An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility:
This paper derives closed-form solutions for the investment and market value, under uncertainty, of competitive firms with constant returns to scale production and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal...
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, MA
1993
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| Schriftenreihe: | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series
4412 |
| Schlagworte: | |
| Zusammenfassung: | This paper derives closed-form solutions for the investment and market value, under uncertainty, of competitive firms with constant returns to scale production and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of q, the shadow value of capital. The conditions of optimality imply that q cannot contain a bubble; thus, optimal investment depends only on fundamentals. However, the value of the firm may contain a bubble that does not affect investment behavior. Relative to the case of reversible investment, the introduction of irreversibility does not affect q, but it reduces the fundamental market value of the firm. |
| Beschreibung: | 24 S. |
Internformat
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| 245 | 1 | 0 | |a An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility |c Andrew B. Abel ; Janice C. Eberly |
| 264 | 1 | |a Cambridge, MA |c 1993 | |
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| 490 | 1 | |a National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |v 4412 | |
| 520 | |a This paper derives closed-form solutions for the investment and market value, under uncertainty, of competitive firms with constant returns to scale production and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of q, the shadow value of capital. The conditions of optimality imply that q cannot contain a bubble; thus, optimal investment depends only on fundamentals. However, the value of the firm may contain a bubble that does not affect investment behavior. Relative to the case of reversible investment, the introduction of irreversibility does not affect q, but it reduces the fundamental market value of the firm. | ||
| 650 | 4 | |a Ökonometrisches Modell | |
| 650 | 4 | |a Capital stock |x Econometric models | |
| 650 | 4 | |a Corporations |x Valuation |x Econometric models | |
| 700 | 1 | |a Eberly, Janice C. |e Verfasser |0 (DE-588)124670202 |4 aut | |
| 830 | 0 | |a National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |v 4412 |w (DE-604)BV002801238 |9 4412 | |
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Datensatz im Suchindex
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| author | Abel, Andrew B. Eberly, Janice C. |
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| id | DE-604.BV008415799 |
| illustrated | Not Illustrated |
| indexdate | 2024-07-09T17:19:22Z |
| institution | BVB |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-005544422 |
| oclc_num | 28884493 |
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| physical | 24 S. |
| publishDate | 1993 |
| publishDateSearch | 1993 |
| publishDateSort | 1993 |
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| series | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| series2 | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| spelling | Abel, Andrew B. Verfasser aut An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility Andrew B. Abel ; Janice C. Eberly Cambridge, MA 1993 24 S. txt rdacontent n rdamedia nc rdacarrier National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 4412 This paper derives closed-form solutions for the investment and market value, under uncertainty, of competitive firms with constant returns to scale production and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of q, the shadow value of capital. The conditions of optimality imply that q cannot contain a bubble; thus, optimal investment depends only on fundamentals. However, the value of the firm may contain a bubble that does not affect investment behavior. Relative to the case of reversible investment, the introduction of irreversibility does not affect q, but it reduces the fundamental market value of the firm. Ökonometrisches Modell Capital stock Econometric models Corporations Valuation Econometric models Eberly, Janice C. Verfasser (DE-588)124670202 aut National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 4412 (DE-604)BV002801238 4412 |
| spellingShingle | Abel, Andrew B. Eberly, Janice C. An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series Ökonometrisches Modell Capital stock Econometric models Corporations Valuation Econometric models |
| title | An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility |
| title_auth | An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility |
| title_exact_search | An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility |
| title_full | An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility Andrew B. Abel ; Janice C. Eberly |
| title_fullStr | An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility Andrew B. Abel ; Janice C. Eberly |
| title_full_unstemmed | An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility Andrew B. Abel ; Janice C. Eberly |
| title_short | An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility |
| title_sort | an exact solution for the investment and market value of a firm facing uncertainty adjustment costs and irreversibility |
| topic | Ökonometrisches Modell Capital stock Econometric models Corporations Valuation Econometric models |
| topic_facet | Ökonometrisches Modell Capital stock Econometric models Corporations Valuation Econometric models |
| volume_link | (DE-604)BV002801238 |
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