Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84372
Authors: 
Apreda, Rodolfo
Year of Publication: 
2002
Series/Report no.: 
Serie Documentos de Trabajo, Universidad del CEMA: Área: finanzas 220
Abstract: 
This paper attempts to make of the standard incremental cash flow model (SICFM) a functional vehicle for coping with conflicts of interest. After outlining the model, residual rights to cash flows are linked to residual risks. Then, the underlying information sets to cash flows are brought to light, stressing the nurturing factors behind conflicts of interest: bounded rationality, asymmetric information, opportunistic behavior and transaction costs. Next, decision rights and organization forms are included into the frame of the paper. Finally, the core subject section shows how incremental cash flows come in handy to root out conflicts of interest, firstly by disclosing the residual information sets that divide managers, stockholders and creditors and, secondly, by advocating the design of ex~ante restrictive covenants on the uses and sources of incremental expected cash flows.
Subjects: 
cash flow
conflict of interest
information set
residual rights
JEL: 
G30
G32
G34
Document Type: 
Working Paper

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