Financing Investment

Gomes, Jacqueline Ramos de Andrade Antunes

doi:10.1257/aer.91.5.1263

Cited by 839 publications

(650 citation statements)

References 28 publications

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“…An interesting avenue for future research would be to evaluate empirically models that incorporate both types of frictions (e.g., Gomes, 2001;DeAngelo, DeAngelo, and Whited, 2011), to derive their joint distribution in the cross section of firms. Although such models are characterized by a higher number of state variables, recent developments in numerical integration methods (Judd, Maliar, and Maliar, 2011) and the use of parallel computing (Aldrich, Fernandez-Villaverde, Gallant, and Rubio-Ramirez, 2011) alleviate the computational burden required for estimation.…”

Section: Resultsmentioning

confidence: 99%

Technological Heterogeneity and Corporate Investment

Dimopoulos

Sacchetto

2015

SSRN Journal

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We study a dynamic model of corporate investment with fixed and convex capital adjustment costs, and estimate the parameters of the model separately for each firm in a sample of U.S. companies. We evaluate empirically the degree of parameter heterogeneity among firms; quantify the cross-sectional distribution of capital adjustment costs; and assess the magnitude of the estimation bias when one assumes that firms are characterized by a homogeneous set of parameter values. The results show that a considerable amount of parameter heterogeneity exists across firms. Average fixed adjustment costs are 1.15% of the firm's capital, they account for the majority of total adjustment costs, and they are underestimated when assuming parameter homogeneity across firms. Adjustment costs decline with firm size, and convex adjustment costs are positively related to a firm's average merger and acquisition expenditure.JEL Classifications: D21, D92, E22, L11

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Section: Resultsmentioning

confidence: 99%

Technological Heterogeneity and Corporate Investment

Dimopoulos

Sacchetto

2015

SSRN Journal

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“…The model is written in the spirit of Gomes (2001) while also taking elements from Melitz (2003) and Helpman, Melitz and Yeaple (2003). The model is from the viewpoint of firms incorporated in the U.S..…”

Section: Oecd Countriesmentioning

confidence: 99%

Section: Oecd Countriesmentioning

confidence: 99%

“…The model closely follows the setup of Gomes (2001), while also borrowing several aspects from Helpman, Melitz and Yeaple (2003). Heterogeneity in the model originates from firms receiving differential productivity draws in each period.…”

Section: Structural Model Environmentmentioning

confidence: 99%

“…Following the draw, the firms make an extensive margin decision -they can opt to exit the industry, compete only in the U.S. market or operate in both the U.S. and abroad with a parentforeign subsidiary setup. Firms are subject to costly equity financing in the form introduced by Gomes (2001) and are allowed to undertake collateralised borrowing where they can borrow against their capital stocks in each country of operation.The numerical results of the model suggest that the current U.S. worldwide system of taxation acts to distort both the financial policy and investment decisions of U.S. multinationals. They show that moving to the territorial tax system would result in a fall in 4 the U.S. capital stock of around 1.5%, while increasing domestic output by a little under 4%.…”

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confidence: 99%

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Policy Effects of International Taxation on Firm Dynamics and Capital Structure

Spencer

2016

SSRN Journal

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I develop and calibrate an industry equilibrium model with heterogeneous multinational firms to study the impact of a potential policy change from the current U.S. worldwide taxation system to a territorial system on firm investment, capital structure, payout policy and tax revenues. Firms in the model make both intensive and extensive margin decisions in terms of overseas investment. They optimally choose dividend payments to shareholders, holdings of riskless debt securities and earnings repatriations from the subsidiary to the parent in each period. To estimate the impact of the policy change, I solve the model under both worldwide and territorial systems and compare the stationary equilibria. The results show that the policy change causes both domestic and overseas production by U.S. firms to rise. In addition, firms borrow more and pay larger dividends to shareholders. These effects on firm variables are coupled with a rise in U.S. Government tax collections. * I thank Oliver Levine and my advisor, Dean Corbae, for some valuable discussions that helped me to develop this project and to get it off the ground. Comments received by Mark Ready, Michael Gofman and David Brown have also been particularly helpful. I'm grateful to participants at the 2017 Midwest Finance Association Annual Meeting and in particular, thankful to Joseph Farhat for giving a helpful discussion. I'm also appreciative for suggestions during the Spring 2016 Midwest Macro Meeting at Purdue University in addition to those provided during the macroeconomics brownbag, the macro-finance reading group and the finance brownbag all at UW -Madison. I am also thankful for funding provided by the Culbertson Prize, the Richard E. Stockwell Fellowship and a Summer Research Fellowship awarded by the economics department and generous support from the finance department at UW -Madison. I'm also fortunate to have received outstanding computational support from the Center for High Throughput Computing (CHTC). All remaining errors are my own. (HM Government, 2013). The Japanese reasons for change were more related to fear over funds being trapped overseas. The idea was that the policy change would result in more funds being brought back to Japan, resulting in higher domestic investment and employment (Altshuler, Shay and Toder, 2015).There has been an ongoing debate in the U.S. in recent years surrounding the need for this potential tax policy change. It is an issue, which has been debated by academics, politicians and the media. One major point of controversy in the debate surrounds the deferrability of active foreign earnings in the current system, (see section II for more details). This particular aspect of the U.S. tax code has allowed many large firms to hold-off on repatriating their overseas earnings and to accumulate large amounts of funds abroad.U.S. politicians have expressed concern regarding this behaviour by firms along the dimension that it may be serving the firms at the expense of domestic economic activity. In response, the 2004 Ho...

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Two Decades of Big Data in Finance

Altaf

2021

Big Data Analytics for Internet of Things

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Financing Investment

Cited by 839 publications

References 28 publications

Technological Heterogeneity and Corporate Investment

Technological Heterogeneity and Corporate Investment

Policy Effects of International Taxation on Firm Dynamics and Capital Structure

Two Decades of Big Data in Finance

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