Discussion Papers no. 109
An empirical analysis of Norwegian firms
Investment and financial constraints
This paper investigates the relationship between a firm's investment decision and its financial situation. We present a model of investment, where the cost of external finance is increasing in the debt ratio. The model is estimated using a panel of Norwegian manufacturing establishments for the period 1977-1990. The empirical analysis finds a positive relationship between a firm's debt ratio and its marginal return to capital. This indicates that firms with high debt ratios have higher costs of finance than other firms. Including convex adjustment costs in the model did not change this result, as the size of the adjustment costs was found to be very small.
Om publikasjonen
- Tittel
-
Investment and financial constraints. An empirical analysis of Norwegian firms
- Ansvarlig
-
Frode Johansen
- Serie og -nummer
-
Discussion Papers no. 109
- Utgiver
-
Statistics Norway, Research Department
- Emne
-
Discussion Papers
- Antall sider
-
34
- Målform
-
Engelsk
- Om Discussion Papers
-
Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.
Kontakt
-
SSBs informasjonstjeneste