On Debt Financing and Investment Timing
This 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.
Volume (Year): 15 (2002)
Issue (Month): 2 (Autumn)
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- Howitt, Peter & Griffith, Rachel & Aghion, Philippe & Blundell, Richard & Bloom, Nick, 2005.
"Competition and Innovation: An Inverted-U Relationship,"
4481507, Harvard University Department of Economics.
- Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 701-728.
- Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and innovation: an inverted U relationship," IFS Working Papers W02/04, Institute for Fiscal Studies.
- Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and Innovation: An Inverted U Relationship," NBER Working Papers 9269, National Bureau of Economic Research, Inc.
- Vesa Kanniainen & Christian Keuschnigg, 2001.
"Start-Up Investment with Scarce Venture Capital Support,"
CESifo Working Paper Series
439, CESifo Group Munich.
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- Christian Keuschnigg, 2002. "Start-Up Investment With Scarce Venture Capital Support," University of St. Gallen Department of Economics working paper series 2002 2002-03, Department of Economics, University of St. Gallen.
- Kanniainen, V. & Keuschnigg, C., 2001. "Start-up Investment With Scarce Venture Capital Support," University of Helsinki, Department of Economics 503, Department of Economics.
- Lensink, Robert & Sterken, Elmer, 2001.
"Asymmetric information, option to wait to invest and the optimal level of investment,"
Journal of Public Economics,
Elsevier, vol. 79(2), pages 365-374, February.
- Lensink, Robert & Sterken, Elmer, 1999. "Asymmetric information, option to wait to invest and the optimal level of investment," CCSO Working Papers 199917, University of Groningen, CCSO Centre for Economic Research.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Vercammen, James, 2000. "Irreversible investment under uncertainty and the threat of bankruptcy," Economics Letters, Elsevier, vol. 66(3), pages 319-325, March.
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