The influence of financial constraints and real options on corporate investment decisions

Ekaterina Kuzmicheva () and Kirill Kuzmichev
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Ekaterina Kuzmicheva: National Research University Higher School of Economics (Nizhny Novgorod, Russia)

HSE Working papers from National Research University Higher School of Economics

Abstract: This paper presents evidence of the negative combined effect of financial constraints and real options on corporate investment. Using panel data on public companies functioning in developed countries, the authors prove that with increasing uncertainty surrounding a firm, the real options effect increases the influence of financial constraints on investment. To this end we have found the threshold value of the option multiple, which switches the uncertainty regimes from relatively high to relatively low, and we have constructed an index of financial constraints.

Keywords: investment decisions; index of financial constraints; real options to delay (search for similar items in EconPapers)
JEL-codes: C12 C23 C24 D22 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2013
New Economics Papers: this item is included in nep-acc
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Published in WP BRP Series: Financial Economics / FE, September 2013, pages 1-21

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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:17/fe/2013

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