Abstract

http://ssrn.com/abstract=2091854
 
 

References (173)



 
 

Citations (3)



 


 



Dynamic Models and Structural Estimation in Corporate Finance


Ilya A. Strebulaev


Stanford University - Graduate School of Business; National Bureau of Economic Research

Toni M. Whited


University of Rochester - Simon Business School; National Bureau of Economic Research

December 1, 2012

Final pre-publication version, published in Foundations and Trends in Finance 6 (2012), 1-163.

Abstract:     
We review the last two decades of research in dynamic corporate finance, focusing on capital structure and the financing of investment. We first cover continuous time contingent claims models, starting with real options models, and working through static and dynamic capital structure models. We then move on to corporate financing models based on discrete-time dynamic investment problems. We cover the basic model with no financing, as well as more elaborate models that include features such as costly external finance, cash holding, and both safe and risky debt. For all the models, we offer a minimalist, simplified presentation with a great deal of intuition. Throughout, we show how these models can answer questions concerning the effects of financial constraints on investment, the level of corporate leverage, the speed of adjustment of leverage to its target, and market timing, among others. Finally, we review and explain structural estimation of corporate finance models.

Number of Pages in PDF File: 159

Keywords: Dynamic Corporate Finance, Structural Estimation

JEL Classification: G3

Accepted Paper Series


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Date posted: June 25, 2012 ; Last revised: January 10, 2014

Suggested Citation

Strebulaev, Ilya A. and Whited, Toni M., Dynamic Models and Structural Estimation in Corporate Finance (December 1, 2012). Final pre-publication version, published in Foundations and Trends in Finance 6 (2012), 1-163.. Available at SSRN: http://ssrn.com/abstract=2091854 or http://dx.doi.org/10.2139/ssrn.2091854

Contact Information

Ilya A. Strebulaev
Stanford University - Graduate School of Business ( email )
655 Knight Way
Stanford, CA 94305-5015
United States
HOME PAGE: http://faculty-gsb.stanford.edu/strebulaev/

National Bureau of Economic Research ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Toni M. Whited (Contact Author)
University of Rochester - Simon Business School ( email )
Rochester, NY 14627
United States
HOME PAGE: http://toni.marginalq.com

National Bureau of Economic Research ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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