Agency problems and capital expenditure announcements

This article examines the market valuation of announcements of new capital expenditure. Prior research suggests that the firm's growth opportunities and cash flow position condition the market response. This study jointly examines the role of growth and cash flow, and the interaction between them. Using a new data set of Australian firms that avoids problems associated with expectations models, the results are remarkably strong and support a positive association between growth opportunities and the market valuation, in addition to supporting the role of free cash flow. The findings have implications for the relationship between general investment information and stock prices.

The role of the board in firm strategy: Integrating agency and organisational control perspectives

The role of the board of directors in firm strategy has long been the subject of debate. However, research efforts have suffered from several deficiencies: the lack of an overarching theoretical perspective, reliance on proxies for the strategy role rather than a direct measure of it and the lack of quantitative data linking this role to firm financial performance. We propose a new theoretical perspective to explain the board's role in strategy, integrating organisational control and agency theories. We categorise a board's approach to strategy according to two constructs: strategic control and financial control. The extent to which either construct is favoured depends on contextual factors such as board power, environmental uncertainty and information asymmetry.

Agency as discursive practice: From nobody to somebody as an international student in Australia

As more and more students pursue an international education, there is a need to investigate how these students deal with the demands of their study programs in the new academic context. This paper introduces one such student, a Thai English teacher named Woody,2 and looks at the ways that he engaged with a Master of Education program in Australia. I analyse the transcripts of two interviews that I conducted with Woody in his first semester using Fairclough's model of Critical Discourse Analysis (CDA). The analysis is interested in the social and institutional demands that Woody identified as impacting on the course, and the strategic action that he took in response to them. I argue that by undertaking this action, Woody was “working” as an agent of his own change. The analysis highlights a proactive and strategic engagement on Woody's part, a point that has been missed in much of the literature on the international student experience in Australia.

Incentives and standards in agency contracts

This paper studies the structure of state-contingent contracts in the presence of moral hazard and multitasking. Necessary and sufficient conditions for the presence of multitasking to lead to fixed payments instead of incentive schemes are identified. It is shown that the primary determinant of whether multitasking leads to higher or lower powered incentives is the role that noncontractible outputs play in helping the agent deal with the production risk associated with the observable and contractible outputs. When the noncontractible outputs are risk substitutes and are socially undesirable, standards are never optimal. If the noncontractible outputs are socially desirable, standards are never optimal if the noncontractible outputs play a risk-complementary role.

Fixed wages and bonuses in agency contracts: the case of a continuous state space

In this paper, we extend the state-contingent production approach to principal–agent problems to the case where the state space is an atomless continuum. The approach is modelled on the treatment of optimal tax problems. The central observation is that, under reasonable conditions, the optimal contract may involve a fixed wage with a bonus for above-normal performance. This is analogous to the phenomenon of "bunching" at the bottom in the optimal tax literature.

Maintaining human agency in the design on context-aware systems: Design games in a dental surgery

This paper describes a series of design games, specifically aimed at exploring shifts in human agency in order to inform the design of context-aware applications. The games focused on understanding information handling issues in dental practice with participants from a university dental school playing an active role in the activities. Participatory design activities help participants to reveal potential implicit technical resources that can be presented explicitly in technologies in order to assist humans in managing their interactions with and amidst technical systems gracefully.