Agency Con icts , Investment , and Asset Pricing

  title={Agency Con icts , Investment , and Asset Pricing},
  author={Rui Wang},
The separation of ownership and control allows controlling shareholders to pursue private benefits. We develop an analytically tractable dynamic stochastic general equilibrium model to study asset pricing and welfare implications of imperfect investor protection. Consistent with empirical evidence, the model predicts that countries with weaker investor protection have more incentives to overinvest, lower Tobin’s q, higher return volatility, larger risk premia, and higher interest rate… CONTINUE READING