Arbeitspapier

Incremental cash flows, information sets and conflicts of interest

This paper attempts to make of the standard incremental cash flow model (SICFM) a functional vehicle for coping with conflicts of interest. After outlining the model, residual rights to cash flows are linked to residual risks. Then, the underlying information sets to cash flows are brought to light, stressing the nurturing factors behind conflicts of interest: bounded rationality, asymmetric information, opportunistic behavior and transaction costs. Next, decision rights and organization forms are included into the frame of the paper. Finally, the core subject section shows how incremental cash flows come in handy to root out conflicts of interest, firstly by disclosing the residual information sets that divide managers, stockholders and creditors and, secondly, by advocating the design of ex~ante restrictive covenants on the uses and sources of incremental expected cash flows.

Language
Englisch

Bibliographic citation
Series: Serie Documentos de Trabajo ; No. 220

Classification
Wirtschaft
Corporate Finance and Governance: General
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Subject
cash flow
conflict of interest
information set
residual rights

Event
Geistige Schöpfung
(who)
Apreda, Rodolfo
Event
Veröffentlichung
(who)
Universidad del Centro de Estudios Macroeconómicos de Argentina (UCEMA)
(where)
Buenos Aires
(when)
2002

Handle
Last update
10.03.2025, 11:41 AM CET

Data provider

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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Apreda, Rodolfo
  • Universidad del Centro de Estudios Macroeconómicos de Argentina (UCEMA)

Time of origin

  • 2002

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