IDEAS home Printed from https://ideas.repec.org/p/anc/wpaper/79.html
   My bibliography  Save this paper

Firm's optimal capital accumulation path with asymmetric informations and debt instead of equity finance

Author

Listed:
  • Marco GALLEGATI

    (Universit… Politecnica delle Marche, Dipartimento di Economia)

Abstract

Two Euler equations are obtained from a firm's investment intertemporal dvnamic model where debt finance is the onlv external source of funds and firms face borrowing constraints in the form of a limit to the maximum amount of outstanding debt. As suggested by the hierarchy of finance model they represent the optimal capital accumulation path for firms belonging to different financing regimes. The Euler equations differ for a discount factor function of the nominal interest rate on debt for liquidity constrained firms and of the rate of return on retentions for unconstrained firms. Then, when asymmetric information is a characteristic of the financial markets, liquidity constrained firms will be characterized by a lower optimal capital accumulation path than the unconstrained ones.

Suggested Citation

  • Marco GALLEGATI, 1996. "Firm's optimal capital accumulation path with asymmetric informations and debt instead of equity finance," Working Papers 79, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  • Handle: RePEc:anc:wpaper:79
    as

    Download full text from publisher

    File URL: http://docs.dises.univpm.it/web/quaderni/pdf/079.pdf
    File Function: First version, 1996
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:anc:wpaper:79. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maurizio Mariotti (email available below). General contact details of provider: https://edirc.repec.org/data/deancit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.