investment; the impact of uncertainty on investment occurs primarily through changes in credit spreads; and innovations in credit … spreads have a strong effect on investment, irrespective of the level of uncertainty. These findings raise a question … financial shocks. By influencing the effective supply of credit, both types of shocks exert a powerful effect on investment and …

We develop a model of investment timing under uncertainty for a financially constrained firm. Facing external financing … costs, the firm prefers to fund its investment through internal funds, so that the firm's optimal investment policy and …, and at times as a substitute, to the real flexibility given by the optimal timing of investment. We show that: 1) the …

-seeking behavior by firms. Firms with high liquidity risk are likely to use cash rather than credit lines for liquidity management … because the cost of monitored liquidity insurance increases with liquidity risk. We exploit a quasi-experiment around the … downgrade of General Motors (GM) and Ford in 2005 and find that firms that experienced an exogenous increase in liquidity risk …

debt is strongly negatively correlated with corporate debt and investment, but strongly positively correlated with … strategy influences firms' capital structures and investment policies. …

lower income counties. Finally, we find higher investment in farm equipment and decreased borrowing following a positive …

with investor "rationality," the relation must be "explained" by a risk factor model. The investment approach changes the … big picture of asset pricing. Factors formed on characteristics are not necessarily risk factors: Characteristics …-based factor models are linear approximations of firm-level investment returns. The evidence that characteristics dominate …

We study investment options in a dynamic agency model. Moral hazard creates an option to wait and agency conflicts … affect the timing of investment. The model sheds light, theoretically and quantitatively, on the evolution of firms' dynamics …

We examine the neoclassical investment model using a panel of U.S. manufacturing firms. The standard model with no … for firms with low (pre-sample) payouts (firms we expect to face financing constraints). Hem, investment is sensitive to … both firm cash flow and macroeconomic credit conditions, holding constant investment opportunities. Sample splits based on …

This paper uses firm-level panel data to analyze the role of financial factors in determining investment outcomes … parameter estimates imply that financial factors may account for 50% to 80% of the overall drop in investment observed during … this episode. Our estimates also imply that foreign-denominated debt had relatively little effect on aggregate investment …