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There is widespread evidence supporting the conjecture that borrowing constraints have important implications for firm growth and survival. In this paper we model a multi-period borrowing/lending relationship with asymmetric information. We show that borrowing constraints emerge as a feature of...
Persistent link: https://www.econbiz.de/10005102279
There is widespread evidence supporting the conjecture that borrowing constraints have important implications for firm growth and survival. In this paper we model a multi-period borrowing/lending relationship with asymmetric information. We show that borrowing constraints emerge as a feature of...
Persistent link: https://www.econbiz.de/10012728087
A large and increasing fraction of the value of executives' compensation is accounted for by security grants. However, in most models of executive compensation, the optimal allocation can be implemented through a sequence of state-contingent cash payments. Security awards are redundant. In this...
Persistent link: https://www.econbiz.de/10005433550
Since the seminal contribution of Berk, Green, and Naik (Journal of Finance, 1999), we have witnessed a growing interest in rationalizing the observed cross-sectional relation between investment and stock returns. Unfortunately, however, the extant literature falls short of ensuring that the...
Persistent link: https://www.econbiz.de/10011080084
We amend Hopenhayn's model of equilibrium industry dynamics by explicitly modeling the firm's investment choice and by introducing aggregate fluctuations. Our main goal is to study the model's implications for the cyclical behavior of entry, exit, and the cross--section of operating firms. We...
Persistent link: https://www.econbiz.de/10011080828
contract. We focus our attention on testable implications: (i) the relationship between compensation and firm size, (ii) the relative importance of current and deferred compensation, (iii) the sensitivity of compensation to innovations in shareholder wealth, and (iv) the relationship between...
Persistent link: https://www.econbiz.de/10011080930
The model we explore is in the spirit of Hopenhayn (1992) and, more directly, an extension of Clementi and Palazzo (2010). Our interest here is to better understand how selection reshapes the dynamics of macro aggregates in a general equilibrium setting with realistic firm-level investment...
Persistent link: https://www.econbiz.de/10011081568
of the two shortcomings.
Persistent link: https://www.econbiz.de/10011082005
An extension of our basic model introduces sectoral production and endogenises the set of sectors active at any time. This allows us to address cross-country evidence on the higher relative price of investment
Persistent link: https://www.econbiz.de/10011082142
We estimate the volatility of plant–level idiosyncratic shocks in the U.S. manufacturing sector. Our measure of volatility is the variation in Revenue Total Factor Productivity which is not explained by either industry– or economy–wide factors, or by establishments’ characteristics....
Persistent link: https://www.econbiz.de/10011122154