Event

Financial Policies and Internal Governance with Heterogeneous Risk Preferences

Join Professor Bart Lambrecht from the University of Cambridge as he discusses optimal investment policies for firms when investors have heterogeneous risk preferences.

  • Wed 13 Feb 19

    14:00 - 16:00

  • Colchester Campus

    EBS.2.41

  • Event speaker

    Dr Bart Lambrecht

  • Event type

    Lectures, talks and seminars
    Essex Finance Centre Research Seminar Series

  • Event organiser

    Essex Business School

  • Contact details

    Dr Thanos Verousis

This seminar will examine optimal policies for firms when individual investors have heterogeneous risk preferences and how these change under different economic conditions.

Seminar abstract

We consider a group of investors with heterogeneous risk preferences that jointly determines a firm's investment policy, and each investor's compensation function. The optimal investment policy is a time-varying weighted average of investors' optimal policies and converges to the policy of the least(most) risk averse investor in booms(busts), reconciling the diversification of opinions hypothesis and the group shift hypothesis. The most(least) risk averse investor has a strict concave(convex) claim on the firm's net worth. For intermediate risk preferences investors' claim is S-shaped. We derive investors' utility weights absent wealth distribution and under social optimisation.

Booking

This is an open event. Feel free to bring your colleagues, classmates and friends along.

Speaker bio

Bart Lambrecht is Professor of Finance at Judge Business School, University of Cambridge. In the past he was a professor at the University of Lancaster, and a senior lecturer at the University of Cambridge. Professor Lambrecht is an Editor of the Journal of Corporate Finance, an Associate Editor of the Journal of Banking and Finance, and member of the editorial board of the Journal of Business Finance & Accounting.

His research interests included various aspects of corporate finance such as

  • real options and investment under uncertainty
  • merges and acquisitions
  • payout policy
  • managerial agency and the role of asymmetric information
  • bankruptcy
  • the financing of firms
  • housing and household finance

He has also published extensively in journals such as the Journal of Finance, Journal of Financial Economics, Review of Financial Studies.

As well as being an associate of the Real Options Group, he is also a member of the Cambridge Financial Management Board he is also on the advisory board of the Cambridge INET Institute and the Cambridge Corporate Governance Network.