Author: Joachim K. WinterPublisher:
ISBN:
Category : Economics
Languages : en
Pages : 31
Book Description
Does Firms' Financial Status Affect Plant-level Investment Ans Exit Decisions
Author: Joachim K. WinterPublisher:
ISBN:
Category : Economics
Languages : en
Pages : 31
Book Description
Does Firms' Financial Status Affect Plant-level Investment and Exit Decisions?
Author: Joachim WinterInvestment and Exit Decisions at the Plant Level
Author: Joachim WinterPublisher: Springer Science & Business Media
ISBN: 3642998038
Category : Business & Economics
Languages : en
Pages : 192
Book Description
This book develops a dynamic programming framework for the analysis of firms' joint investment and market exit decisions and reviews methods for econometric estimation of such models. In an empirical application of this framework, a version of this model that allows for financial constraints is estimated by structural methods, using a plant-level dataset for a sample of U.S. firms. The empirical analysis shows that both the plant's productivity and firm-level financial constraints have important effects on plant-level investment and exit decisions. The main contribution of the book to the empirical investment literature is the application of a mixed discrete-continuous Markov process framework to investment and exit decisions, and the structural estimation using a full-information maximum-likelihood method, the nested fixed-point algorithm.
The Investment Decision: A Re-Examination of Competing Theories Using Panel Data
Author: Cherian SamuelPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
September 1996 For firms, the single most important determinant of capital spending appears to be cash flow. Firm managers care more about cash flow and cost of capital than about stock market signals and level of output. In the United States, gross business investments in plant and equipment (fixed investments) constitute only about 10 percent of GNP, but such investments may represent GNP's most important component because (1) plant and equipment have a long-term effect on the economy's productive capacity, (2) changes in investment spending directly affect levels of employment and workers' incomes in durable goods industries, and (3) supply and demand are sensitive to changes in investment, which is the most volatile component of GNP. Economists have long been concerned about what - in the economy, the industry, and the firm - determines investments in capital spending. Using a panel of data for U.S. manufacturing firms for 1972-90, Samuel compares five theories of investment: accelerator theory, cash flow theory (liquidity model, managerial model, and information-theoretic model), neoclassical theory, modified neoclassical (Bischoff) theory, and Q theory. If the results from cross-section regressions can be viewed as representing the long-term equilibrium, the single most important determinant of capital spending appears to be cash flow. Apparently, managers care more about cash flow and cost of capital than about stock market signals and the level of output. And at the firm level, managerial perceptions about fundamentals are more important than market perceptions. For managers, the stock market may be a side show to capital spending decisions. To generalize in a way that might be useful for developing countries: Financial decisions at the firm level are closely linked to real decisions in the economy. Internal finance is the most important source of funds, and capital spending is the most important use of funds, so there is a close relationship betwen real and financial decisions. This paper - a product of the Operations Policy Group, Operations Policy Department - is part of a larger effort in the department to disseminate results of policy analysis. The author may be contacted at [email protected].
The Investment Decision
Author: Cherian SamuelPublisher:
ISBN:
Category :
Languages : en
Pages : 60
Book Description
For firms, the single most important determinant of capital spending appears to be cash flow. Firm managers care more about cash flow and cost of capital than about stock market signals and level of output. In the United States, gross business investments in plant and equipment (fixed investments) constitute only about 10 percent of GNP, but such investments may represent GNP's most important component because (1) plant and equipment have a long-term effect on the economy's productive capacity, (2) changes in investment spending directly affect levels of employment and workers' incomes in durable goods industries, and (3) supply and demand are sensitive to changes in investment, which is the most volatile component of GNP.Economists have long been concerned about what - in the economy, the industry, and the firm - determines investments in capital spending. Using a panel of data for U.S. manufacturing firms for 1972shy;90, Samuel compares five theories of investment: accelerator theory, cash flow theory (liquidity model, managerial model, and information-theoretic model), neoclassical theory, modified neoclassical (Bischoff) theory, and Q theory.If the results from cross-section regressions can be viewed as representing the long-term equilibrium, the single most important determinant of capital spending appears to be cash flow. Apparently, managers care more about cash flow and cost of capital than about stock market signals and the level of output. And at the firm level, managerial perceptions about fundamentals are more important than market perceptions. For managers, the stock market may be a side show to capital spending decisions.To generalize in a way that might be useful for developing countries: Financial decisions at the firm level are closely linked to real decisions in the economy. Internal finance is the most important source of funds, and capital spending is the most important use of funds, so there is a close relationship betwen real and financial decisions.This paper - a product of the Operations Policy Group, Operations Policy Department - is part of a larger effort in the department to disseminate results of policy analysis. The author may be contacted at [email protected].
Irreversibility, Uncertainty, and Investment
Author: Robert S. PindyckPublisher: World Bank Publications
ISBN:
Category : Capital investments
Languages : en
Pages : 58
Book Description
Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.
Dead Firms
Author: Miguel M. TorresPublisher: Emerald Group Publishing
ISBN: 178635313X
Category : Business & Economics
Languages : en
Pages : 208
Book Description
Why do firms die? This volume explores international and cross-disciplinary perspectives, carrying out a forensic examination of 'how and why' companies die in order to understand the lessons 'dead firms' may have to offer.
The Investment Decision
Author: Cherian SamuelPublisher: World Bank Publications
ISBN:
Category : Business enterprises
Languages : en
Pages : 60
Book Description
Industrial Policy
Author: United States. Congress. House. Committee on Banking, Finance, and Urban Affairs. Subcommittee on Economic StabilizationPublisher:
ISBN:
Category : Capital investments
Languages : en
Pages : 1066
Book Description
Handbook of Econometrics
Author: Zvi GrilichesPublisher: Elsevier
ISBN: 0444887660
Category : Business & Economics
Languages : en
Pages : 1013
Book Description
The Handbook is a definitive reference source and teaching aid for econometricians. It examines models, estimation theory, data analysis and field applications in econometrics.