We empirically examine the trade-off theory of capital structure, allowing for costly adjustment. After confirming that financing behavior is consistent with the presence of adjustment costs, we use a dynamic duration model to show that firms behave as though adhering to a dynamic trade-off...

We examine the impact of R&D intensity and agency costs on the value of firms across 13 economies. We find that R&D adds value while high agency costs reduce value. R&D adds value, however, even when agency costs are high. We show that in those firms where agency costs are high and R&D intensity...

This paper analyzes the determinants of the sources of funding for the firms of an economy without stock market. Once the available and relevant financial sources for a Uruguayan firm are defined, their determinants are analyzed through cross section econometric models. The analysis casts out...

In this research, we investigate the dynamic of the capital structure, using panel data techniques. A sample of new high-tech German Firms over the period 1998-2002 is used to specifically establish the determinants of a time-varying optimal capital structure. We consider the dynamic models,...

This paper extends the linear lasso estimators to non-linear case. We are especially interested in GMM type of Lasso estimators. Lasso estimators are generalization of ridge regression in least squares. With this setup we can deal with identification problem introduced by weak instruments. When...

In examining the likely consequences of nonsense relationship, Granger and Newbold (1974) made it clear that the differencing is not the universal sure solution to the problem of spurious regression models. This has prompted the discovery of the cointegration regression estimation by Engle and...

The use of the Beveridge Nelson decomposition in macroeconomic analysis involves the truncation and estimation of infinite weighted sums of random variables, whereas the single source of error (SSE) state space approach provides a simple and effective framework that leads to exactly the same...

In many countries we observe a gap between macroeconomic and microeconomic statistics. In order to explain the underreporting observed in microeconomic statistics, the present paper tests the misreporting hypothesis through the double hurdle model. The misreporting hypothesis is based on some...

Abstract In many areas of economic analysis, economic theory restricts the shape as well as other characteristics of functions used to represent economic constructs. Obvious examples are the monotonicity and curvature conditions that apply to utility, profit, and cost functions. Commonly, these...