We provide a strategic rationale for growth options under uncertainty and imperfect competition. In a market with strategic competition, investment confers a greater capability to take advantage of future growth opportunities. This strategic advantage leads to the capture of a greater share of the market, either by dissuading entry or by inducing competitors to 'make room' for the stronger comp...

This paper reports substantial differences in the ownership and control of companies across countries both in terms of concentration of control and the type of investor exerting control. It reports significant differences not only between Anglo-American and Continental European systems but also between the UK and US and within Continental Europe. Voting blocks are concentrated at levels at whic...

We investigate whether foreign institutional ownership impacts corporate innovation. Using firm-level data from 30 countries in 2001-2010, we find that higher foreign institutional ownership is associated with more investment in R&D and patents. Using the exogenous increase in foreign institutional holdings that follows a firm’s addition to the Morgan Stanley Capital International World Index, ...

Firm cash holdings increased substantially from 1980 to 2013. The overall distribution of firm cash holdings changed in the same period. We study the implications of these changes for monetary policy. We use Compustat data and a model with financial frictions that allows the calculation of the monetary policy effects according to the distribution of cash holdings. We find that the interest rate...

Article history: Received 14 April 2014 Received in revised form 5 June 2015 Accepted 15 June 2015 Available online 20 June 2015 This paper investigates the impact of CEO career concerns on a firm's investment efficiency for publicly listed Chinese companies from 2002 to 2009. We use CEO age and appointment of new CEO as proxies for CEO career concerns. For thewhole sample, we demonstrate that ...

University of Glasgow, Glasgow Royal Infirmary Campus, Glasgow G31 2ER, UK University of Birmingham, Birmingham Women’s Hospital, Birmingham, UK The University of Melbourne and the Royal Women’s Hospital, Royal Women’s Hospital, Parkville, Melbourne, Australia Correspondence to: M A Lumsden Maryann.Lumsden@glasgow. ac.uk Cite this as: BMJ 2015;351:h4887 doi: 10.1136/bmj.h4887 Uterine leiomyomas...

Credit contagion refers to the propagation of economic distress from one firm to another. This article proposes a reduced-form model for these contagion phenomena, assuming they are due to the local interaction of firms in a business partner network. We study aggregate credit losses on large portfolios of financial positions contracted with firms subject to credit contagion. In particular, we p...

This paper develops and tests a structural investment model nesting the Q theory and ...ve distortions: contract-induced CEO myopia, empire building, shirking, debt overhang, and ‡otation costs. Supporting the empire building hypothesis, founders’ (non-founders’) investment is consistent with their deriving an annual bene...t of $3.30 ($0.40) per $1000 of capital. Evidence of contract-induced m...

Firms can use capital that they either purchase or lease, but these alternatives are treated differently for tax purposes. This paper derives the demand for leased capital as a function of tax parameters, and uses the model to estimate the responsiveness of leasing to the introduction of bonus depreciation in 2002, finding strong evidence that depreciation allowances influence leasing patterns....

The current extensive literature on irreversible investment decisions makes the assumption of constant interest rate. In this paper we study the impact of interest rate and revenue variability on the decision to carry out an irreversible investment project. Given the generality of the considered valuation problem, we first provide a thorough mathematical characterization of the problem and deve...