The effects of external financing costs on investment timing and sizing decisions

Material type: 文書・図像類

Author: Nishihara, Michiほか

Publisher: Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University

Publication date: 2012-04

Material Format: Paper

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Note (General)：: We develop a dynamic model in which a firm exercises an option to expand productionon either a small or large scale with cash reserves and costly exte...

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Paper

Material Type: 文書・図像類
Title: The effects of external financing costs on investment timing and sizing decisions
Author/Editor: Nishihara, Michi
Shibata, Takashi
Author Heading: Nishihara, Michi
https://nrid.nii.ac.jp/nrid/1000020456940
Shibata, Takashi
https://nrid.nii.ac.jp/nrid/1000070372597
Publication, Distribution, etc.: Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University
Publication Date: 2012-04
Publication Date (W3CDTF): 2012-04
Periodical title: Discussion Papers In Economics And Business
No. or year of volume/issue: 12-07
Volume: 12-07
Text Language Code: eng
Subject Heading: Investment timing
Investment size
Costly external financing
Optimal stopping
Target Audience: 一般
Note (General): We develop a dynamic model in which a firm exercises an option to expand productionon either a small or large scale with cash reserves and costly external funds. We show thatthe financing costs greatly distort the firm's financing and investment behavior and resultin a policy contingent on the dynamics of the cash flow and reserves. Most notably, weprove that an intermediate level of cash reserves is likely to accelerate investment in thesmall-scale project by interactions among financing costs, investment timing, and investmentsizing. Our results fill the gap between two types of results: (i) empirical findings ina U-shaped relation between the investment volume and internal funds, and (ii) empiricalpredictions of a U-shaped relation between the investment timing and internal funds.
References (URI): http://www2.econ.osaka-u.ac.jp/library/global/dp/1207.pdf
URI
http://www2.econ.osaka-u.ac.jp/library/global/dp/1207.pdf
Data Provider (Database): 国立情報学研究所 : 学術機関リポジトリデータベース（IRDB）（機関リポジトリ）
https://irdb.nii.ac.jp
Original Data Provider (Database): 大阪大学 : 大阪大学学術情報庫　桜華