Capital Budgeting and Delegation

Milton Harris*, Artur Raviv

*Corresponding author for this work

Research output: Contribution to journalArticle

61 Scopus citations


As part of our ongoing research into capital budgeting processes as responses to decentralized information and incentive problems, we focus in this paper on when a level of a managerial hierarchy will delegate the allocation of capital across projects and time to the level below it. In our model, delegation is a way to save on costly investigation of proposed projects. Therefore, it is more extensive the larger are the costs of such investigations. This delegation takes advantage of the fact that the lower-level manager's preferences are assumed to be similar (though not identical) to those of the higher level.

Original languageEnglish (US)
Pages (from-to)259-289
Number of pages31
JournalJournal of Financial Economics
Issue number3
StatePublished - Dec 1 1998


  • Budget rollovers
  • Capital budgeting
  • Delegation
  • G31

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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