Testing Uncertainty's Effect in Real Options with Multiple Capital Goods
Testing Uncertainty's Effect
Bibliographic Data
| ID | 9727993 |
|---|---|
| Authors | Konstantinos Drakos, Κωνσταντίνος Δράκος (0000-0003-4244-5377, Athens University of Economics and Business, corresponding author) |
| Year | 2011 |
| Volume | 78 |
| Issue | 310 |
| Pages | 330-346 |
| Publication date | 2011-04-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/j.1468-0335.2009.00825.x |
| OpenAlex | W1935287178 |
| Language | EN |
| References cited | 38 |
The irreversible investment theory with heterogeneous capital predicts a negative relationship between uncertainty and the investment extensive margin. We empirically explore this prediction using plant-level data for investment across multiple fixed assets, and employ a discrete ordered choice model. Our results indicate that uncertainty, even after controlling for financial constraints, induces a negative effect on the extensive margin, thereby decreasing the likelihood of investment triggering in more types of capital. This effect takes the form of both a higher probability of investment inactivity but also a lower probability of investment triggering in a higher number of capital types
Capital (architecture) · Capital formation · Capital good · Capital investment · Econometrics · Economics · Financial capital · Fixed investment · Investment (military) · Margin (machine learning) · Microeconomics · Monetary economics · Public good · Capital Investment and Risk Analysis · Computer Science · Economic theories and models · Finance · Market Dynamics and Volatility
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Monotone Comparative Statics
Uncertainty and Investment Dynamics
Financing Constraints and Corporate Investment
Generalized autoregressive conditional heteroskedasticity
Contrasts Between Types of Assets in Fixed Investment Equations as a Way of Testing Real Options Theory
Market Concentration, Contestability, and Sunk Costs
Investment and Capital Market Imperfections
Fixed Capital Adjustment
The Differential Impact of Uncertainty on Investment in Small and Large Businesses
A New Look at Firm Market Value, Investment, and Adjustment Costs
Financial Factors and Investment in Belgium, France, Germany, and the United Kingdom
Zeros and Lumps in Investment
| Citation velocity | historical |
|---|---|
| Highly cited | No |