search query: @author Stenbacka, R. / total: 13
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| Author: | Stenbacka, R. Tombak, M. |
| Title: | Investment, Capital Structure, and Complementarities Between Debt and New Equity |
| Journal: | Management Science
2002 : FEB, VOL. 48:2, p. 257-272 |
| Index terms: | INVESTMENT INVESTMENT ANALYSIS CAPITAL STRUCTURE OF COMPANIES DEBT |
| Language: | eng |
| Abstract: | The authors study simultaneous investment and financing decisions made by incumbent owners in the presence of capital market imperfections. The authors present a theory for how the optimal combination of debt and equity financing depends on the firm's internal funds. The authors identify complementarities between the two financial instruments. The authors test these predictions empirically with panel data on 3,119 corporations in the COMPUSTAT database. The authors' estimates using instrumental variable techniques support the authors' theoretical predictions regarding the link between internal funds and capital investments, as well as the interaction effects between debt and new equity. The authors explore implications for managers, financiers, and policy makers. |
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