How and When Do Firms Adjust their Investments toward Targets?

David Florysiak, Ralf Elsas, Catharina Schauer

Publikation: Working paperForskning

Resumé

We analyze how adjustment costs influence firms’ adjustment behavior toward target investments by using unique investment plan data. We find heterogeneity in
adjustment behavior, as financially constrained firms and firms with major capacity expansion investments face higher adjustment costs. By examining the effects of the financial crisis it is shown that the crisis did not affect adjustment costs due to financial constraints, but affected the costs of capacity expansions. Difference-indifferences and instrumental variables estimations alleviate endogeneity concerns and confirm robustness of results. Our paper provides new insights on firms’ adjustment behavior and on the design of policy measures during crises.
OriginalsprogEngelsk
StatusUdgivet - 1. sep. 2017

Fingeraftryk

Adjustment costs
Capacity expansion
Indifference
Instrumental variable estimation
Policy measures
Financial crisis
Endogeneity
Financial constraints
Costs
Robustness

Citer dette

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How and When Do Firms Adjust their Investments toward Targets? / Florysiak, David; Elsas, Ralf; Schauer, Catharina.

2017.

Publikation: Working paperForskning

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