This study reports the results of contingent valuation (CV) studies conducted in eight states in the United States. Over 1,100 telephone interviews examined valuation effects on residential properties impacted by Leaking Underground Storage Tanks (LUST). Negative discounts for marginal bidders...

This study developed a unified framework for theoretically analyzing a set of mortgage attributes that screens borrower types according to their unobservable default risk. In the presence of asymmetric information, a self-selection process is attained, where lower default risk type borrowers...

We further elucidate the smooth pasting condition behind optimal early exercise of options. It is easy to show that smooth pasting implies rate of return equalization between the option and the levered position that results from exercise. This yields new economic insights into the optimal early...

This paper examines the impact of existing debt on irreversible investment decisions. We confirm that bankruptcy risk discourages investment but find that the impact of debt on firm decisions decreases as uncertainty increases

We find that a firm facing higher uncertainty has a higher value of cash. This effect is attributed to the increased value of the option to wait and see as well as the aggravated financial constraints and mitigated agency conflicts

We explore the significance of employee compensation and alternative (reservation) income on investment timing, endogenous default, yield spreads and capital structure. In a real-options setting, a manager's incentive to under (over) invest in a project is associated to labor income he has to...

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)....