Investors often fail to incorporate all relevant information when they make decisions. This is a consequence of both information overload and investors’ limited cognitive abilities. The first essay shows that firms take advantage of investors’ inattention by managing the advance notice...

This paper analyses the presence of financial constraint in the investment decisions of 367 Brazilian firms from 1997 to 2004, using a Bayesian econometric model with group-varying parameters. The motivation for this paper is the use of clustering techniques to group firms in a totally...

This paper addresses the issue of how regulatory constraints affect firm's investment choices when the firm has an option to delay investment. The RPI-x rule is compared to a profit sharing rule, which increases the x factor in case profits go beyond a given level. It is shown that a pure price...

We develop a non-dynamic panel smooth transition regression model with fixed individual effects. The model is useful for describing heterogenous panels, with regression coefficients that vary across individuals and over time. Heterogeneity is allowed for by assuming that these coefficients are...

A game in which an incumbent and an entrant decide the timings of entries into a new market is investigated. The profit flows involve two uncertain factors: (1) the basic level of the demand of the market observed only by the incumbent and (2) the fluctuation of the profit flow described by a...

The paper analyzes investment behavior of industrial enterprises in the period immediately following price and foreign trade liberalization in the Czech Republic. It also focuses on the effect of soft macroeconomic environment on the microeconomic decisions. A dynamic investment function with...

The literature on strategic growth options examines the impact of investment to gain comparative advantages. The commitment of irreversible investment may confer strategic advantages as a result of a reduction in future expansion costs (Dixit, 1980) or operating costs (Kulatilaka and Perotti,...

In the three-year period following stock market liberalizations, the growth rate of the typical firm's capital stock exceeds its pre-liberalization mean by an average of 4.1 percentage points. Cross-sectional changes in investment are significantly correlated with the signals about fundamentals...

Real Options is the term used to refer to the application of option pricing theory to the valuation of investments in non-financial or "real" assets where much of the value is attributable to flexibility and learning over time. A key problem with Real Options is that there are many different...