Real options analysis seeks to value flexibility in investment opportunities – both the flexibility offered to management once the investment is undertaken, and the flexibility of delaying the investment through time. The real options approach contrasts with the standard approach to investment decision making, the net present value (NPV) approach, which assumes the investment opportunity is a n...

a r t i c l e i n f o We re-evaluate the cash flow–investment relation from a new angle in a setting where the firm can access capital markets and faces different investment opportunity sets. Instead of replying on cash flow, we introduce other forms of finance to interact with investment. We find that financial variables enter significantly into the investment regressions at different timing. ...

By considering the demand and supply effects of defense investment and the uncertainty of the stochastic process of the production and defense investment, this study proposes a stochastic endogenous growth model to explore the impact of defense investment on economic growth. The results suggest that the relationship between defense investment and economic growth rate is nonlinear and obtains th...

Firms’systematic risk falls (increases) sharply following investment (disinvestment). This risk dynamics is driven by real investment and not by changes in …rm characteristics and is strongest among …rms with valuable investment opportunities, highly irreversible investment and low operating leverage. Consistent with rational pricing, …rms with poor investment opportunities, those most likely t...

While most models with financial market imperfections predict investment by financially constrained firms to be more sensitive to financial variables, contracting models argue that investment by such firms should be more sensitive to fundamental determinants of investment because fundamentals capture both investment opportunities and changes in the financial position. By first grouping U.S. man...

The classical portfolio problem is a problem of distributing capital to a set of securities. By generalizing the set of securities to a set of investment strategies (or security-rule pairs), this study proposes an investment strategy portfolio problem, which becomes a problem of distributing capital to a set of investment strategies. Since the investment strategy portfolio problem can be formul...

a r t i c l e i n f o This paper uses a real-option model to examine the net benefit to a government from using tax cut and/or investment subsidy as incentives to induce immediate investment. Although earlier papers generally concluded that investment subsidy dominates tax cut, it is observed that many governments use a combination of subsidy and tax cut. We show that, when the government uses ...

financial literacy of investors reduces uncertainty on future decisions and increases predictability of investment policies in financial markets. thus, the lack of clear information on financial markets is a determining factor in the arrival of domestic and foreign capitals and their quick exit in case of crisis. the lack of transparency and basic knowledge on decisions and failure to provide r...

Today, investors consider a wide range of factors for choosing an investment. Effective factors on investor decisions are wider than ever before and the results of these decisions will have an impact on the lives of people. In this research, the role of the role Subjective behaviors based on economic behavior and financial intelligence have been investigated on the investment decision process. ...