Showing 1 - 10 of 70
We study how investors' preferences for robustness influence corporate investment, financing, and compensation … ambiguity aversion lowers Tobin’s q, the average investment, and investment volatility. The entrepreneur values the project at …
Persistent link: https://www.econbiz.de/10013242023
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 …
Persistent link: https://www.econbiz.de/10010951274
We model dynamic investment, financing and default decisions of a firm, which begins its life with a collection of … growth options. The firm exercises them optimally over time, and finances the costs of investment by trading off tax benefits … classes of debtholders are managed through optimal choice of investment triggers, capital structure, and default triggers. We …
Persistent link: https://www.econbiz.de/10014026469
To study the impact of stochastic interest rates and capital illiquidity on investment and firm value, we incorporate a … of the stochastic interest rates and capital illiquidity on investment, Tobin's average q, the duration and user cost of …
Persistent link: https://www.econbiz.de/10011962209
Many business opportunities feature second-mover advantages as there are often positive spillovers and externalities from early entrants to followers. We develop a tractable stochastic duopoly entry game with a second-mover advantage. We show that firms engage in a war-of-attrition game with the...
Persistent link: https://www.econbiz.de/10013404960
Many business opportunities feature second-mover advantages as there are often positive spillovers and externalities from early entrants to followers. We develop a tractable stochastic duopoly entry game with a second-mover advantage. We show that firms engage in a war-of-attrition game with the...
Persistent link: https://www.econbiz.de/10013334369
We analyze a duopoly real-option entry game where the second mover has a cost advantage over the first mover. The equilibrium solution features five regions. In addition to the option-value-of-waiting and competing-to-enter (first-mover-advantage) regions (Fudenberg and Tirole, 1985; Grenadier,...
Persistent link: https://www.econbiz.de/10014255176
. Investment increases and the private marginal value of liquidity decreases as w decreases and exit becomes more likely, contrary …
Persistent link: https://www.econbiz.de/10010593826
This paper proposes a simple homogeneous dynamic model of investment and corporate risk management for a financially … investment and financing decisions. In our model, corporate risk management involves internal liquidity management, financial … hedging, and investment. We determine a firm's optimal cash, investment, asset sales, credit line, external equity finance …
Persistent link: https://www.econbiz.de/10005830351
We analyze a model of optimal capital structure and liquidity choice based on a dynamic tradeoff theory for financially constrained firms. In addition to the classical tradeoff between the expected tax advantages of debt and bankruptcy costs, we introduce a cost of external financing for the...
Persistent link: https://www.econbiz.de/10010796667