Asset liquidity, corporate investment, and endogenous financing costs
| Autor: | Stefan Hirth, Christian Riis Flor |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2013 |
| Předmět: |
Finance
Economics and Econometrics business.industry Liquidity crisis Financial system Financing constraints Investment (macroeconomics) Liquidity risk Market liquidity Internal financing Corporate investment Redeployability Asset liquidity External financing Asset (economics) Business Liquid funds Open-ended investment company |
| Zdroj: | Flor, C R & Hirth, S 2013, ' Asset liquidity, corporate investment, and endogenous financing costs ', Journal of Banking & Finance, vol. 37, no. 2, pp. 474-489 . https://doi.org/10.1016/j.jbankfin.2012.09.014 University of Southern Denmark Flor, C R & Hirth, S 2010, ' Asset Liquidity, Corporate Investment, and Endogenous Financing Costs ', Paper presented at 17th annual meeting of German Finance Association, Hamburg, Germany, 08/10/2010-09/10/2010 . |
| DOI: | 10.1016/j.jbankfin.2012.09.014 |
| Popis: | We analyze how the liquidity of real and financial assets affects corporate investment. The trade-off between liquidation costs and underinvestment costs implies that low-liquidity firms exhibit negative investment sensitivities to liquid funds, whereas high-liquidity firms have positive sensitivities. If real assets are not divisible in liquidation, firms with high financial liquidity optimally avoid external financing and instead cut new investment. If real assets are divisible, firms use external financing, which implies a lower sensitivity. In addition, asset redeployability decreases the investment sensitivity. Our findings demonstrate that asset liquidity is an important determinant of corporate investment. |
| Databáze: | OpenAIRE |
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