Optimal Corporate Investment and Financing Policies: A Simple Quantitative Rule in a Novel General Setting

2011 ◽  
Author(s):  
Katarzyna Romaniuk
Keyword(s):  
General Setting ◽  
Corporate Investment ◽  
Financing Policies ◽  
Investment And Financing

scholarly journals Risk Management: Coordinating Corporate Investment and Financing Policies

1993 ◽  
Vol 48 (5) ◽  
pp. 1629 ◽  
Author(s):  
Kenneth A. Froot ◽  
David S. Scharfstein ◽  
Jeremy C. Stein
Keyword(s):  
Risk Management ◽  
Corporate Investment ◽  
Financing Policies ◽  
Investment And Financing

scholarly journals Risk Management: Coordinating Corporate Investment and Financing Policies

1993 ◽  
Vol 48 (5) ◽  
pp. 1629-1658 ◽  
Author(s):  
KENNETH A. FROOT ◽  
DAVID S. SCHARFSTEIN ◽  
JEREMY C. STEIN
Keyword(s):  
Risk Management ◽  
Corporate Investment ◽  
Financing Policies ◽  
Investment And Financing

scholarly journals Working Capital Management Policies and Returns of Listed Manufacturing Firms in Ghana

2017 ◽  
Vol 64 (2) ◽  
pp. 255-269 ◽  
Author(s):  
Anokye M. Adam ◽  
Edward Quansah ◽  
Seyram Kawor
Keyword(s):  
Stock Exchange ◽  
Manufacturing Firms ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Financing Policies ◽  
Current Asset ◽  
Investment And Financing ◽  
Management Policies ◽  
Ghana Stock Exchange

Abstract This study sought to determine the effects aggressive/conservative current asset investment and financing policies have on firms′ return for six manufacturing firms listed at Ghana Stock Exchange for a period of 2000-2013. Data were obtained from the annual reports of the firms and the Ghana Stock Exchange. The study adopted longitudinal explanatory non-experimental research design applied to dynamic panel ARDL framework in analyzing the data. The results revealed that the current asset investment and financing policies have highly significant positive effects on returns to equity holders in the long-run. The empirical evidence suggests that conservative current asset investment policies increase firms return while conservative financing policies yields negative returns. The study therefore would enable finance managers to be able to fashion out the appropriate working capital management policies. A firm pursuing conservative current asset investment policy should balance it with aggressive current asset financing policy in order to enhance profitability and create value for their investors.

scholarly journals Discrete optimal capital investment and financing policies in fishery resource harvesting with reserve area

2019 ◽  
Author(s):  
Farida Hanum ◽  
Toni Bakhtiar ◽  
Muhamad Nagib Alatas
Keyword(s):  
Capital Investment ◽  
Renewable Resource ◽  
State Variables ◽  
Sweep Method ◽  
Fishery Resource ◽  
Dividend Payout ◽  
Financing Policies ◽  
Investment And Financing ◽  
Optimal Capital ◽  
Forward Backward Sweep Method

This research discusses a problem in renewable resource (fish) harvesting on single-owner fishery where the dynamics of growth are expressed by system of difference equations. The model involves three state variables (stock of equity, resource stock in reserve zone and unreserved zone) and two control variables (effort rate and dividend payout rate). Discrete Pontryagin maximum principle was applied to obtain optimality conditions which must be satisfied by the variables. Further, the forward-backward sweep method was used to determine the numerical solution of optimal control model. Three scenarios of interest rate applied to find out the response of company in managing harvesting effort and dividend payout rate were investigated.

Behavioral and Social Corporate Finance

2019 ◽  
Author(s):  
Henrik Cronqvist ◽  
Désirée-Jessica Pély
Keyword(s):  
Social Psychology ◽  
Decision Making ◽  
Corporate Finance ◽  
Profit Maximization ◽  
Personal Traits ◽  
Value Perception ◽  
Social Traits ◽  
Financing Policies ◽  
Investment And Financing ◽  
Behavioral Corporate Finance

Corporate finance is about understanding the determinants and consequences of the investment and financing policies of corporations. In a standard neoclassical profit maximization framework, rational agents, that is, managers, make corporate finance decisions on behalf of rational principals, that is, shareholders. Over the past two decades, there has been a rapidly growing interest in augmenting standard finance frameworks with novel insights from cognitive psychology, and more recently, social psychology and sociology. This emerging subfield in finance research has been dubbed behavioral corporate finance, which differentiates between rational and behavioral agents and principals. The presence of behavioral shareholders, that is, principals, may lead to market timing and catering behavior by rational managers. Such managers will opportunistically time the market and exploit mispricing by investing capital, issuing securities, or borrowing debt when costs of capital are low and shunning equity, divesting assets, repurchasing securities, and paying back debt when costs of capital are high. Rational managers will also incite mispricing, for example, cater to non-standard preferences of shareholders through earnings management or by transitioning their firms into an in-fashion category to boost the stock’s price. The interaction of behavioral managers, that is, agents, with rational shareholders can also lead to distortions in corporate decision making. For example, managers may perceive fundamental values differently and systematically diverge from optimal decisions. Several personal traits, for example, overconfidence or narcissism, and environmental factors, for example, fatal natural disasters, shape behavioral managers’ preferences and beliefs, short or long term. These factors may bias the value perception by managers and thus lead to inferior decision making. An extension of behavioral corporate finance is social corporate finance, where agents and principals do not make decisions in a vacuum but rather are embedded in a dynamic social environment. Since managers and shareholders take a social position within and across markets, social psychology and sociology can be useful to understand how social traits, states, and activities shape corporate decision making if an individual’s psychology is not directly observable.

scholarly journals Investment and Financing Policies of Nepalese Enterprises

2017 ◽  
Vol 8 ◽  
pp. 47-55
Author(s):  
Kapil Deb Subedi
Keyword(s):  
Capital Market ◽  
Data Set ◽  
Investment Policies ◽  
Financing Policies ◽  
Firm Financing ◽  
Investment And Financing ◽  
Internal Funds ◽  
Financing And Investment ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey

Firm financing and investment policies are central to the study of corporate finance. In imperfect capital market, financing and investment policies of enterprises are dependent to each other. Firm’s investment decisions depend upon the access and availability of finance in capital market. But various capital market frictions like information and incentives wedge the efficient allocation of fund to each of marginally profitable project. Consequently, in asymmetric informational theoretic framework, firms change their strategies in raising their capital. Firms' first best choice for financing their investment in severity of information problem, rests on their internal funds since it is the cheapest and more unrestricted source of finance to the managers. To this milieu, this paper focuses on investigating whether the Nepalese enterprises depend on their internal funds to finance their investment or not? World Bank Enterprise Survey data set are employed to examine the investment and financing policies of Nepalese enterprises. The data set consist of financial information of 968 firms across multiple size, sector and age category. We employ simple measures of descriptive statistics like frequencies, percentage and arithmetic mean viz; the average of a set of numerical values to analyze the data by sorting the observations to various portfolios. The study result confirms that the firms heavily depend on their internal funds to finance their investment. These results are consistent with prior literatures for example; Fazzari, Hubbard, & Peterson (1988), Gilchrist & Himmelberg (1995), Hu & Schiantarelli (1998) etc when observed in cross section of size, sector, age and ownership pattern of enterprises.The Saptagandaki Journal Vol.8 2017: 47-55

Sign in / Sign up

Export Citation Format

Share Document