We introduce a post-entry liquidity constraint to the standard real option model of a firm with stochastic cash flow and an irreversible exit decision. We assume that a firm with no cash holdings and negative cash flow is forced to exit regardless of its future prospects. This creates a...

This paper investigates the impact of irreversibility of investments and competition on the sign of the relationship between investment and uncertainty. The empirical analysis uses firm-level data and is based on a survey of over 800 polish non-financial companies which was carried out by the...

We use forward-looking and exogenous measures of output price uncertainty to examine the effect of price uncertainty on firm-level capital investment, risk management, and debt issuance. The effects of uncertainty vary significantly by firm size. When faced with high price uncertainty, large...

The economic reliability of a performance metric depends on its consistency with the Net Present Value (NPV). We use the new notion of strong NPV-consistency for comparing the Straight-Line rate of return (belonging to the class of AIRR metrics) and the traditional Internal Rate of Return (IRR)....

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. Overlevered firms facing high uncertainty converge...

For carbon-intensive, internationally-traded industrial goods, a unilateral increase in the domestic CO2 price may result in the reduction of the domestic production but an increase of imports. In such sectors as electricity, cement or steel, the trade flows result more from short-term regional...

This article illustrates a formal link between economic growth and longstanding quantitative measures of information and knowledge. The link is found by relating two concepts from evolutionary theory, namely the Price equation and bet-hedging (stochastic switching). The first part of the article...

When tickets are sold in advance, as with airlines, concerts, theaters and sporting events, in some cases advanced sales are made at a discount and in others a premium is charged. This paper argues that the more preference certain consumers are regarding future purchases the more likely firms...

This paper considers the investment decision of a firm where it has to decide about the timing and capacity. We obtain that in a fast growing market, right after investment the firm produces below capacity, where the utilization rate (the proportion of capacity that is used for production right...