A common perspective in macro-finance analyses links firms’ borrowing constraints to the liquidation value of physical assets firms pledge as collateral. We empirically investigate borrowing by non-financial firms in the US. We find that 20% of corporate debt by value is collateralized by specific physical assets (“asset-based lending” in creditor parlance), while 80% is based predominantly on ...

We provide the first direct estimates of how agents trade off immediate costs and uncertain future benefits that occur in the very long run, 100 or more years away. We find that very longrun discount rates are low, much lower than implied by most economic theory. We estimate these discount rates by exploiting a unique feature of residential housing markets in England, Wales and Singapore, where...

This work aims to apply genetic algorithms (GA) and particle swarm optimization (PSO) to managing cash balance, comparing performance results between computational models and the Miller-Orr model. Thus, the paper proposes the application of computational evolutionary models to minimize the total cost of cash balance maintenance, obtaining the parameters for a cash management policy, using assum...

This paper examines the extent of firm level over-investment of free cash flow. Using an accounting-based framework to measure overinvestment and free cash flow, I find evidence that, consistent with agency cost explanations, over-investment is concentrated in firms with the highest levels of free cash flow. Further tests examine whether firms’ governance structures are associated with over-inv...

Agency cost theory is an important branch of capital structural theory. Free cash flow has significant impact on agency cost. The combination of research on these two fields would help to build and extend the theoretical system. Based on agency cost theory, the present study firstly categorized the characteristics of free cash flow as well as the statistical methodologies. Furthermore, the exis...

2 The Dedication, or Cash-Flow Matching (CFM) Model. 3 2.1 The Deterministic Case . . . . . . . . . . . . . . . . . . . . . 4 2.1.1 Short-term reinvesting and borrowing . . . . . . . . . 5 2.1.2 Tradeability Considerations . . . . . . . . . . . . . . . 6 2.1.3 Transactions costs . . . . . . . . . . . . . . . . . . . . 8 2.1.4 Rebalancing an existing portfolio . . . . . . . . . . . . 8 2.1.5 Tim...

This paper provides new evidence on the predictive power of dividend yields for U.S. aggregate stock returns. Following Miller and Modigliani, we construct a measure of the dividend yield that includes all cash flows to shareholders. We show that this alternative cash-flow yield has strong and stable predictive power for returns, and appears robust to a battery of tests that have been proposed ...