Scaling Capitalist Class Relations: Commercial Property Development in Tampa, Florida

Authors

  • M. Mark Amen University of South Florida, School of Interdisciplinary Global Studies

DOI:

https://doi.org/10.6000/1929-7092.2016.05.19

Keywords:

Agency problems, Free cash flows, Overinvestment, Implied cost of capital

Abstract

We test the relationship between the implied cost of capital and two agency problems, free cash flows and overinvestment. We show that free cash flows have a significant negative impact on the implied cost of capital, but overinvestment has a significantly positive impact. In addition, the pay-for-performance sensitivity has a negative effect but the sensitivity of volatility has a significantly positive effect on the implied cost of capital. After taking the incentives into account, we find that the significance of the impact from both agency problems still exists. Finally, we conclude that well-designed executive compensation should focus on reducing overinvestment and the sensitivity of volatility.

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Published

2016-06-01

How to Cite

Amen, M. M. (2016). Scaling Capitalist Class Relations: Commercial Property Development in Tampa, Florida. Journal of Reviews on Global Economics, 5, 227–242. https://doi.org/10.6000/1929-7092.2016.05.19

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