Publication: Shared Investment Projects and Forecast...
Master data
Title: | Shared Investment Projects and Forecasting Errors: Setting Framework Conditions for Coordination and Sequencing Data Quality Activities |
Subtitle: | |
Abstract: | This paper investigates the impact of inaccurate forecasting on the coordination of distributed investment decisions. In particular, by setting up a computational multi-agent model of a stylized firm, we investigate the case of investment opportunities that are mutually carried out by organizational departments. The forecasts of concern pertain to the initial amount of money necessary to launch and operate an investment opportunity, to the expected intertemporal distribution of cash flows, and the departments' efficiency in operating the investment opportunity at hand. We propose a budget allocation mechanism for coordinating such distributed decisions. The paper provides guidance on how to set framework conditions, in terms of the number of investment opportunities considered in one round of funding and the number of departments operating one investment opportunity, so that the coordination mechanism is highly robust to forecasting errors. Furthermore, we show that - in some setups - a certain extent of misforecasting is desirable from the firm's point of view as it supports the achievement of the corporate objective of value maximization. We then address the question of how to improve forecasting quality in the best possible way, and provide policy advice on how to sequence activities for improving forecasting quality so that the robustness of the coordination mechanism to errors increases in the best possible way. At the same time, we show that wrong decisions regarding the sequencing can lead to a decrease in robustness. Finally, we conduct a comprehensive sensitivity analysis and prove that - in particular for relatively good forecasters - most of our results are robust to changes in setting the parameters of our multi-agent simulation model. |
Keywords: |
Publication type: | Article in journal (Authorship) |
Publication date: | 24.03.2015 (Online) |
Published by: |
PLOS ONE
PLOS ONE
(
Public Library of Science;
)
to publication |
Title of the series: | - |
Volume number: | - |
Issue: | - |
First publication: | Yes |
Version: | - |
Page: | pp. 1 - 42 |
Total number of pages: | 42 pp. |
Versionen
Keine Version vorhanden |
Publication date: | 24.03.2015 |
ISBN (e-book): | - |
eISSN: | 1932-6203 |
DOI: | http://dx.doi.org/10.1371/journal.pone.0121362 |
Homepage: | http://www.plosone.org |
Open access |
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Assignment
Organisation | Address | ||||
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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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Fakultät für Wirtschafts- und Rechtswissenschaften
Institut für Finanzmanagement Abteilung Finance and Accounting
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AT - 9020 Klagenfurt am Wörthersee |
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Peer reviewed |
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