Investment, Irreversibility, and Financial Imperfections¤
نویسنده
چکیده
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, raise the marginal value product of capital and the value of the option to invest.
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