We develop a model of investment with financial constraints and use it to investigate the relation between investment … between q and investment, relative to the frictionless benchmark. We present a calibrated version of the model, which, due to … this effect, generates realistic correlations between investment, q, and cash flow …

of investment requires a new idea, an quot;optionquot;. When options are scarce, new capital is harder to put in place …, Q rises gradually, as options are used up. Because investment represents an exercise of options, it has an intertemporal …

We analyze private fixed investment in the U.S. over the past 30 years. We show that investment is weak relative to … two broad categories of explanations: theories that predict low investment because of low Q, and theories that predict low … investment despite high Q. We argue that the data does not support the first category, and we focus on the second one. We use …

We examine how credit constraints affect the cyclical behavior of productivity-enhancing investment and thereby … volatility and growth. We first develop a simple growth model where firms engage in two types of investment: a short-term one and … a long-term productivity-enhancing one. Because it takes longer to complete, long-term investment has a relatively less …

firm characteristics - Tobin's Q, past investment, earnings-price ratios, market betas, and idiosyncratic volatility of … returns by aggregate investment and valuation ratios; and v) a downward sloping term structure of risk premia for dividend … strips. Our model delivers testable predictions about the behavior of firm-level real variables - investment and output …

In this paper I analyze the relationships among investment, q, and cash flow in a tractable stochastic model in which … regressions of investment on q and cash flow. In empirical studies, the estimated cash-flow coefficient is generally positive and …

stock market bubble by issuing new equity. The bubble reduces the user-cost of capital and increase real investment. Using … real investment …

The Q-theory of investment says that a firm's investment rate should rise with its Q. We argue here that this theory … also explains why some firms buy other firms. We find that 1. A firm's merger and acquisition (Mamp;A) investment responds … to its Q more -- by a factor of 2.6 -- than its direct investment does, probably because Mamp;A investment is a high …