We study the implications of hedging for firm financing and investment. We do so using an extensive, hand … present shows that hedging has a first-order effect on firm financing and investment, and provides new insights into how … channels (cost of borrowing and investment restrictions) through which hedging affects corporate outcomes. The analysis we …

, consumption/savings, and portfolio selection. For a lump-sum investment payoff and an agent with a sufficiently strong … precautionary savings motive, an increase in volatility can accelerate investment, contrary to the standard real options analysis …. When the agent can trade the market portfolio to partially hedge against investment risk, the systematic volatility is …

This paper examines the importance of financial constraints for firm investment expenditures by looking at the … relationship between investment expenditures and proceeds from voluntary asset sales in financially healthy US manufacturing … companies. Specifically, we examine whether asset sales have a greater influence on investment expenditures for firms that are …

the same inputs (including capital) thus experience lower costs, which boosts investment, output, and profits, reflecting …

This paper studies the effect of durability on the financing of durable assets. We show that more durable assets … the price of an asset and hence the overall financing need more than its collateral value. This insight has implications … dominated technologies. More durable assets are more likely to be rented given their larger financing need. Legal enforcement …

to bypass attractive investment opportunities, with 86% of constrained U.S. CFOs saying their investment in attractive … their planned investment. Our results also hold in Europe and Asia, and in many cases are stronger in those economies …

macroeconomic variables such as investment, lending, interest rates, and inflation. The facts that we uncover lend support to the …

frictions. Firms take their production, financing, and contractual decisions so as to maximize their value under rational …

speculators are capital constrained, and commodity producers have hedging demands for commodity futures. Increases (decreases) in … producers' hedging demand (speculators' risk-capacity) increase hedging costs via price-pressure on futures, reduce producers … associated with producer hedging demand rises when speculative activity reduces. We conclude that limits to financial arbitrage …