Showing 1 - 10 of 12
Persistent link: https://www.econbiz.de/10002111109
Many economists believe that the stock market plays an important role in efficiently allocating capital to its most productive uses. This standard story of the stock market was called into question by events in the late 1990s, when some observers believed that stock market overvaluation - or a...
Persistent link: https://www.econbiz.de/10009153871
This paper introduces a new approach to understanding investment. The distinctive feature of our approach is that shocks to the economic fundamentals have both persistent and transitory components, and that firms must disentangle the persistent from the transitory shocks. The model generates...
Persistent link: https://www.econbiz.de/10011418195
Empire-building by managers implies that they use a lower effective discount rate in making investment decisions. We use actual investment decisions to measure the gap between the manager’s effective discount rate and the market rate. Our empirical work is based on panel data for 193 Canadian...
Persistent link: https://www.econbiz.de/10009726806
By studying the gap between the discount rates used by executives and shareholders, we assess the extent to which governance problems distort firm behavior. The estimation strategy recovers discount rates used by executives from the pattern of their actual investment spending. Our empirical work...
Persistent link: https://www.econbiz.de/10011514083
This paper investigates whether investment spending of firms is sensitive to the availability of internal funds. Imperfect capital markets create a hierarchy for the different sources of funds such that investment and financial decisions are not independent. The relation between corporate...
Persistent link: https://www.econbiz.de/10010493784
Persistent link: https://www.econbiz.de/10010493785
Persistent link: https://www.econbiz.de/10002251836
Persistent link: https://www.econbiz.de/10001596232
By studying the gap between the discount rates used by executives and shareholders, we assess the extent to which governance problems distort firm behavior. The estimation strategy recovers discount rates used by executives from the pattern of their actual investment spending. Our empirical work...
Persistent link: https://www.econbiz.de/10001739558