haku: @author Hennessy, C. A. / yhteensä: 2
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| Tekijä: | Hennessy, C. A. Levy, A. Whited, T.M. |
| Otsikko: | Testing Q theory with financing frictions |
| Lehti: | Journal of Financial Economics
2007 : MAR, VOL 83:3, p. 691-717 |
| Asiasana: | financing investment debt capital investments |
| Vapaa asiasana: | Q-theory |
| Kieli: | eng |
| Tiivistelmä: | The article develops a Q theory of investment under financing constraints. The firm invests and saves optimally facing three important frictions: convex costs of external equity, overhang from outstanding debt, and collateral constraints on new borrowing. Model predicts that overhang and costs of external equity discourage investment. Firms anticipating collateral constraints invest more today. That is because they experience a side benefit from investing as installed capital relaxes future constraints. According to the study, empirical tests support the model. The study uses Kaplan and Zingales and the Whited and Wu indices to proxy for firms anticipating binding collateral constraints. Both indices enter investment regressions positively, as model suggests. |
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