Bibliographic Details
| Title: |
How Do Frictions Affect Corporate Investment? A Structural Approach. |
| Authors: |
Bustamante, M. Cecilia |
| Superior Title: |
Journal of Financial & Quantitative Analysis. Dec2016, Vol. 51 Issue 6, p1863-1895. 33p. |
| Subject Terms: |
*MATHEMATICAL models of investments, *INVESTMENT policy, *CORPORATE finance, *ECONOMIC forecasting, LATTICE theory |
| Abstract: |
This paper provides a structural approach to testing investment equations based on the log-likelihood function of a nonlinear investment rule. The analysis integrates the predictions of the q-theory for the commonly studied active region of investment and provides new inferences on how real and financing frictions affect the probability that a firm invests. The empirical findings are consistent with the macro-finance literature suggesting that q-theory models with nonconvex investment frictions better explain the data. I also find that both real and financing costs of investment are related to the capital intensity of the industry in which firms operate. [ABSTRACT FROM PUBLISHER] |
|
Copyright of Journal of Financial & Quantitative Analysis is the property of Cambridge University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) |
| Database: |
Business Source Premier |