Managerial economics and operating beta

O’Brien, Thomas J.

doi:10.1002/mde.1525

Cited by 8 publications

(7 citation statements)

References 51 publications

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“…Having documented the relationship between market power and systematic risk, we can turn back to assess the theoretical models of this relationship. Overall, important properties of models consistent with our results seem to be the assumption of Cobb-Douglas production functions for capital and labor, isoelastic demand, and, importantly, flexible output (O'Brien, 2011). On the other hand, static demand-shock Cournot competition models with fixed output yield no relationship between beta and market power (Alexander and Thistle, 1999;Wong, 1995).…”

Section: Ta B L Esupporting

confidence: 80%

Market power and systematic risk

Hollstein,

Prokopczuk,

Würsig

2023

Financial Management

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We examine the impact of product market competition on firms' systematic risk. Using a measure of total product market similarity, we document a strong negative relationship between market power and market betas. The effect more than triples in the most recent period of low competition. Anticompetitive mergers result in a significant reduction in market betas. Firms facing less competition seem to be partially insulated from systematic discount‐rate shocks. Lower equity costs therefore imply that market power is partly self‐perpetuating.

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Section: Ta B L Esupporting

confidence: 80%

Market power and systematic risk

Hollstein,

Prokopczuk,

Würsig

2023

Financial Management

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“…The scope of managerial economics encompasses aspects of running a successful business and their contributions to effective decision-making in an organizational setting. Managerial economics aids companies in the house in an effective decision-making process by informing the management on using different quantifiable tools such as available time and money resources and economic concepts to formulate policies for making informed managerial decisions [4]. Business executives can use concepts of managerial economics to perform successful production and cost evaluations when approximating the cost of production and to determine factors that cause disparities in cost approximations.…”

Section: Scope Of Managerial Economicsmentioning

confidence: 99%

“…Furthermore, managerial economics enables production managers to develop sustainable production schedules for all production activities of an organization. Business executives can use this approach to management to approximate possible future demands for goods and services through different quantitative tools such as Gross Domestic Product and a population's income levels [4]. These tools enable the easy formulation of production schedules to satisfy current and future market demands.…”

Section: Business Organization and Growthmentioning

confidence: 99%

The Nature, Scope and Role of Managerial Economics in Business

Gao¹

2023

Advances in Economics, Business and Management Research

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Managerial economics plays a significant role in the management of business enterprises because it helps managers develop a wide range of leadership traits that streamline business decisions for the long term. The model allows managers to make informed decisions that ensure an organization make sustainable profits and attain positive growth rates. Since decision-making and business management are inseparable concepts, managerial economics helps managers achieve business functions such as planning, hiring, and company organization. Managers often consider several options to reach a workable conclusion based on the variables surrounding a particular situation. Thus, managerial economics helps the decision-making in organizations as making informed decisions is at the core of management. This essay will discuss the nature and scope of managerial economics and point out the role and significance of the business concept in a business setting. The paper achieves this by highlighting that business executives are required to choose the best available alternatives and adopt specific approaches to management. Data will be collected, and findings analyzed to provide a detailed conclusion on managerial economics' scope, nature, and role in business.

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“…Many scholars link firm risk to structural variables, such as scale of production and industry concentration (O’Brien, ), firm size (Carroll & Wei, ; Chan & Chen, ; Handa, Kothari, & Wasley, ), dynamics at the sector level (Vos, ), operating and financial leverage (Gahlon & Gentry, ; Hill & Stone, ; John, John, & Reisman, ; Mandelker & Rhee, ; Rubinstein, ), and intrinsic business risk (Chung, ; Griffin & Dugan, ; Mensah, ).…”

Section: Literature Antecedentsmentioning

confidence: 99%