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I study the properties of optimal long-term contracts in an environment in which the agent's type evolves stochastically over time. The model stylizes a buyer-seller relationship but the results apply quite naturally to many contractual situations including regulation and optimal...
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We model a risk-averse firm owner who wants to maximize the intertemporal expected utility of firm’s dividends. The optimal dynamic control problem is characterized by two stochastic state variables: the equity value, and profitability (ROA) of the _rm. According to the empirical evidence, we...
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capital structure are highlighted through separately observing debt and equity and their relationship to investment …
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portion of the cross-sectional variation in firms’ payout and financing decisions and show that the expansive monetary …
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capital structure are highlighted through separately observing debt and equity and their relationship to investment … Estate Investment Trust (REIT) ; Real Estate Operating Company (REOC) ; financial flexibility ; cash flow sensitivities …
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response to reduced debt capacity. We model how firms' payout and cash holding policies are affected by this shift. Our insight … is that the creation of intangibles is largely achieved by human capital investment and requires lower upfront outlays … dilution. Our empirical evidence confirms that firms with higher intangible investment have lower upfront investment needs …
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