Seminar Invitation-Thursday 8 December 2016-Sebastian Pfeil

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The Department of Banking and Financial Management announces the upcoming seminar with Prof. Sebastian Pfeil, University of Bonn.

Sebastian Pfeil will present:

A Dynamic Agency Theory of Delegated Investment


We analyze a continuous-time principal-agent model where, in addition to managing

the day-to-day business, the agent has to invest in the firm’s future profitability.

The interaction of both tasks endogenously creates distortions in delegated investment,

which depend on past performance as well as the profitability of the investment

technology. Delegated investment is distorted upwards relative to first-best for highly

profitable investment technologies and distorted downwards for less profitable ones.

These distortions decrease in past performance, which implies that investment-cash

flow sensitivities are negative in the first case and positive in the second. Investment

distortions as well as investment-cash flow sensitivities increase in absolute terms

with pay for short-term performance under the optimal contract and with costs of

external financing.

Prof. Sebastian Pfeil,

University of Bonn

 More information about Sebastian Pfeil

A Dynamic Agency Theory of Delegated Investment

Time and Place

December 8, 2016

Time: 16.15-18.00

Place: Room 013

More upcoming Seminars 2016:

December 15, 2016

Norman Schuerhoff, University of Lausanne

December 22, 2016

Dimos Andronoudis, LSE