Chapter 2
Agency, Information and Corporate Investment
Jeremy C. Stein* Harvard University and NBER* I am grateful to the NSF for financial support, and to Geoff Tate and Ann Richards for research assistance Thanks also to Judy Chevalier, Milt Harris, Oliver Hart, Bengt Holmström, Steve Kaplan, Owen Lamont, Raghu Rajan, David Scharfstein, Andrei Shleifer and René Stulz for their input.
Abstract
This essay surveys the body of research that asks how the efficiency of corporate investment is influenced by problems of asymmetric information and agency. I organize the material around two basic questions. First, does the external capital market channel the right amount of money to each firm? That is, does the market get across-firm allocations right, ...
