Private benefits of control, growth options and inefficient investments
CAI Zhen-hong1, RANRong2
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1. Faculty of Construction Management and Real Estate, Chongqing University, Chongqing 400030, China;2. College of Trade and Public Administration, Chongqing University, Chongqing 400030, China
This study is about the influence of growth options on inefficient investment and firm value under controlling shareholder settings. Results indicates that controlling shareholder makes under-investment decision which stray from maximum firm value aim but the growth options that firm owned produces alleviating effect to the under-investment because controlling shareholders like the sustainability of private benefits of control. Further more, the greater the growth factor and the more shares that the controlling shareholders owned, the stronger alleviating effects on controlling shareholders’ under-investment behavior and firm value increases when they have a more single aim.
CAI Zhen-hong
, RANRong. , {{custom_author.name_en}}.
Private benefits of control, growth options and inefficient investments. Systems Engineering - Theory & Practice, 2011, 31(1): 55-63 https://doi.org/10.12011/1000-6788(2011)1-55