S. Smidt, Best Executive in Securities Markets: An Application of Signaling and Agency Theory: Discussion, The Journal of Finance, Vol. 37, No. 2, Papers and Proceedings of the Fortieth Annual Meeting of the American Finance Association, Washington, D.C., December 28-30, 1981 (May, 1982), pp. 519-521

This article discusses a plausible method of valuing individual durable assets, not valuing those of the whole firm, for internal, managerial purposes; that is, for decisions and control. In this paper a method of valuation is explored that is appropriate for an accounting system when its primary purpose is to provide data for managerial decision-making. Three basic approaches to the valuation of individual assets are available. They are: the first one is past transactions, second is future earning power, and the third one is present market price. These approaches can be stated in terms of the costs which are used as a basis for valuing the assets. They are original cost, internal opportunity cost, and external opportunity cost. External opportunity cost is defined as a market price of an asset that is to be used in production rather than bought or sold. Internal opportunity cost is the present value of the incremental cash flow an asset or a set of assets can earn in its feasible use within the firm.

How MUCH DOES technological change in agriculture contribute to the nation's growth? How greatly will agriculture be affected by conditions making for growth in the national economy? Answers to questions like these pertaining to interactions between agriculture and the rest of the economy are needed perennially in formulating national economic policies and in formulating price support and other policies focusing on agriculture. Discussion of the questions has been fragmented, with not much attention to the overall set of relationships determining interactions between the two parts of the economy. The first contribution of the present study is to develop a model appropriate to explaining adjustments between agriculture and the rest of the economy implied by U.S. growth. We believe this study presents for the first time a formally complete model taking account of feedback effects involved in intersectoral equilibration and production function substitution between factors.' The model contains two sectors (agriculture and nonagriculture) and two productive factors (human resources and physical capital). Factor immobilities and other non-Pareto features are introduced, and there are special complications involving agriculture's purchased inputs which affect price measurement and production functions. Equilibrations determining prices and quantities of products and factors for each sector are explained within the model as responses to changes in the economy's major exogenous forces. These forces, reflected in the exogenous variables, include output per unit of input in the two sectors and total factor supplies available to the economy. The model permits quantitative estimates of how effects of changes in