Article history: Received 6 February 2008 Accepted 14 May 2008 Available online 20 May 2008 JEL classification: C63 G11 G31 G39

We study the life cycle of a firm that produces good unknown quality. The manages its quality by investing while consumers learn via public breakthroughs; if fails to generate such breakthroughs, revenue falls and it eventually exits. Optimal investment depends on firm’s reputation (the market’s belief about quality) self-esteem own quality), is single-peaked in time since breakthrough. derive ...

Business credit lags GDP growth by about one year. This contributes to high leverage during recessions and slow deleveraging. We show that a model in which firms use risky long-term debt replicates this adjustment of firm debt. In the model, slow-moving has important effects for real activity. High levels issued expansions are only gradually reduced recessions. generates an adverse feedback loo...

General purpose technologies (GPTs) like AI enable and require significant complementary investments. These investments are often intangible poorly measured in national accounts. We develop a model that shows how this can lead to underestimation of productivity growth new GPTs early years and, later, when the benefits harvested, overestimation. call phenomenon Productivity J-curve. apply our me...

The objective of this study is to provide an alternative characterization of the optimal value function of a certain BlackScholes-type optimal stopping problem where the underlying stochastic process is a general random walk, i.e. the process constituted by partial sums of an IID sequence of random variables. Furthermore, the pasting principle of this optimal stopping problem is studied. JEL Cl...

We model the production of complex goods in a large supply network. Each firm sources several essential inputs through relationships with other firms. Individual are at risk idiosyncratic failure, which threatens to disrupt production. To protect against this, firms multisource and strategically invest make stronger, trading off cost investment benefits increased robustness. A network is called...

ABSTRACT We examine the real effects of lease-capitalization rules (i.e., standards that require firms to capitalize finance leases) on corporate investment. show introduction these leads a decrease in investment, which is more pronounced for with high reliance leases. posit and find lease capitalization affects investment via learning channel contracting channel. Regarding first channel, we ar...

t he relationship between the price of oil and the level of economic activity is a fundamental empirical issue in macroeconomics. in this research, by using a multivariate garch-in-mean var, we try to investigate direct effects of uncertainty of oil price on macroeconomics of iran by using annually data from 1965 to 2013.results show that uncertainty about oil prices had a negative and signific...

Objective - This study aims to examine whether the condition of bankruptcy risk a company will influence market response capital expenditure. The main hypothesis this research is that positive reaction level expenditure issued be different in companies with high and low risk. Methodology/Technique was conducted on 56 large capitalization Indonesia Stock Exchange for 2018-2021. Findings results ...

We show that sovereign debt impairments can have a significant impact on financial markets and real economies through a credit ratings channel. Specifically, we find that firms reduce their investment and reliance on credit markets due to a rising cost of debt capital following a sovereign rating downgrade. We identify these effects by exploiting exogenous variation on corporate ratings due to ...