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Leasing, Ability to Repossess, and Debt Capacity

Eisfeldt, Andrea; Rampini, Adriano - Society for Economic Dynamics - SED - 2006

This paper studies the role of leasing of productive assets. When capital is leased (or rented), it is more easily repossessed and hence leasing has higher debt capacity and relaxes financing constraints. However, leasing gives rise to an agency problem with regard to the care with which the...

Persistent link: https://www.econbiz.de/10005069226

Corporate Governance Institutions, Investment, and the Macroeconomy

Falato, Antonio - Society for Economic Dynamics - SED - 2004

This paper evaluates quantitatively the macroeconomic implications of corporate governance institutions within a model where the size and distribution of firms and the structure of financial markets are jointly determined. If firms adapt their financing modes to economic conditions, aggregate...

Persistent link: https://www.econbiz.de/10005069570

The Magnitude and Cyclical Behavior of Financial Market Frictions

Levin, Andrew T.; Natalucci, Fabio M. - Society for Economic Dynamics - SED - 2005

Persistent link: https://www.econbiz.de/10004970333

Risk-Taking Executives, The Value of the Firm and Economic Performance

Covas, Francisco - Society for Economic Dynamics - SED - 2004

This paper develops a new framework that combines agency problems associated with managerial behavior and firm finance in a dynamic macroeconomic model. Agency costs arise because neither the shareholders nor the debt provider can directly control the manager's choice of how much risk to assume,...

Persistent link: https://www.econbiz.de/10005051422

Letting Go: Managerial Incentives and the Reallocation of Capital

Rampini, Adriano A.; Eisfeldt, Andrea L. - Society for Economic Dynamics - SED - 2004

This paper studies the provision of incentives to reallocate capital when managers are reluctant to relinquish control and have private information about the productivity of assets under their control. We show that when managers get private benefits from running projects substantial bonuses are...

Persistent link: https://www.econbiz.de/10004970357

Housing v. Financial Wealth: a Cross-Country Comparison

Piazzesi, Monika; Schneider, Martin - Society for Economic Dynamics - SED - 2004

This paper compares wealth portfolios across countries. The household sector in the US and Canada owns much more financial wealth, and much less housing wealth, than the household sector in most of Europe. We address this fact using a calibrated two sector growth model with endogenous financial...

Persistent link: https://www.econbiz.de/10005085456

Q Theory Without Adjustment Costs & Cash Flow Effects Without Financing Constraints

Eberly, Janice C.; Abel, Andrew B. - Society for Economic Dynamics - SED - 2004

one, Tobin's Q is informative about the firm's growth prospects. We show that investment is positively related to Tobin …, cash flow has a positive effect on investment, and this effect is larger for smaller, faster growing and more volatile … cast doubt on evidence of financing constraints based on cash flow effects on investment …

Persistent link: https://www.econbiz.de/10004970341

Credit Market Frictions with Costly Capital Reallocation as a Propagation Mechanism

Kurmann, Andre; Petrosky-Nadeau, Nicolas - Society for Economic Dynamics - SED - 2006

Empirical evidence suggests that capital separation is an important phenomenon over and beyond depreciation and that reallocation is a costly and time-consuming process. In addition, both separation and reallocation rates display substantial variation over the business cycle. We build a dynamic...

Persistent link: https://www.econbiz.de/10005090772

Shareholders Unanimity With Incomplete Markets

Coen-Pirani, Daniele - Society for Economic Dynamics - SED - 2004

When financial markets are incomplete, shareholders will in general disagree on the optimal level of investment to be … competitive equilibrium shareholders will unanimously agree on the optimal level of investment. As a result, in this incomplete …

Persistent link: https://www.econbiz.de/10005090882

Financial Frictions, Investment and Tobin's q

Lorenzoni, Guido; Walentin, Karl - Society for Economic Dynamics - SED - 2006

We develop a model of investment with financial constraints and use it to investigate the relation between investment … correlation between q and investment. We calibrate the model and show that, thanks to this effect, the model can generate … realistic correlations between investment, q and cash flow …

Persistent link: https://www.econbiz.de/10005051248