English, Article, Journal or magazine article edition: Testing Financing Constraints on Firm Investment using Variable Capital Andrea Caggese

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Bookmark: http://trove.nla.gov.au/version/153913
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Testing Financing Constraints on Firm Investment using Variable Capital
Author
  • Andrea Caggese
Physical Description
  • preprint
Notes
  • We consider a dynamic multifactor model of investment with financing imperfections, adjustment costs and fixed and variable capital. We use the model to derive a test of financing constraints based on a reduced form variable capital equation. Simulation results show that this test correctly identifies financially constrained firms even when the estimation of firms’ investment opportunities is very noisy. In addition, the test is well specified in the presence of both concave and convex adjustment costs of fixed capital. We confirm empirically the validity of this test on a sample of small Italian manufacturing companies.
  • Financing Constraints, Investment
  • RePEc:upf:upfgen:1009
Language
  • English
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