Firm Market Value and Investment: The Role of Market Power and Adjustment Costs∗
نویسندگان
چکیده
Barnett and Sakellaris (1999) show that the responsiveness of investment to Tobin’s Q is highly nonlinear, using a modified neoclassical investment model with linearly homogenous profit and capital adjustment cost functions, both of which are questioned by recent studies. In this paper, a dynamic investment model with convex and nonconvex adjustment costs as well as firm market power is simulated to replicate the empirical results of Barnett and Sakellaris in order to better understand the foundations of empirical results based on Qtheory models. The structural parameters of the model are estimated using an indirect inference methodology.
منابع مشابه
Labour and the Market Value of the Firm
Labour and the Market Value of the Firm What role does labour play in firms’ market value? We explore this question using a production-based asset-pricing model with frictions in the adjustment of both capital and labor. We posit that hiring of labour is akin to investment in capital and that the two interact, with the interaction being a crucial determinant of market value behaviour. We use ag...
متن کاملA Note on Competitive Investment under Uncertainty by
This paper clarifies how uncertainty affects irreversible investment in a competitive market equilibrium. With free entry, irreversibility affects the distribution of future prices, and thereby creates an opportunity cost of investing now rather than waiting. As with an imperfectly competitive firm, uncertainty can also increase the value of a marginal unit of capital. I show that with an infin...
متن کاملThe Impact of Corporate income Tax and Firm Size on Fixed Investment
This paper is an attempt to analyze the impact of income taxes and market capitalization on fixed investment (investment in tangible assets) by manufacturing companies listed on KSE. This paper basically examines that how corporate income taxes affect fixed investment by reducing cash flow available for a firm to invest and how the firm size in the lights of market capitalization affects fixed ...
متن کاملCosts of intangibles and rents from market power in the valuation and investment of the multi-assets firm
In this paper we examine the determinants of economic value and investment behavior of the multi-asset firm when the firm internally produces intangible assets in the process of making fully productive the externally purchased ones and it has market power. The theoretical models are estimated with data from Spanish banks on material (branches, financial), immaterial (advertising and IT) and int...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
دوره شماره
صفحات -
تاریخ انتشار 2007