Financing constraint,over-investment and market-to-book ratio |
| |
| Authors: | Yann Braouezec |
| |
| Affiliation: | 1. Université de Clermont Auvergne, France;2. Central Bank of the Republic of San Marino & ERF, San Marino;3. College of Business and Economics, UAE University, United Arab Emirates;4. South Champagne Business School, France;5. Institut de Recherche en Gestion (EA 2354), Université Paris Est, France |
| |
| Abstract: | In a simple symmetric information continuous-time model, we consider leverage as way to finance a fraction of the investment cost. We show that underinvestment cannot arise while overinvestment may and the room for overinvestment is negatively related with the fraction paid by equityholders. Finally, we show that our model predicts the (empirically observed) negative relation between the market-to-book ratio and the leverage ratio. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
