Showing 1 - 7 of 7
We quantify how much nonfundamental movements in stock prices affect firm decisions. We estimate a dynamic investment model in which firms can finance with equity or cash (net of debt). Misvaluation affects equity values, and firms optimally issue and repurchase overvalued and undervalued...
Persistent link: https://www.econbiz.de/10014121059
This study examines the effect of shocks observed in financial markets on output and employment during the Great Depression. We present three main findings. First, an adverse financial shock leads to a decline in the manufacturing sector's output and employment that peaks about 11 months...
Persistent link: https://www.econbiz.de/10013115113
We develop a dynamic model for digital service firms, which invest in monetization to generate revenues from services provided to customers for free. Our model captures and explains why such firms often build a large customer base and become highly valued while continuing to suffer...
Persistent link: https://www.econbiz.de/10014355014
Purchases and sales of operating assets by firms generated $162 billion for shareholders over the past 20 years. This contrasts sharply with the evidence on mergers. This paper characterizes the behavior of value-maximizing firms, which may grow organically, purchase existing assets or sell...
Persistent link: https://www.econbiz.de/10012732037
Using data on a broad set of European firms, we find a strong positive relationship between the use of external financing and future productivity (TFP) growth within firms. This relationship is robust to various measures of financing and productivity, and strengthens as financing costs increase....
Persistent link: https://www.econbiz.de/10013291768
The broad economic damage of the COVID-19 pandemic poses the first major test of the bank regulatory reforms put in place after the Global Financial Crisis. Our study assesses the U.S. regulatory framework, with an emphasis on capital and liquidity requirements. Prior to the COVID-19 crisis,...
Persistent link: https://www.econbiz.de/10013311493
While many studies find that the tail distribution of high frequency stock returns follow a power law, there are only a few explanations for this finding. This study presents evidence that time-varying volatility can account for the power law property of high frequency stock returns. The power...
Persistent link: https://www.econbiz.de/10013210380