The Cross-sectional Determinants of Corporate Capital Expenditures: A Multinational Comparison
This study predicts cross-sectional investment (capital expenditure) changes in the U.S., Canada, Great Britain, Europe, and Japan. We find that lagged stock returns are the most important cross-sectional (and positive) predictors of investment (capital expenditure) increases in all five countries. Japanese and European firms' investment may respond less to stock returns than large U.S. firms, whereas Canadian and British firms' investment may respond more to stock returns than large U.S. firms. However, the differences between the Japanese and European firms on one hand and large U.S. firms on the other hand are minor. Other predictors of capital expenditures are also examined.
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