TY - JOUR
T1 - Irreversible investment, financing, and bankruptcy decisions in an oligopoly
AU - Jou, Jyh Bang
AU - Lee, Tan
N1 - Funding Information:
∗Jou, [email protected], Department of Economics and Finance, Massey University (Albany Campus), Auckland, New Zealand and Graduate Institute of National Development, National Taiwan University, No. 1 Roosevelt Rd. Sec. 4, Taipei 106, Taiwan, R.O.C.; and Lee, [email protected], Department of Finance, Auckland University of Technology, Auckland, New Zealand and Department of International Business, Yuan Ze University, 135 Yuan-Tung Rd., Chung-Li, Taoyuan 320, Taiwan, R.O.C. We thank Hendrik Bessembinder (the editor), David Mauer (the referee), Chuang-Chang Chang, Jeff Chien-Fu Lin, Robert L. McDonald, Dean A. Paxson, Brenda A. Priebe, and seminar participants at the Seventy-Ninth Annual Conference of the Western Economics Association (Vancouver), the Fifteenth Annual Conference of the Asian Finance Association (Taipei), the Third NTU International Conference on Economics, Finance, and Accounting, and the Fourth Annual Conference on New Paradigms of Management. Financial support under Grant NSC 92-2416-H-002-036 from the National Science Council, Executive Yuan, R.O.C., is gratefully acknowledged.
PY - 2008/9
Y1 - 2008/9
N2 - This paper examines a firm's debt level, investment timing, and investment scale choices in a continuous-time model where the output price of a good that the firm produces depends on a stochastic demand-shift variable and the total industry supply of the good. Using the simple symmetric Cournot-Nash equilibrium assumption that all firms are identical and therefore follow the same financing and investment strategies, we show that competition decreases the output price and hence encourages a firm to wait for a higher demand level before it is profitable to invest. We also demonstrate how uncertainty, bankruptcy costs, and corporate taxation affect the firm's financing and investment decisions.
AB - This paper examines a firm's debt level, investment timing, and investment scale choices in a continuous-time model where the output price of a good that the firm produces depends on a stochastic demand-shift variable and the total industry supply of the good. Using the simple symmetric Cournot-Nash equilibrium assumption that all firms are identical and therefore follow the same financing and investment strategies, we show that competition decreases the output price and hence encourages a firm to wait for a higher demand level before it is profitable to invest. We also demonstrate how uncertainty, bankruptcy costs, and corporate taxation affect the firm's financing and investment decisions.
UR - http://www.scopus.com/inward/record.url?scp=53549112508&partnerID=8YFLogxK
U2 - 10.1017/S0022109000004282
DO - 10.1017/S0022109000004282
M3 - 期刊論文
AN - SCOPUS:53549112508
SN - 0022-1090
VL - 43
SP - 769
EP - 786
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
IS - 3
ER -