|
Hold-up Problem
In economics, the hold-up problem is central to the theory of incomplete contracts, and shows the difficulty in writing complete contracts. A hold-up problem arises when two factors are present: #Parties to a future transaction must make noncontractible relationship-specific investments before the transaction takes place. #The specific form of the optimal transaction (such as quality-level specifications, time of delivery, what quantity of units) cannot be determined with certainty beforehand. The hold-up problem is a situation where two parties may be able to work most efficiently by cooperating but refrain from doing so because of concerns that they may give the other party increased bargaining power and thus reduce their own profits. When party A has made a prior commitment to a relationship with party B, the latter can 'hold up' the former for the value of that commitment. The hold-up problem leads to severe economic cost and might also lead to underinvestment. Underinves ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on these elements. Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be"; between economic theory and applied economics; between rati ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Klaus M
Klaus is a German, Dutch and Scandinavian given name and surname. It originated as a short form of Nikolaus, a German form of the Greek given name Nicholas. Notable persons whose family name is Klaus *Billy Klaus (1928–2006), American baseball player * Chris Klaus (born 1973), American entrepreneur * Frank Klaus (1887–1948), German-American boxer, 1913 Middleweight Champion *Fred Klaus (born 1967), German footballer *Josef Klaus (1910–2001), Chancellor of Austria 1966–1970 *Karl Ernst Claus (1796–1864), Russian chemist *Václav Klaus (born 1941), Czech politician, former President of the Czech Republic * Walter K. Klaus (1912–2012), American politician and farmer Notable persons whose given name is Klaus * Brother Klaus, Swiss patron saint *Klaus Augenthaler (born 1957), German football player and manager *Klaus Badelt (born 1967), German composer *Klaus Barbie (1913–1991), German SS-Hauptsturmführer and Holocaust Perpetrator * Klaus Bargsten (1911–2000), ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Earnout
Earnout or earn-out refers to a pricing structure in mergers and acquisitions where the sellers must "earn" part of the purchase price based on the performance of the business following the acquisition. Description Earnouts are often employed when the buyer(s) and seller(s) disagree about the expected growth and future performance of the target company. A typical earnout takes place over a three to five-year period after closing of the acquisition and may involve anywhere from ten to fifty percent of the purchase price being deferred over that period. Buyers usually value companies based on historical performance while sellers may weight more heavily projections about higher growth prospects. With an earnout the seller's shareholders are paid an additional sum if some predefined performance targets are met. (See Contingent value rights, having a similar function.) Earnouts are popular among private equity investors, who do not necessarily have the expertise to run a target busines ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Strip Financing
Strip financing is the repackaging of different types of obligations—debt, preferred stock, common stock etc.—into one security. The idea is to ease conflicts of interest and agency costs between the holders of the initial components, bond and stockholders. In deals that are strip financed, returns to investors are generally derived from their equity positions (seen through how investors from time to time take losses on the debt components of the strip). Therefore, in a situation where a company is acquired through a strip-financed deal, and that company begins to default on loans, investors are more willing to renegotiate lending terms, thus avoiding the hold-up problem often seen in prior to and during bankruptcy. Also, repackaging can raise a securities' liquidity. One popular form developed in Canada was the Income Trust, which combined income from a high yield bond with a stock dividend. Beginning in 2003 this concept was expanded to the U.S. when "Income Deposit Sec ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Contingent Value Rights
In corporate finance, Contingent Value Rights (CVR) are rights granted by an acquirer to a company’s shareholders, facilitating the transaction where some uncertainty is inherent. CVRs may be separately tradeable securities; they are occasionally acquired (or shorted) by specialized hedge funds. Forms These rights typically take either of two forms: (1) Event-driven CVRs compensate the owners for yet to eventuate positive developments in their business - hence protecting the acquirer against the valuation risk inherent in overpaying. (2) Price-protection CVRs are granted when payment is share based - protecting the acquired company, by providing a hedge against downside price risk in the acquirer's equity. In the first case, CVRs are granted in scenarios in which the acquiring company does not wish to pay for a product that might not work, has a limited market, or might need significant investment; whereas on the other side, the acquired company “wants to get full va ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Precommitment
In psychology, precommitment refers to a strategy or a method of self-control that an agent may use to restrict the number of choices available to them at a future time. The strategy may also involve the imposition of obstacles or additional costs to certain courses of action in advance. As theorized by the social scientist Jon Elster, agents may precommit themselves when they predict that their preferences will change but wish to ensure that their future actions will align with their current preferences. Precommitment has also been studied as a bargaining strategy in which agents bind themselves to one course of action in order to enhance the credibility of present threats. Some scholars have proposed that collective political agents may also engage in precommitment by adopting constitutions that limit the scope of future legislation. The validity of this application of precommitment theory has been called into question, however. Background In two unrelated articles, both ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Commitment Device
