THE JOURNAL OF FINANCE • VOL. LXVII‚ NO. 1 • FEBRUARY 2012 Information Disclosure and Corporate Governance BENJAMIN E. HERMALIN and MICHAEL S. WEISBACH∗ ABSTRACT Public policy discussions typically favor greater corporate disclosure as a way to reduce firms’ agency problems. This argument is incomplete because it overlooks that better disclosure regimes can also aggravate agency problems and related costs‚ including executive compensation. Consequently‚ a point can exist beyond which additional
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Response to Mill’s “Principle of Utility” John Stuart Mill writes that the Principle of Utility is the placement of happiness‚ of the individual‚ but mostly of society as a whole‚ ought to be the ultimate end in intentions and actions. These considerations weigh the consequences of what the outcome could be‚ to produce the most beneficial outcome for everyone. The most beneficial outcome according to Utilitarianism is the one which maximizes everyone’s happiness overall by weighing the sum of the
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In Ian Frazier’s “In Praise of Margins”‚ Frazier emphasizes the importance of engaging in “marginal” activities. He does not like the negative connotation that the word “marginal” has been given. It’s negative connotation comes from the thought that it describes things that have close to‚ or no purpose. All activities start out as having no purpose to them always end up having a deeper meaning to them in the end. Activities such as traveling‚ playing basketball‚ and exploring the woods in “In Praise
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17:18:55 2007 ECONOMETRICA PROSPECT THEORY: AN ANALYSIS O F DECISION UNDER RISK This paper presents a critique of expected utility theory as a descriptive model of decision making under risk‚ and develops an alternative model‚ called prospect theory. Choices among risky prospects exhibit several pervasive effects that are inconsistent with the basic tenets of utility theory. In particular‚ people underweight outcomes that are merely probable in comparison with outcomes that are obtained with
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1. What do you think would be the principal challenges in implementing the new Centrica business model? Centrica poses challenges in managing an increasing number of employees‚ creating and developing its business model‚ making and executing corporate strategy and introducing an appropriate organizational structure to sustain growth in the future. From gas to energy to home service to financial services and motoring‚ challenges may arise at the home and financial services since both are into
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ECO204: Solutions to Homework 5 1. True‚ False‚ Uncertain a. False. Methods to eliminating moral hazard include writing efficient contracts between principals and agents‚ bonding and deferred payments. The methods to eliminate adverse selection include sending signals and relying on 3rd parties to verify quality. b. True. When there is asymmetric information‚ it drives out high-quality goods because consumers have a difficult time differentiating between high- and low-quality goods. As a result‚
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UPS and the Utility of Information Systems Heather Fraser Ashford University INF 220: IS Principles Tracey Johnson September 17‚ 2012 The United Parcel Service has made great strides to incorporate its business with the entire world not just the United States. It has used technology to overcome eternal factors such as cultural differences‚ time zone‚ and currency differences and hardware constraints to streamline its organization and delivery system (Laudon‚ 7).” The delivery day begins
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Prospect theory is utilized to make decisions that involve risks or gambles. This theory was developed in 1979 as a solution to the shortfalls and contradictions that were found in expected utility theory in certain situations. One of the most significant aspects of prospect theory is the suggestion that individuals avoid risk when they perceive their current prospects or situation to be positive (a gain decision domain)‚ and individuals seek risk when they perceive the current prospects or situation
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surface structures of decision problems. Acta Psychologica‚ 67‚ 175–189. ¨ Wahlund‚ R. (1989). Att fatta beslut under osakerhet och risk. Stockholm: Norstedts Forlag. ¨ Wang‚ X. T. (1996a). Domain-specific rationality in human choices: Violations of utility axioms and social contexts. Cognition‚ 60‚ 31– 63. Wang‚ X. T. (1996b). Evolutionary hypotheses of risk-sensitive choice: Age differences and perspective change. Ethology and Sociobiology‚ 17‚ 1–15. Wang‚ X. T.‚ & Johnston‚ V. S. (1995). Perceived
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argument will be as to why utilitarianism‚ more specifically the Principle of Utility‚ should not be used to decipher the rightness or wrongness of actions in situations. In this essay‚ I will define and explain utilitarianism and Bentham’s spin on the theory‚ argue that this theory cannot be practical in most cases‚ and finally consider why my argument could be seen as fallible. 1. Utilitarianism- The Principle of Utility Utilitarianism can be defined as the theory in which human welfare or happiness
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