We investigate the empirical relationship between company investment and measures of uncertainty, controlling for the effect of expected future profitability on current investment decisions. We consider three measures of uncertainty derived from (1) the volatility in the firm's stock returns;...

We derive robust predictions on the effects of uncertainty on short run investment dynamics in a broad class of models with (partial) irreversibility. When their environment becomes more uncertain firms become more cautious and less responsive to demand shocks. This result contrasts with the...

This study tests for the presence of real options effects induced by uncertainty and (partial) irreversibility on fixed capital investment using Italian company data. The approach recognizes that firm-level investment spending may, itself, be aggregated over multiple investment decisions in...

We re-examine the extent to which personal taxes on dividends are capitalized into the equity prices of domestic firms, using data from around the time of the 1997 U.K. dividend tax reform, which removed a significant tax credit for an important group of investors: U.K. pension funds. The...

This study investigates the relationship between uncertainty and investment using U. K. data at different levels of aggregation. Motivated by a comparative econometric analysis using a firm-level panel and aggregate time-series data, we analyze the implications of aggregating nonlinear...

The aim of this paper is to characterize the empirical implications for dynamic investment models of the hierarchy of finance model of corporate finance and to test these implications using firm level data. The model we estimate is based on the Euler equation for optimal capital accumulation in...

In this paper, the authors investigate the sensitivity of investment to the availability of internal funds using the hierarchy of finance approach to corporate finance. They characterize the empirical implications of this approach for dynamic investment models and test these implications using...