A Financial Theory of Firm Growth
نویسنده
چکیده
The paper analyses dynamic investment behaviour and labour demand of the nancially restricted rm. It shows that rm development is characterised by a negative correlation between leverage and the stocks of capital and labour but a positive correlation between leverage and investment and labour hiring. The paper explains The paper explains why rm growth is decreasing with rm size and age, and why a corporate tax cut leads to a lower debt equity ratio, higher employment and an overshooting dividend ratio. A calibrated version of the model also calculates the welfare implications for shareholders.
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