Nishihara, Michi; Shibata, Takashi - In: Journal of Banking & Finance 37 (2013) 4, pp. 1160-1175
We develop a dynamic model in which a firm exercises an option to expand production on either a small or large scale with cash reserves and costly external funds. An intermediate level of cash reserves, which is insufficient for the large-scale investment but sufficient for the small-scale...