Dynamic Investment Models and the Firm's Financial Policy

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ID: 298624
1994
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Abstract
In this paper we investigate the sensitivity of investment to the availability of internal funds using the hierarchy of finance approach to corporate finance. We characterize the empirical implications of this approach for dynamic investment models and test these implications using firm-level data. The model we estimate is based on the Euler equation for optimal capital accumulation in the presence of convex adjustment costs. The theoretical model explicitly allows for debt finance and financial assets. The empirical investigation uses U.K. company panel data to estimate dynamic investment models using GMM and tests the derived implications.
Reference Key
openalex_W1529832501 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Stephen Bond, Costas Meghir
Journal The Review of Economic Studies
Year 1994
DOI
10.2307/2297978
URL
https://doi.org/10.2307/2297978
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