ABSTRACT We propose a model of dynamic investment, financing, and risk management for financially constrained firms. The highlights the central importance endogenous marginal value liquidity (cash credit line) corporate decisions. Our three main results are: (1) investment depends on ratio q to liquidity, relation between changes with source funding; (2) optimal external financing payout are characterized by an double‐barrier policy firm's cash‐capital ratio; (3) derivatives hedging...

Abstract We develop a dynamic asset pricing model of cryptocurrencies/tokens that allow users to conduct peer-to-peer transactions on digital platforms. The equilibrium price tokens is determined by aggregating heterogeneous users’ transactional demand, rather than discounting cash flows as done in standard valuations models. Endogenous platform adoption builds user network externality and exhibits an $S$-curve: it starts slow, becomes volatile, eventually tapers off. introduction lowers...

ABSTRACT We develop an analytically tractable model integrating dynamic investment theory with optimal incentive contracting, thereby endogenizing financing constraints. Incentive contracting generates a history‐dependent wedge between marginal and average q , both vary over time as good (bad) performance relaxes (tightens) Financial slack, not cash flow, is the appropriate proxy for Investment decreases idiosyncratic risk, positively correlated past profits, investment, managerial...

ABSTRACT The separation of ownership and control allows controlling shareholders to pursue private benefits. We develop an analytically tractable dynamic stochastic general equilibrium model study asset pricing welfare implications imperfect investor protection. Consistent with empirical evidence, the predicts that countries weaker protection have more incentives overinvest, lower Tobin's q , higher return volatility, larger risk premia, interest rate. Calibrating Korean economy reveals...

How likely is a catastrophic event that would substantially reduce the capital stock, GDP, and wealth? much should society be willing to pay probability or impact of catastrophe? We answer these questions provide framework for policy analysis using general equilibrium model production, accumulation, household preferences. Calibrating economic financial data, we estimate mean arrival rate shocks their size distribution, tax on consumption accept limit maximum shock, cost insure against its...

We develop a dynamic contingent-claim framework to model S. Myers's idea that firm is collection of growth options and assets in place. The firm's composition between place evolves endogenously with its investment opportunity set financing options, as well leverage default decisions. trades off tax benefits the potential financial distress endogenous debt-overhang costs over life cycle. Unlike standard capital structure models Leland, our shows anticipated decisions have significant...

Journal Article Entrepreneurial Finance and Nondiversifiable Risk Get access Hui Chen, Chen MIT Sloan School of Management NBER Search for other works by this author on: Oxford Academic Google Scholar Jianjun Miao, Miao Boston University, CEMA, Central University Economics, Zhongnan Economics Law Neng Wang Columbia NBER, Shanghai The Review Financial Studies, Volume 23, Issue 12, December 2010, Pages 4348–4388, https://doi.org/10.1093/rfs/hhq122 Published: 08 November 2010

We investigate whether the performance of private equity (PE) investments is sufficient to compensate investors (LPs) for risk, long-term illiquidity, management, and incentive fees charged by general partner (GP). analyze LPs' portfolio-choice problem find that management fees, carried interest, illiquidity are costly, GPs must generate substantial alpha LPs bearing these costs. Debt cheap reduces costs, potentially explaining high leverage buyout transactions. Conventional interpretations...

ABSTRACT A risk‐averse entrepreneur with access to a profitable venture needs raise funds from investors. She cannot indefinitely commit her human capital the venture, which limits firm's debt capacity, distorts investment and compensation, constrains entrepreneur's risk sharing. This puts dynamic liquidity state‐contingent allocation at center of corporate financial management. The firm balances mean‐variance efficiency preservation slack. We show that in general net worth is overexposed...

Bimetallic steel bar (BSB) consisting of S30408 stainless (cladding layer) and HRB400 carbon (substrate) has outstanding durability, indicating its suitability for RC structures in corrosive environments. The effects fire on the mechanical properties BSB relation to metallographic structure (MS) were investigated experimentally by exposing specimens different elevated temperatures cooling methods. When exposure temperature (ET) was lower than austenite transformation temperature, changes MS...

Abstract We model the welfare consequences of mandates that restrict investors to hold firms with net-zero carbon emissions. To qualify for these mandates, value-maximizing have accumulate decarbonization capital. Qualification lowers a firm’s required return by its investments divided Tobin’s q, is, greenium or dividend yield shareholders forgo address global-warming externality. The welfare-maximizing mandate approximates first-best solution, yielding gains compared laissez-faire...

The use of corals, seawater, and sea-sand to prepare concrete can effectively solve the problem raw material transportation in constructing remote sea islands reefs. Corals have disadvantages high porosity, water absorption, low crushing strength, which adversely affect performance concrete. In this study, corals were modified by a superfine cement paste, coral aggregate seawater was prepared replacing gravel aggregates proportionally with aggregates. cubic compressive, splitting tensile,...

The presence of a well designed bankruptcy code is an important part the financialarchitecture in developed economies. By allowing creditors to seize assets theborrowers who fail make contractual payments, generates beneficial ex ante effectson debt capacity and firm value. giving borrowers options renegotiate their debtobligations seek protection, increases likelihood that borrowersmay avoid inefficient post liquidation. As Hart (1999) notes, should balanceex value maximization with efficiency....