Investment and Dividends under Irreversibility and Financial Constraints¤
نویسنده
چکیده
Research ...nds that ...rms’ investment and dividend policies are distorted by irreversibility and ...nance constraints. Whereas the existing literature examines these features separately, this paper considers their interaction. The main theoretical result concerns the separation of the investment and payout thresholds. The ordering of investment and distribution activities is endogenously determined and depends on the levels of capacity and cash balances in a manner consistent with a life-cycle interpretation of ...rm behaviour. The concavity of the revenue function in capital stock and the complementarity of the constraints drive these results. Important rami...cations for empirical work on investment are discussed.
منابع مشابه
Investment, Irreversibility, and Financial Imperfections¤
Research ...nds that ...rms’ investment decisions are distorted by irreversibility and ...nance constraints. Whereas the existing literature examines the e¤ects of these features separately, this paper studies their interaction. The impact of these constraints on a ...rm’s incentive to invest is characterised using option pricing techniques. Financial constraints reduce the initial capacity, ra...
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