When corporate payout is taxed, internal equity (retained earnings) is cheaper than external equity (share issues). If there are no perfect substitutes for equity finance, payout taxes may therefore have an effect on the investment of firms. High taxes will favor investment by firms who can...

In this paper we present the results of the research of key factors that determine the investment behavior of Russian companies during 2004-2008. The emphasis is made on the policy of capital expenditures. In the analysis there were included macroeconomic, some industry factors (growth rate,...

This study identifies several interrelated reasons why firms' depreciation method choice is likely to influence managers' capital investment decisions. We find that firms that use accelerated depreciation make significantly larger capital investments than firms that use straight-line...

An important debate in the literature relates to the use of investment-cash flow sensitivity (ICFS) to measure finance constraint faced by firms. This debate is grounded on four prominent issues: a priori sorting of firms, treatment of distressed firms, use of cash flow to represent only...

Proximity to plants makes it easier for headquarters to monitor and acquire information about plants. In this paper, I estimate the effects of headquarters' proximity to plants on plant investment and productivity. Using the introduction of new airline routes as a source of exogenous variation...

We examine investment behavior when firms face costs in the access to external funds. We find that despite the existence of liquidity constraints, standard investment regressions predict that cash flow is an important determinant of investment only if one ignores q. Conversely, we also obtain...

This paper investigates the relationship between financing constraints and investment cash flow sensitivities by focusing on cash holdings as the basic classification scheme to separate firms into finacially constrained and unconstrained categories. The idea is that high cash reserves increase...

A deep-ingrained doctrine in asset pricing says that if an empirical characteristic-return relation is consistent with investor “rationality,” the relation must be “explained” by a risk (factor) model. The investment approach questions the doctrine. Factors formed on characteristics are...

It is often asserted that the financial crisis of 2008 caused a recession in the real economy by restricting the supply of credit to firms and households, but this view has been questioned by a number of researchers. This paper uses novel data on lending relationships from Uniform Commercial...

Research on Japanese corporate finance typically starts from the premise that banks decisively affect corporate behavior. Crucial to this premise in the Japanese context are two claims: that the strength of a firm's relationship with a specific bank (and the funds that the bank makes available...