This paper investigates the relation between the degree of creditors’ legal protection and corporate decisions and the effects of this interaction on aggregate activity, both theoretically and empirically. We develop a two country general equilibrium model with overlapping generations. We assume asymmetric information in the credit market and we allow individuals to sign collateralized credit c...

We outline a simple model in which optimizing firms choose corporate investment, external financing, and cash holding decisions simultaneously. The model generates predictions for the responsiveness of the above three corporate financial decisions to cash flow shocks and firm misvaluation, as well as new predictions for the crosseffects of misvaluation on the cash flow sensitivities of these co...

Investment and financing decisions are generally made under the assumption of a given objective function. Deriving growth from the value of a firm, however, requires the initial size and discount rates to be known a priori. The presentation of financial planning as a standard dynamic optimization problem usually works with overly restrictive assumptions. As an alternative, it is proposed to arr...

todays, the parent company has a great role in managing and monitoring subsidiaries and companies in promoting their industrial activities. but, the main problem for pharmaceutical parent companies is the lack of clarity and confusion of responsibilities between units. successful parenting needs to create the element of 'fit' between the ways parent operates – parent characteristics –...

A B S T R AC T This study examined the moderating influence of two top management team (TMT) characteristics, namely managers possessing an MBA education or prior military experience, on the relationships between firm size and corporate criminal activity, and firm strategy and corporate criminal activity. The study utilized data from 184 Fortune 500 companies. The results suggest that both grad...

We extend the theoretical model of external corporate financing to the case when the buyers of the borrowing firm may default during the financing period. In our setup there is an asymmetric information and hence moral hazard between the lender and the borrower concerning the effrts of the borrower. We define the optimal debt contract in two cases. In the symmetric case the lender and the borro...

Information Technology Portfolio Management (ITPM) is a topic of intense interest in the strategic management of information technology (IT). In ITPM, IT synchronization with corporate business strategy is operationalized by the application of the principles of financial portfolio management to IT investments. This perspective is crucial to the continual alignment of business strategy and IT in...

We empirically examine whether firms engage in a dynamic rebalancing of their capital structures while allowing for costly adjustment. We begin by showing that the presence of adjustment costs has significant implications for corporate financial policy and the interpretation of previous empirical results. After confirming that financing behavior is consistent with the presence of adjustment cos...