ssrn.com/abstract=114568 or http://dx.doi.org/10.2139/ssrn.114568

Contact Information

Milton Harris (Contact Author)
University of Chicago - Finance ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
(773) 702-2549 (Phone)
(773) 753-8310 (Fax)
HOME PAGE: http://faculty.chicagobooth.edu/milton.harris/

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Artur Raviv
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-8342 (Phone)
847-491-5719 (Fax)
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