Building on the well-documented relationship between corporate financial hedging and firms' borrowing costs, this study examines impact of utilizing derivative instruments investment. We document that engaging in enables firms to pursue more inorganic growth opportunities form M&As. Acquiring with programs have a lower cost are likely pay for their deals cash use external borrowing. While serve...

Most of the literature on real options considers the optimal decision of a firm in isolation from competitors. In reality, however, the actions of competing firms often affect each other’s investment opportunities. We develop a game model where many firms compete for a single investment opportunity. When one of the firms triggers the investment the opportunity is completely lost for the other f...

This paper investigates the interaction among a firm’s knowledge capital, growth opportunities, earning dynamics, and optimal leverage level. Under the corporate taxation and personal taxation framework, by assuming knowledge capital positively affects the realization of a firm’s growth opportunities, I find a positive relation between a firm’s optimal debt level and its knowledge capital. Mean...

Today, small and medium-sized enterprises (SMEs) play a key role in both developing and developed economies. However, the uncertainty of macroeconomic indicators, such as economic growth, may affect financing and investment of the SMEs in an economy. The present study explores the effect of the economic growth rate uncertainty on financing SMEs in Iran. To this end, the study has applied the Br...

High technology organizations are increasingly facing survival and growth challenges. Whereas the investment in R and D projects is increasing; the development of the new product is decreasing in the biopharmaceutical sector [1]. The pressure for the productivity and emerging opportunities from changing institutions as well as from the advent of enabling information and communication technologi...

Abstract In order to identify the economic driver of negative investment-cash flow sensitivities (ICFS), we derive testable predictions from extending a theoretical investment model with endogenous financing costs (“revenue effect”) and contrast them corporate life-cycle hypothesis. We find that firms (i) lower levels long-term debt display stronger ICFS, (ii) more risky revenues invest more, w...