|
|
|
|
||||
|
||||
A Unified Theory of Tobin's Q, Corporate Investment, Financing, and Risk ManagementPatrick BoltonColumbia Business School - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI) Hui ChenMassachusetts Institute of Technology Neng WangColumbia Business School - Finance and Economics February 8, 2011 Journal of Finance, Forthcoming AFA 2010 Atlanta Meetings Paper Abstract: We propose a model of dynamic corporate investment, financing, and risk management for a financially constrained firm. The model highlights the central importance of the endogenous marginal value of liquidity (cash and credit line) for corporate decisions. Our three main results are: 1) investment depends on the ratio of marginal q and marginal value of liquidity, and the relation between investment and marginal q changes with the marginal source of funding; 2) optimal external financing and payout are characterized by an endogenous double barrier policy for the firm's cash-capital ratio; 3) liquidity management and derivatives hedging are complementary risk-management tools.
Number of Pages in PDF File: 50 Keywords: investment, q theory, cash management, liquidity, hedging, payout, financing JEL Classification: G3, E22 Accepted Paper SeriesDate posted: March 19, 2009 ; Last revised: July 12, 2011Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo7 in 0.406 seconds
