Publication: On the efficiency of hurdle rate based ...
Master data
| Title: | On the efficiency of hurdle rate based coordination mechanisms |
| Subtitle: | |
| Abstract: | Financial resources are scarce, which is why corporate capital budgeting needs to employ efficient allocation mechanisms. This paper conceptually transforms the idea behind a hurdle rate based coordination mechanism from an agency model into a computational model of a multi-divisional corporation with both heterogeneous departments and heterogeneous investment opportunities competing for the same source of funding. On the basis of our results, we reason that for heterogeneous investment opportunities a recurrent use of a hurdle rate based coordination mechanism can work efficiently only if intra-organizational communication is assumed to be absent. We show that, if only a single investment opportunity can be carried into execution due to scarce financial resources, the heterogeneity of the competing investment opportunities positively affects the departments' payoffs, while the number of proposed investment projects negatively impacts departmental utilities derived from a residual income. The latter is why our results support the assumption that an emergence of cooperation is to be expected as soon as departments can establish interdepartmental communication, rendering a hurdle rate based coordination mechanism inefficient. |
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| Publication type: | Article in journal (Authorship) |
| Publication date: | 01.11.2014 (Online) |
| Published by: |
Mathematical and Computer Modelling of Dynamical Systems
Mathematical and Computer Modelling of Dynamical Systems
(
Routledge/Taylor & Francis Group;
)
to publication |
| Title of the series: | - |
| Volume number: | - |
| Issue: | - |
| First publication: | Yes |
| Version: | - |
| Page: | pp. 1 - 17 |
| Total number of pages: | 17 pp. |
Versionen
| Keine Version vorhanden |
| Publication date: | 01.11.2014 |
| ISBN (e-book): | - |
| eISSN: | 1744-5051 |
| DOI: | http://dx.doi.org/10.1080/13873954.2014.973885 |
| Homepage: | http://www.tandfonline.com/doi/abs/10.1080/13873954.2014.973885 |
| Open access |
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Assignment
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Fakultät für Wirtschafts- und Rechtswissenschaften
Institut für Unternehmensführung Abteilung für Controlling und Strategische Unternehmensführung
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AT - 9020 Klagenfurt |
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| Peer reviewed |
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