this paper studies the effects of six factors including industry type, size, age, ratio of capital to total assets, ratio of debts to assets, and advertising costs on profitability of com companies accepted in tse. profitability is defined at the three standard levels of roa, roat, and roe. the sample used in this research belong to the companies which are accepted in tse vy feb. 2001, and they...

We present an equilibrium model of a moral-hazard economy with a very large firm and financial markets, where a stock and bonds are traded. We show that optimal contracts necessitate the principal to forbid the agent to trade the stock, and that moral hazard problems can result in low interest rates and sometimes in high equity premium. We also obtain a number of striking results: the second be...

Article history: Received 5 March 2012 Received in revised form 7 October 2012 Accepted 13 October 2012 Available online 22 October 2012 This paper explores the relationship between firms' investment and stock market liquidity. Using a panel of Latin American firms, I find evidence that a higher trading volume and a higher industry-adjusted trading volume are associated with higher firm investm...

Information problems and lack of collateral value should make R&D more susceptible to financing frictions than other investments, yet existing evidence on whether financing constraints limit R&D is decidedly mixed, particularly in studies of non-U.S. firms. We study a large sample of European firms and show that prior studies likely understate the impact of financing constraints on R&D because ...

We study how interactions between financing and investment decisions can shape firm boundaries in dynamic product markets. In particular, we model a new product market opportunity as a growth option and ask whether it is best exploited by a large incumbent firm (Integration) or by a separate, specialized firm (Non-Integration). Starting from a standard theoretical framework, in which value-maxi...

This paper provides a new approach for valuing a wide set of capital budgeting problems with many embedded real options dependent on many state variables and a related valuation algorithm based on Monte Carlo simulation. The valuation approach decomposes of a complex real option problem with many options into a set of simple options, but taking into account deviations from value additivity due ...

We show that in stark contrast to conventional wisdom, maturity transformation does not expose banks to significant interest rate risk. Aggregate net interest margins have been near-constant over 1955–2013, despite substantial maturity mismatch and wide variation in interest rates. We argue that this is due to banks’ market power in deposit markets. Market power allows banks to pay deposit rate...

This paper studies the dynamics of the IPO (Initial Public Offering) market and its effect on real investment decisions in emerging industries. We first propose a model of IPOs cycle based on divergence of opinion among investors and short-sale constraints. Using a real option approach, we show that firms are more likely to go public when the ratio of overvaluation over profits is high, that is...

In this paper we offer the first large sample evidence on the availability and usage of credit lines in U.S. public corporations and use it to re-examine the existing findings on corporate liquidity. We show that the availability of credit lines is widespread and that average undrawn credit is of the same order of magnitude as cash holdings. We test the trade-off theory of liquidity according t...