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This paper examines the rationale behind capital allocation practices in multi-division firms, focusing on the use of hurdle rates and budgets. It suggests that capital rationing, where firms allocate limited funds to divisions, may be beneficial when managers do not perceive the full consequences of their investment decisions. The paper contrasts the efficiency of a pricing system based on hurdle rates with a budgeting system imposed by headquarters, arguing that many firms employ a...
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The NBER Working Paper No. is a specific identification number assigned to research papers published by the National Bureau of Economic Research (NBER) that are intended for dissemination to the academic community.
Authors and researchers who wish to disseminate their findings through the NBER are required to file an NBER Working Paper No.
To fill out an NBER Working Paper No., authors need to follow the submission guidelines provided by the NBER, which typically include information such as the title, authors, abstract, keywords, and a detailed explanation of the research.
The purpose of the NBER Working Paper No. is to facilitate the early dissemination of research findings, allowing authors to share their work with peers for feedback and discussion before formal publication.
The information that must be reported includes the title of the paper, the names of the authors, their affiliations, an abstract, keywords, and any necessary data and methodology used in the research.
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