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Aggregate Risk and the Choice between Cash and Lines of Credit

Acharya, Viral V; Almeida, Heitor; Campello, Murillo - C.E.P.R. Discussion Papers - 2012

We model corporate liquidity policy and show that aggregate risk exposure is a key determinant of how firms choose between cash and bank credit lines. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result, firms with high aggregate risk find it costly to get credit...

Persistent link: https://www.econbiz.de/10011083590

The Real Effects of Investor Sentiment

Polk, Christopher; Sapienza, Paola - C.E.P.R. Discussion Papers - 2003

traders to arbitrageurs? We study firm business investment to address this question. In our model, benevolent managers of … with positive net present value. Empirically, we find a positive relation between investment and a number of proxies for … mispricing, controlling for investment opportunities and financial slack, suggesting that overpriced (underpriced) firms tend to …

Persistent link: https://www.econbiz.de/10005067581

Investment, Liquidity Constraints and Bank Relationships: Evidence from German Manufacturing Firms

Elston, Julie Ann - C.E.P.R. Discussion Papers - 1996

firm investment. This hypothesis is tested by estimating investment equations for two groups of German manufacturing firms … external financing costs and liquidity constraints. Findings support the hypothesis of greater investment sensitivity to … liquidity constraints, as well as increased investment sensitivity over time, for the group of independent firms. …

Persistent link: https://www.econbiz.de/10005136704

The Dynamics of Investment, Payout and Debt

Lambrecht, Bart; Myers, Stewart C - C.E.P.R. Discussion Papers - 2014

We present a dynamic agency model of investment, borrowing and payout decisions by a mature corporation operating in … managerial rents. They under-invest and smooth payout and rents. Debt is the shock-absorber for operating income and investment …

Persistent link: https://www.econbiz.de/10011083994

Asset Prices and Business Cycles with Costly External Finance

Gomes, Joao F; Yaron, Amir; Zhang, Lu - C.E.P.R. Discussion Papers - 2003

This Paper asks whether the asset pricing fluctuations induced by the presence of costly external finance are empirically plausible. To accomplish this, we incorporate costly external finance into a dynamic stochastic general equilibrium model and explore its implications for the properties of...

Persistent link: https://www.econbiz.de/10005667119

Asset Pricing Implications of Firms' Financing Constraints

Gomes, Joao F; Yaron, Amir; Zhang, Lu - C.E.P.R. Discussion Papers - 2002

pricing kernel that incorporates the effects of financing constraints on investment behavior. The key ingredients in this … pricing kernel depend not only on ‘fundamentals’, such as profits and investment, but also on the financing variables. Our …

Persistent link: https://www.econbiz.de/10005497817

Financial Constraints in China: Firm-Level Evidence

Poncet, Sandra; Steingress, Walter; Vandenbussche, Hylke - C.E.P.R. Discussion Papers - 2009

financial constraints and can boost the investment of private firms. …

Persistent link: https://www.econbiz.de/10005661590

Financing a Portfolio of Projects

Inderst, Roman; Mueller, Holger M; Muennich, Felix - C.E.P.R. Discussion Papers - 2006

This paper shows that investors financing a portfolio of projects may use the depth of their financial pockets to overcome entrepreneurial incentive problems. While competition for scarce informed capital at the refinancing stage increases the investor’s ex post bargaining position, it may...

Persistent link: https://www.econbiz.de/10005504454

Financial Development, Property Rights and Growth

Claessens, Stijn; Laeven, Luc - C.E.P.R. Discussion Papers - 2002

This Paper investigates how the legal framework not only affects the amount of external financing available, but also firms’ resource allocation among different types of assets. Using a simple model, we show that in a weaker legal environment a firm will get less financing, and thus invest...

Persistent link: https://www.econbiz.de/10005504760

Capital Structure and Regulation: Do Ownership and Regulatory Independence Matter?

Bortolotti, Bernardo; Cambini, Carlo; Rondi, Laura; … - C.E.P.R. Discussion Papers - 2008

We construct a comprehensive panel data of 92 publicly traded European utilities over the period 1994-2005 in order to study the relationship between capital structure, regulated prices, and firm value, and examine if and how this interaction is affected by ownership structure and regulatory...

Persistent link: https://www.econbiz.de/10005497873