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Real Options in a Dynamic Agency Model, with Applications to Financial Development, IPOs, and Business Risk

Thomas Philippon () and Yuliy Sannikov

No 13584, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study investment options in a dynamic agency model. Moral hazard creates an option to wait and agency conflicts affect the timing of investment. The model sheds light, theoretically and quantitatively, on the evolution of firms' dynamics, in particular the decline of the failure rate and the decrease in the age of IPOs.

JEL-codes: D82 D86 D92 E22 G31 G32 G33 (search for similar items in EconPapers)
Date: 2007-11
New Economics Papers: this item is included in nep-bec, nep-fmk and nep-mac
Note: CF EFG
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