We construct novel measures of financial constraints using textual analysis of firms' annual reports and investigate their impact on stock returns. Our three measures capture access to equity markets, debt markets, and external financial markets in general. In all cases, constrained firms earn...

We investigate how adverse selection in the used capital market generates procyclical sales of used capital -- capital reallocation. In our model, adverse selection produces a resale discount for used capital. In equilibrium, this endogenous partial irreversibility is more severe in recessions...

We compare the ability of three measurement error remedies to deliver unbiased estimates of coefficients in investment regressions. We examine high-order moment estimators, dynamic panel estimators, and simple instrumental variables estimators that use lagged mismeasured regressors as...