Investment and the cost of capital: new evidence from the corporate bond market
We study the effect of variation in interest rates on investment spending, employing a large panel data set that links yields on outstanding corporate bonds to the issuer income and balance sheet statements. The bond price data -- based on trades in the secondary market -- enable us to construct a f...
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
National Bureau of Economic Research
2007
|
| Schriftenreihe: | Working paper series / National Bureau of Economic Research
13174 |
| Online-Zugang: | Volltext |
| Zusammenfassung: | We study the effect of variation in interest rates on investment spending, employing a large panel data set that links yields on outstanding corporate bonds to the issuer income and balance sheet statements. The bond price data -- based on trades in the secondary market -- enable us to construct a firm-specific measure of the user cost of capital based on the marginal cost of external finance as determined in the market for long-term corporate debt. Our results imply a robust and quantitatively important effect of the user cost of capital on the firm-level investment decisions. According to our estimates, a 1 percentage point increase in the user cost of capital implies a reduction in the investment rate of 50 to 75 basis points and, in the long run, a 1 percent reduction in the stock of capital. |
| Beschreibung: | Literaturverz. S. 33 - 35 |
| Beschreibung: | 40 S. graph. Darst. 22 cm |
Internformat
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| 490 | 1 | |a Working paper series / National Bureau of Economic Research |v 13174 | |
| 500 | |a Literaturverz. S. 33 - 35 | ||
| 520 | 8 | |a We study the effect of variation in interest rates on investment spending, employing a large panel data set that links yields on outstanding corporate bonds to the issuer income and balance sheet statements. The bond price data -- based on trades in the secondary market -- enable us to construct a firm-specific measure of the user cost of capital based on the marginal cost of external finance as determined in the market for long-term corporate debt. Our results imply a robust and quantitatively important effect of the user cost of capital on the firm-level investment decisions. According to our estimates, a 1 percentage point increase in the user cost of capital implies a reduction in the investment rate of 50 to 75 basis points and, in the long run, a 1 percent reduction in the stock of capital. | |
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| id | DE-604.BV023593083 |
| illustrated | Illustrated |
| index_date | 2024-07-02T22:41:31Z |
| indexdate | 2024-07-09T21:25:14Z |
| institution | BVB |
| language | English |
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| physical | 40 S. graph. Darst. 22 cm |
| publishDate | 2007 |
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| publisher | National Bureau of Economic Research |
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| series2 | Working paper series / National Bureau of Economic Research |
| spelling | Gilchrist, Simon 1963- Verfasser (DE-588)128971886 aut Investment and the cost of capital new evidence from the corporate bond market Simon Gilchrist ; Egon Zakrajsek Cambridge, Mass. National Bureau of Economic Research 2007 40 S. graph. Darst. 22 cm txt rdacontent n rdamedia nc rdacarrier Working paper series / National Bureau of Economic Research 13174 Literaturverz. S. 33 - 35 We study the effect of variation in interest rates on investment spending, employing a large panel data set that links yields on outstanding corporate bonds to the issuer income and balance sheet statements. The bond price data -- based on trades in the secondary market -- enable us to construct a firm-specific measure of the user cost of capital based on the marginal cost of external finance as determined in the market for long-term corporate debt. Our results imply a robust and quantitatively important effect of the user cost of capital on the firm-level investment decisions. According to our estimates, a 1 percentage point increase in the user cost of capital implies a reduction in the investment rate of 50 to 75 basis points and, in the long run, a 1 percent reduction in the stock of capital. Zakrajšek, Egon Verfasser (DE-588)121151891 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.> NBER working paper series 13174 (DE-604)BV002801238 13174 http://papers.nber.org/papers/w13174.pdf kostenfrei Volltext |
| spellingShingle | Gilchrist, Simon 1963- Zakrajšek, Egon Investment and the cost of capital new evidence from the corporate bond market |
| title | Investment and the cost of capital new evidence from the corporate bond market |
| title_auth | Investment and the cost of capital new evidence from the corporate bond market |
| title_exact_search | Investment and the cost of capital new evidence from the corporate bond market |
| title_exact_search_txtP | Investment and the cost of capital new evidence from the corporate bond market |
| title_full | Investment and the cost of capital new evidence from the corporate bond market Simon Gilchrist ; Egon Zakrajsek |
| title_fullStr | Investment and the cost of capital new evidence from the corporate bond market Simon Gilchrist ; Egon Zakrajsek |
| title_full_unstemmed | Investment and the cost of capital new evidence from the corporate bond market Simon Gilchrist ; Egon Zakrajsek |
| title_short | Investment and the cost of capital |
| title_sort | investment and the cost of capital new evidence from the corporate bond market |
| title_sub | new evidence from the corporate bond market |
| url | http://papers.nber.org/papers/w13174.pdf |
| volume_link | (DE-604)BV002801238 |
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