Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
984383 | Research in Economics | 2010 | 11 Pages |
Abstract
This paper explores the investment decision of a firm facing both an irreversibility constraint and a financial constraint on investment. I show that, for all but the fastest growing firms, the planned investment delaying impact of an irreversibility constraint dominates the planned investment accelerating impact of a financing constraint. This result is especially likely to hold in a reality where firms have a variety of strategies not modeled here, from holding cash reserves to taking on debt, that can mitigate the financing constraint.
Related Topics
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Economics and Econometrics
Authors
M. Kevin McGee,