Does Firms` Financial Status Affect Plant-Level Investment and Exit Decision
AbstractThis paper investigates the influence of a firm's financial status on the within-firm allocation of funds, reflected in its plant-level investment and exit decisions. In the empirical analysis, financial status is measured by both standard measures and an indicator variable recently suggested by Kaplan and Zingales. Based on these firm-level financial variables and on plant-level investment and production data from the U.S. Census Bureau's Longitudinal Research Database (LRD), econometric models of plant operating regimes are estimated which summarize investment and exit decisions. The empirical evidence supports the view that firm-level financial status affects investment and market exit decisions observed at the plant level.
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Bibliographic InfoPaper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 98-48.
Length: 31 pages
Date of creation: 01 Nov 1998
Date of revision:
Note: Financial Support from Deutsche Forschungsgemeinschaft, SFB 504 at the University of Mannheim, is gratefully acknowledged.
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Other versions of this item:
- Joachim K Winter, 1999. "Does Firms' Financial Status Affect Plant-Level Investment and Exit Decisions?," Working Papers 99-3, Center for Economic Studies, U.S. Census Bureau.
- NEP-ALL-1999-08-27 (All new papers)
- NEP-CFN-1999-08-27 (Corporate Finance)
- NEP-FIN-1999-08-27 (Finance)
- NEP-IND-1999-08-27 (Industrial Organization)
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