On April 17, the Hujiang Economics and Management Forum Series (98th Session) was held at the Lecture Hall on the fourth floor of Building A of the Business School. Dr. Chen Fei, lecturer of the Department of System Science, delivered an academic report entitled Influence of Knightian Uncertainty on Short and Long-termism of Firm Investment: From the Perspective of Dynamic Financial Contract.
From the perspective of dynamic financial contract design, the report first clarifies the importance of short-term and long-term investment decision for the development of enterprises and the complexity of this issue in the actual operation of enterprises, and then sorts out the problem framework and model in the existing research. Since the uncertainty in the real environment will have a non-negligible impact on the market, Peng's sublinear expectation theory and some researches on applying this theory to solve financial and economic problems were briefly introduced to the students. Therefore, the paper introduces the dynamics of cash flow and capital stock under the sub-linear framework, and uses the dynamic programming principle and G-HJB equation to find the dynamic balance point of short-term and long-term investment in the uncertain market environment, so as to seek long-term development. Finally, based on the dynamic contract model, we select the data of Shanghai and Shenzhen A-shares in recent years, and verify the validity of the model through empirical analysis.
In conclusion, Dr. Zhonghui Hu, a lecturer in the Department of Business Administration, offered insightful commentary on the lecture. The event concluded with an engaging discussion among the participants, fostering a deeper understanding of the lecture’s content.
Translated by Fei Chen
Reviewed by Fang Zhiming