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Article: CVP under uncertainty and the manager's utility function revisited
Title | CVP under uncertainty and the manager's utility function revisited |
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Authors | |
Keywords | Conflict of interest Cost-volume-profit analysis Multiple sources of uncertainty Risk aversion |
Issue Date | 1999 |
Publisher | Springer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0924-865X |
Citation | Review Of Quantitative Finance And Accounting, 1999, v. 12 n. 2, p. 159-171 How to Cite? |
Abstract | This paper re-examines the model of Kim, Abdolmohammada, and Klein (KAK, 1996) in which owners of a firm delegate the production decision to a risk-averse manager. Conflict of interest between the owners and the manager emerges as the latter maximizes the expected utility of his/her own wealth rather than that of the firm's profits. This paper shows that the results of KAK on the expected contribution margin and the excess return on the risky asset are flawed. Furthermore, while KAK study the effects of delegating the production decision to the manager on the firm's optimal output based on the mean-variance analysis, this paper derives parallel results within utility functions exhibiting constant absolute risk aversion and any arbitrary probability distribution functions. © 1999 Kluwer Academic Publishers. |
Persistent Identifier | http://hdl.handle.net/10722/85666 |
ISSN | 2023 Impact Factor: 1.9 2023 SCImago Journal Rankings: 0.553 |
References |
DC Field | Value | Language |
---|---|---|
dc.contributor.author | Chan, DK | en_HK |
dc.contributor.author | Wong, KP | en_HK |
dc.date.accessioned | 2010-09-06T09:07:47Z | - |
dc.date.available | 2010-09-06T09:07:47Z | - |
dc.date.issued | 1999 | en_HK |
dc.identifier.citation | Review Of Quantitative Finance And Accounting, 1999, v. 12 n. 2, p. 159-171 | en_HK |
dc.identifier.issn | 0924-865X | en_HK |
dc.identifier.uri | http://hdl.handle.net/10722/85666 | - |
dc.description.abstract | This paper re-examines the model of Kim, Abdolmohammada, and Klein (KAK, 1996) in which owners of a firm delegate the production decision to a risk-averse manager. Conflict of interest between the owners and the manager emerges as the latter maximizes the expected utility of his/her own wealth rather than that of the firm's profits. This paper shows that the results of KAK on the expected contribution margin and the excess return on the risky asset are flawed. Furthermore, while KAK study the effects of delegating the production decision to the manager on the firm's optimal output based on the mean-variance analysis, this paper derives parallel results within utility functions exhibiting constant absolute risk aversion and any arbitrary probability distribution functions. © 1999 Kluwer Academic Publishers. | en_HK |
dc.language | eng | en_HK |
dc.publisher | Springer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0924-865X | en_HK |
dc.relation.ispartof | Review of Quantitative Finance and Accounting | en_HK |
dc.subject | Conflict of interest | en_HK |
dc.subject | Cost-volume-profit analysis | en_HK |
dc.subject | Multiple sources of uncertainty | en_HK |
dc.subject | Risk aversion | en_HK |
dc.title | CVP under uncertainty and the manager's utility function revisited | en_HK |
dc.type | Article | en_HK |
dc.identifier.openurl | http://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0924-865X&volume=12&issue=2&spage=159&epage=170&date=1999&atitle=CVP+under+Uncertainty+and+the+Manager%27s+Utility+Function+Revisited | en_HK |
dc.identifier.email | Chan, DK: dkchan@hkucc.hku.hk | en_HK |
dc.identifier.email | Wong, KP: kpwongc@hkucc.hku.hk | en_HK |
dc.identifier.authority | Chan, DK=rp01046 | en_HK |
dc.identifier.authority | Wong, KP=rp01112 | en_HK |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1023/A:1008352305790 | - |
dc.identifier.scopus | eid_2-s2.0-0242558600 | en_HK |
dc.identifier.hkuros | 41219 | en_HK |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-0242558600&selection=ref&src=s&origin=recordpage | en_HK |
dc.identifier.volume | 12 | en_HK |
dc.identifier.issue | 2 | en_HK |
dc.identifier.spage | 159 | en_HK |
dc.identifier.epage | 171 | en_HK |
dc.publisher.place | United States | en_HK |
dc.identifier.scopusauthorid | Chan, DK=7402216890 | en_HK |
dc.identifier.scopusauthorid | Wong, KP=7404759417 | en_HK |
dc.identifier.issnl | 0924-865X | - |