A commitment device is, according to journalist Stephen J. Dubner and economist Steven Levitt, a way to lock oneself into following a plan of action that one might not want to do, but which one knows is good for oneself. In other words, a commitment device is a way to give oneself a reward or punishment to make an empty promise stronger and believable. A commitment device is a technique where someone makes it easier for themselves to avoid akrasia (acting against one's better judgment), particularly procrastination. Commitment devices have two major features. They are voluntarily adopted for use and they tie consequences to follow-through failures. Consequences can be immutable (irreversible, such as a monetary consequence) or mutable (allows for the possibility of future reversal of the consequence). Overview The term "commitment device" is used in both economics and game theory. In particular, the concept is relevant to the fields of economics and especially the study of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Theory Of The Firm
The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market. Firms are key drivers in economics, providing goods and services in return for monetary payments and rewards. Organisational structure, incentives, employee productivity, and information all influence the successful operation of a firm in the economy and within itself. As such major economic theories such as Transaction cost theory, Managerial economics and Behavioural theory of the firm will allow for an in-depth analysis on various firm and management types. Overview In simplified terms, the theory of the firm aims to answer these questions: # Existence. Why do firms emerge? Why are not all transactions in the economy mediated over the market? # Boundaries. Why is the boundary between firms and the market located exactly there in relation to size and output var ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Game Theory
Game theory is the study of mathematical models of strategic interactions among rational agents. Myerson, Roger B. (1991). ''Game Theory: Analysis of Conflict,'' Harvard University Press, p.&nbs1 Chapter-preview links, ppvii–xi It has applications in all fields of social science, as well as in logic, systems science and computer science. Originally, it addressed two-person zero-sum games, in which each participant's gains or losses are exactly balanced by those of other participants. In the 21st century, game theory applies to a wide range of behavioral relations; it is now an umbrella term for the science of logical decision making in humans, animals, as well as computers. Modern game theory began with the idea of mixed-strategy equilibria in two-person zero-sum game and its proof by John von Neumann. Von Neumann's original proof used the Brouwer fixed-point theorem on continuous mappings into compact convex sets, which became a standard method in game theory and mathem ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Vertical Monopoly
In microeconomics, management and international political economy, vertical integration is a term that describes the arrangement in which the supply chain of a company is integrated and owned by that company. Usually each member of the supply chain produces a different product or (market-specific) service, and the products combine to satisfy a common need. It contrasts with horizontal integration, wherein a company produces several items that are related to one another. Vertical integration has also described management styles that bring large portions of the supply chain not only under a common ownership but also into one corporation (as in the 1920s when the Ford River Rouge Complex began making much of its own steel rather than buying it from suppliers). Vertical integration and expansion is desired because it secures supplies needed by the firm to produce its product and the market needed to sell the product. Vertical integration and expansion can become undesirable when ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Specific Asset
Asset specificity is a term related to the inter-party relationships of a transaction. It is usually defined as the extent to which the investments made to support a particular transaction have a higher value to that transaction than they would have if they were redeployed for any other purpose. Asset specificity has been extensively studied in a variety of management and economics areas such as marketing, accounting, organizational behavior and management information systems. Overview The concept of asset specificity is closely related to that of opportunism. Classical economists assume the existence of the "perfectly rational economic man". Previous approaches to economics often assumed that two contractually bounded firms will stick to the contract as they are supposed to. However, recent scholars led by Oliver E. Williamson (1975, 1985) stressed the issue of opportunism. A party to a transaction could be opportunistic by producing poor quality goods, delivering products late, o ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Sanford J
Sanford may refer to: People * Sanford (given name), including a list of people with the name * Sanford (surname), including a list of people with the name Places United States * Sanford, Alabama, a town in Covington County * Sanford, Colorado, a statutory town in Conejos County * Sanford, Florida, the county seat of Seminole County ** Orlando Sanford International Airport, in Sanford, Floria * Sanford, Georgia, an unincorporated community * Sanford, Kansas, an unincorporated community in Pawnee County * Sanford, Maine, a city in York County ** Sanford (CDP), Maine, a former census-designated place in downtown Sanford * Sanford, Michigan, a village in Midland County * Sanford, Mississippi, an unincorporated community in Covington County * Sanford, New York, a town in Broome County * Sanford, North Carolina, a city in Lee County * Sanford, Texas, a town in Hutchinson County * Sanford, Virginia, a census-designated place in Accomack County * Mount Sanford (Alaska), a s ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
