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Persistent link: https://www.econbiz.de/10010231043
The investment anomaly refers to the pervasive negative predictability in future stock returns following large firm investments. I re-investigate two competing hypotheses for the potential source of the anomaly: i) prolonged mispricing due to limits to arbitrage and ii) financing constraints in...
Persistent link: https://www.econbiz.de/10014085398
We develop a simple model of investment in business groups subject to moral hazard. Our model suggests that productivity and pledgeable income are the drivers of resources in the internal capital markets of these groups. This prediction can be use to explain on the grounds of efficiency some...
Persistent link: https://www.econbiz.de/10012998381
We examine a large and unique panel containing survey and financial statement data on small and medium sized private enterprises (SMEs) in Germany from 1991 to 2011. From the survey data, we derive a financial constraints measure based on managers' self-perception. We find that our measure...
Persistent link: https://www.econbiz.de/10013007687
We investigate the effect of financial constraints on the investment decisions of Slovenian firms during the current financial and economic crisis. By estimating the error-correction model and the Euler-equation specification, we found that corporate investments were significantly affected by...
Persistent link: https://www.econbiz.de/10012970755
We assess the impact of credit constraints on investment, inventories and other working capital and firm growth with a large panel of small and medium-sized enterprises from 12 European countries for the period 2014-2016. The data come from the Survey on the access to finance of enterprises...
Persistent link: https://www.econbiz.de/10012955240
Measuring the extent to which a firm is financially constrained is critical in assessing capital structure. Extant measures of financial constraints focus on macro firm characteristics such as age and size – variables highly correlated with other firm attributes. We parse 10-K disclosures...
Persistent link: https://www.econbiz.de/10013035014
I construct a structural model in which firms maximize value conditional on being restricted from issuing equity and unsecured debt. Using GMM estimation, I find that a model with both equity and debt constraints fits better than models without constraints or with only one constraint. The...
Persistent link: https://www.econbiz.de/10013038199
The opportunity cost approach suggesting a countervailing cyclical effect between R&D and short-term investments is the subject of theoretical and empirical debate. The lack of firm-level panel data on R&D and ambiguous indicators for demand fluctuations has hindered empirical testing of...
Persistent link: https://www.econbiz.de/10012918355
We show how to calculate the after-tax value of real options, including the value of interest tax shields on debt supported or displaced by the options. An option's “debt capacity” can be calculated from the adjusted present value (APV) and target debt ratio for the underlying asset, the...
Persistent link: https://www.econbiz.de/10012921061