This paper investigates how different legal frameworks not only affect the amount of external financing available, but also the allocation of resources among different type of assets. Using a simple model, we show that a firm will get less financing, and thus invest less, in a weak law and order...

The extraordinary success of the U.S. economy and the parallel growth slowdown of the large European countries and Japan in the 1990s bear a simple rationale. The United States has eventually benefited from the effective adoption of information technologies. The introduction of the newly...

This paper examines the impact of the New Economy on the relationship between corporate debt policy and firm investment opportunities. One distinctive feature of new economy firms is their high level of investment opportunities. We study whether the impact of investment opportunities on...