How to Spur Capital Spending: Plan for Failure

Research by UCLA Anderson’s Marvin B. Lieberman, Gwendolyn K. Lee of the University of Florida and Timothy B. Folta of the University of Connecticut proposes a blueprint, of sorts, for making the wisest possible corporate investment decisions of how best to deploy shareholders’ capital in what are inherently risky new ventures. Because, companies might invest more in new ventures if they could see in advance how to redeploy the assets if things don’t pan out. So it’s important to plan for failure.

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