Costly external equity : implications for asset pricing anomalies / Dongmei Li, Erica X. N. Li, Lu Zhang.
Material type:
TextSeries: Working paper series (National Bureau of Economic Research) ; no. 14342.Publication details: Cambridge, Mass. : National Bureau of Economic Research, 2008Description: 41 p. : ill. ; 22 cmSubject(s): Corporations -- Finance | Assets (Accounting) -- PricesLOC classification: HB1 | .N38 no. 14342Online resources: Click here to access online Summary: We document that the value, net stock issues, investment, and asset growth anomalies tend to be stronger in financially more constrained firms than in less constrained firms. This effect of financial constraints is distinct from that of financial distress on anomalies. Intuitively, costly external finance makes marginal costs of investment more sensitive to investment in more constrained firms, giving rise to a stronger negative correlation between investment and the discount rate.
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University of Macedonia Library Βιβλιοστάσιο Β (Stack Room B) | Research Papers | HB1.N38 no. 14342 (Browse shelf (Opens below)) | 1 | Available | 0013119314 |
Includes bibliographical references (p. 25-27).
We document that the value, net stock issues, investment, and asset growth anomalies tend to be stronger in financially more constrained firms than in less constrained firms. This effect of financial constraints is distinct from that of financial distress on anomalies. Intuitively, costly external finance makes marginal costs of investment more sensitive to investment in more constrained firms, giving rise to a stronger negative correlation between investment and the discount rate.
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