On Debt Financing and Investment Timing
AbstractThis paper studies the relationship between debt-financing and the timing of investment, under asymmetric information. In particular we show that an option to delay raises the average profitability of firms who choose to invest immediately, thereby reducing the market interest rate on debt. Moreover, the option to delay is shown to be welfare improving.
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Bibliographic InfoArticle provided by Finnish Economic Association in its journal Finnish Economic Papers.
Volume (Year): 15 (2002)
Issue (Month): 2 (Autumn)
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
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