Investment decisions in troubled times: A Bayesian approach applied to Brazilian firms

Aquiles Elie Guimarães Kalatzis and Carlos Azzoni

International Journal of Production Economics, 2009, vol. 120, issue 2, 595-606

Abstract: This study analyses the investment decision of 497 Brazilian firms during a period of unstable macroeconomic conditions. The role of financial constraints is considered in a Bayesian econometric model. We estimate three different models, and the results indicate the presence of financial restrictions, especially for capital-intensive firms. The recursive predictive density criterion indicates that the most preferred model is the one in which firm-specific effects are correlated with cash-flow. Financial restrictions are more important for capital-intensive firms, probably due to their lower profitability indexes, higher fixed costs and higher degree of property diversification.

Keywords: Investment; decisions; Financial; restrictions; Bayesian; model; Capital; intensity (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (3)

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Working Paper: Investment Decisions in Troubled Times: a Bayesian Approach Applied to Brazilian Firms (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:120:y:2009:i:2:p:595-606

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