traders to arbitrageurs? We study firm business investment to address this question. In our model, benevolent managers of … with positive net present value. Empirically, we find a positive relation between investment and a number of proxies for … mispricing, controlling for investment opportunities and financial slack, suggesting that overpriced (underpriced) firms tend to …

firm investment. This hypothesis is tested by estimating investment equations for two groups of German manufacturing firms … external financing costs and liquidity constraints. Findings support the hypothesis of greater investment sensitivity to … liquidity constraints, as well as increased investment sensitivity over time, for the group of independent firms. …

We present a dynamic agency model of investment, borrowing and payout decisions by a mature corporation operating in … managerial rents. They under-invest and smooth payout and rents. Debt is the shock-absorber for operating income and investment …

investment over the period 1970--89 for Germany, Japan, the United Kingdom and the United States and second, to challenge some …

pricing kernel that incorporates the effects of financing constraints on investment behavior. The key ingredients in this … pricing kernel depend not only on ‘fundamentals’, such as profits and investment, but also on the financing variables. Our …

financial constraints and can boost the investment of private firms. …

-termism” and overinvestment due to “empire building.” Empirical identification relies on a proxy for optimal investment derived … investment opportunities compared to matched unlisted firms, especially in industries in which stock prices are particularly …-building were the dominant agency problem in the stock market. Our results suggest that the stock market harms investment incentives …