| Registro completo |
| Provedor de dados: |
AgEcon
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| País: |
United States
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| Título: |
Investment Reluctance: Irreversibility or Imperfect Capital Markets? Evidence from German Farm Panel Data
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| Autores: |
Huettel, Silke
Musshoff, Oliver
Odening, Martin
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| Data: |
2007-06-27
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| Ano: |
2007
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| Palavras-chave: |
Investment decision
Irreversibility
Uncertainty
Q-model
Capital market imperfections
Generalized tobit model
Transition
Financial Economics
D81
D92
O12
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| Resumo: |
Investment behavior at the firm level is characterized by lumpy adjustments and frequent periods of inactivity. Low investment rates are particularly puzzling in transition economies where an urgent need of modernization exists. The literature offers two explanations for. Firstly, neo-institutional finance theory focuses on the impacts of imperfect capital markets on investment decisions showing that the limited availability of financial funds may confine firms investments. Secondly, real options theory asserts that the interaction of irreversibility, uncertainty and flexibility may also result in investment reluctance. In this paper we suggest a generalized model that combines imperfect capital markets and real options effects. We also offer an econometric implementation that has the structure of a generalized tobit model. This model is applied to German farm panel data. We demonstrate that ignoring real options effects may lead to erroneous results when estimating the impact of imperfect capital markets on investment decisions.
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| Tipo: |
Conference Paper or Presentation
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| Idioma: |
Inglês
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| Identificador: |
26265
http://purl.umn.edu/9826
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| Editor: |
AgEcon Search
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| Relação: |
American Agricultural Economics Association>2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon
Selected Paper 174132
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| Formato: |
31
application/pdf
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