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Uncertainty, Investment Spikes, and Leverage Adjustments
Im, Hyun Joong - 2020
We study the effects of uncertainty on corporate leverage adjustments with respect to investment spikes and find that … overlevered and underlevered firms behave very differently in response to the combination of uncertainty and investment spikes …
Persistent link: https://www.econbiz.de/10012855716
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Discount Rate Uncertainty and Capital Investment
Bessembinder, Hendrik; H. Décaire, Paul - 2021
this bias affects corporate investment decisions and firm financial performance, and we test additional predictions derived … discount rate uncertainty is associated with increased firm investment of 6.8%, while profitability decreases by 4.1% …
Persistent link: https://www.econbiz.de/10013251697
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Financing Uncertain Growth
Li, Jay Y. - 2016
We examine interactions between investment and financing decisions in a dynamic model where the firm can alter the mix …. The lack of coordination between the timing of investment and debt financing helps explain a number of findings in the …
Persistent link: https://www.econbiz.de/10013008584
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Risk Analysis Probability of Default : A Stochastic Simulation Model
Montesi, Giuseppe - 2015
We present a stochastic simulation model for estimating forward-looking corporate probability of default and loss given default. We formulate the model in a discrete time frame, apply capital-budgeting techniques to define the relationships that identify the default condition, and solve the...
Persistent link: https://www.econbiz.de/10013023044
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De and re-levering betas with risky debt
Krause, Marko Volker - In: Business research 12 (2019) 2, pp. 703-720
De- and re-levering betas is important to obtain discount rates for assets that are not publicly traded. A de- and re-levering procedure is around for the case of risk-free debt. The procedure for risky debt is much less clear even under very simplifying assumptions. In this paper, I concretize...
Persistent link: https://www.econbiz.de/10012256377
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Leverage and risk-taking in a dynamic model
Berg, Tobias; Heider, Florian - 2024
This paper examines the dynamic relationship between firm leverage and risktaking. We embed the traditional agency problem of asset substitution within a multi-period model, revealing a U-shaped relationship between leverage and risktaking, evident in data from both the U.S. and Europe. Firms...
Persistent link: https://www.econbiz.de/10014584403
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The Economics of Legal Uncertainty
Lee, Jiwon; Schoenherr, David; Starmans, Jan - 2022
In this paper, we study how legal uncertainty affects economic activity. We develop a parsimonious model with different types of legal uncertainty that reduce economic activity and that can be classified as idiosyncratic (i.e., diversifiable) or systematic (i.e., nondiversifiable). We test the...
Persistent link: https://www.econbiz.de/10014244584
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Managerial Incentives and IPO Failure Risk
Colak, Gonul - 2019
quality, higher investment efficiency, and superior operating performance …
Persistent link: https://www.econbiz.de/10012898102
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Capital Budgeting and Idiosyncratic Risk
H. Décaire, Paul - 2020
Using an NPV-based revealed-preference strategy, I find that idiosyncratic risk materially affects the discount rate that firms use in their capital budgeting decisions. I exploit quasi-exogenous within-region variation in project-specific idiosyncratic risk and find that, on average, firms...
Persistent link: https://www.econbiz.de/10012846966
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The Effect of Common Ownership on Investment Decisions under Uncertainty
Baek, In Gyun - 2020
This paper examines the effects of firm-level common ownership on the level and efficiency of investment when firms … a deadweight loss for the economy through decreased investment. Proponents of common ownership suggest that it allows … firms to increase investment due to a reduced threat of involuntary knowledge spillover to rivals. This study contributes to …
Persistent link: https://www.econbiz.de/10012836263