Corporate Investment and Financing Dynamics

2015 ◽  
Author(s):  
Dirk Hackbarth ◽  
Dongming Sun
Keyword(s):  
Corporate Investment ◽  
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 The effect of option trading

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Keming Li
Keyword(s):  
Information Asymmetry ◽  
Trading Volume ◽  
Corporate Investment ◽  
The United States ◽  
Corporate Policies ◽  
Option Trading ◽  
Public Data ◽  
Prior Literature ◽  
Alternative Measures ◽  
Investment And Financing

AbstractThis paper studies the effect of option trading on corporate investment and financing policies. Based on prior literature, I hypothesize that option market induces informed trading and thus reduces information asymmetry and the cost of capital. As a result, firms with high option trading have more investment and financing. Specifically, based on the United States public data, this paper finds that option trading volume increases corporate investment and financing, but reduces cash holdings and corporate payouts. These results are robust to the inclusion of industry or firm fixed effect, a control for endogenous options trading, and the use of alternative measures of option trading and corporate policies. The effect of option trading is stronger for firms with higher information asymmetry problems. Finally, this paper finds the results are inconsistent with the “quiet Life” hypothesis and the catering hypothesis.

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