This study aims to investigate the impact of deviation from optimal level of cash holdings on adverse selection and moral hazard problems. The data set includes 106 listed firms of Tehran Stock Exchange during the period of 2005-2016 and both panel data and cross-sectional data multivariate regressions were utilized in different stage of analysis to test the hypotheses. According to the optimal...

The short-lived oil price shock at the beginning of the Persian Gulf Crisis created a natural experiment. Oil producers were left with an unexpected, one-time cash flow shock and unchanged investment opportunities. We examine how they spent this free cash flow. Most firms followed an expansionary path, but there is considerable variation in how the cash flow was allocated. Both costly external ...

We investigate the financial and real implications of corporate cash holdings over different capital market conditions in the period 1972-2008. A recent theoretical work implies that the value of corporate liquidity varies with the supply of external capital and should be higher during market-wide liquidity shocks. We find that for an average firm a marginal dollar in cash holdings has the same...

The mechanism design approach to monetary theory is the search for fruitful settings or environments in which something that resembles monetary trade actually accomplishes something— or, in Hahn’s [7] terminology, in which money is essential. Fruitfulness means that the settings provide new insights about puzzling observations and policy questions. The search for settings in which money is esse...

Investors use the company value as one of benchmarks in investing capital since is generated from share price with basis performance and public assessment on that performance. The can be measured by Price Earning Ratio (PER), Book Value (PBV), Tobin's Q. selected this research its measurement. subjects were technology-based companies listed Indonesian stock exchange. From data obtained, it was ...

We consider the optimal contract between an entrepreneur and investors in a single-period model when both parties have limited liability, are risk-neutral toward cash flow risk, and are ambiguity-averse. Ambiguity aversion is modeled by multiplier preferences for robustness toward model uncertainty, as in Hansen and Sargent (2001). Efficient ambiguity-sharing implies that the first-best contrac...