Liquidity Constraints and Investment Return Behaviour

Guariglia, Alessandra and Basu, P. (2002) Liquidity Constraints and Investment Return Behaviour. Economica, 69 . pp. 563-581. (The full text of this publication is not available from this repository)

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Abstract

We construct a production-based model, which compares the investment return behaviour of liquidity-constrained firms with that of unconstrained firms. The key testable implication that emerges from the model is that the investment returns of the constrained firms are predictable, while those of the unconstrained firms are not. We test this implication indirectly, verifying whether the capital stock and investment returns of the latter firms lead those of the former, and directly, via the estimation of an Euler equation. Our results are consistent with the model's prediction.

Item Type: Article
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: G.F. Green
Date Deposited: 19 Oct 2008 01:38
Last Modified: 14 Jan 2010 14:35
Resource URI: http://kar.kent.ac.uk/id/eprint/9492 (The current URI for this page, for reference purposes)
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