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Financial Markets And Firm Dynamics
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Book Synopsis Financial Markets and Firm Dynamics by : Thomas F. Cooley
Download or read book Financial Markets and Firm Dynamics written by Thomas F. Cooley and published by . This book was released on 2008 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent studies have shown that the dynamics of firms (growth, job relocation and exit) are negatively associated with the firm's size. In this paper we analyze whether financial factors are important in generating this negative relation. We develop a model in which, at each point in time, firms are heterogeneous in the amount of equity, and the equity affects their financing decision. The production and investment behavior of small and large firms differs substantially, and the model replicates many of the key features of industry evolution: smaller firms experience faster growth, higher rates of job creation and destruction and lower survival rates.
Book Synopsis Essays on Firm Dynamics and Financial Markets by : Haozhou Tang
Download or read book Essays on Firm Dynamics and Financial Markets written by Haozhou Tang and published by . This book was released on 2017 with total page 110 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis aims to better understand the interplay between financial markets and firm dynamics. In the first chapter I study the firm-level implications of asset bubbles. I relax the no-Ponzi-game condition in a model with firm heterogeneity and firm entry and exit. In equilibrium, the price of a firm may contain a bubble component in addition to the fundamental component, i.e. the net present value of profits. I show that bubbles act as subsidies to firm entry because they raise the return on the establishment and investment of new firms. The second chapter investigates different types of exiters by embedding different endogenous firm exit into a model with heterogeneous firms. The main finding is that in a recession, highly leveraged firms with high productivity but few assets become very likely to exit. However, due to the low wage rate in a recession, low leverage firms with low productivity become even more likely to survive. The prediction is consistent with our firm-level evidence about leverage.
Book Synopsis Handbook of Financial Markets: Dynamics and Evolution by : Thorsten Hens
Download or read book Handbook of Financial Markets: Dynamics and Evolution written by Thorsten Hens and published by Elsevier. This book was released on 2009-06-12 with total page 607 pages. Available in PDF, EPUB and Kindle. Book excerpt: The models of portfolio selection and asset price dynamics in this volume seek to explain the market dynamics of asset prices. Presenting a range of analytical, empirical, and numerical techniques as well as several different modeling approaches, the authors depict the state of debate on the market selection hypothesis. By explicitly assuming the heterogeneity of investors, they present models that are descriptive and normative as well, making the volume useful for both finance theorists and financial practitioners. Explains the market dynamics of asset prices, offering insights about asset management approaches Assumes a heterogeneity of investors that yields descriptive and normative models of portfolio selections and asset pricing dynamics
Book Synopsis Implications of Credit Market Imperfections on Firm Dynamics, Business Cycles and International Trade by : Stéphane Verani
Download or read book Implications of Credit Market Imperfections on Firm Dynamics, Business Cycles and International Trade written by Stéphane Verani and published by . This book was released on 2011 with total page 152 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent empirical studies of firms have documented important differences in the behavior of large and small firms, as well as exporting and non-exporting firms. These empirical regularities are widely interpreted as indirect evidence of frictions in financial markets. There is furthermore a growing consensus that financing frictions significantly impact firm dynamics. This dissertation investigates the links between financial market imperfections, firm dynamics, real business cycles fluctuations and international trade.
Book Synopsis The Social Dynamics of Financial Markets by : Patricia A. Adler
Download or read book The Social Dynamics of Financial Markets written by Patricia A. Adler and published by . This book was released on 1984 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Financial Constraints, Precautionary Saving and Firm Dynamics by : Andrea Caggese
Download or read book Financial Constraints, Precautionary Saving and Firm Dynamics written by Andrea Caggese and published by . This book was released on 2000 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Financial Markets Theory by : Emilio Barucci
Download or read book Financial Markets Theory written by Emilio Barucci and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 473 pages. Available in PDF, EPUB and Kindle. Book excerpt: A presentation of classical asset pricing theory, this textbook is the only one to address the economic foundations of financial markets theory from a mathematically rigorous standpoint and to offer a self-contained critical discussion based on empirical results. Tools for understanding the economic analysis are provided, and mathematical models are presented in discrete time/finite state space for simplicity. Examples and exercises included.
Book Synopsis Financing Constraints, Firm Dynamics, Export Decisions, and Aggregate Productivity by : Andrea Caggese
Download or read book Financing Constraints, Firm Dynamics, Export Decisions, and Aggregate Productivity written by Andrea Caggese and published by . This book was released on 2011 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Exchange Rate Exposure and Firm Dynamics by : Juliana Salomao
Download or read book Exchange Rate Exposure and Firm Dynamics written by Juliana Salomao and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Firm Dynamics, Financial Frictions, and the Labor Market by : Dongchen Zhao
Download or read book Essays on Firm Dynamics, Financial Frictions, and the Labor Market written by Dongchen Zhao and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three chapters. The first chapter concerns the secular changes in the U.S. firm size distribution and firm dynamics. This chapter sets up a quantitative model of firm dynamics with debt heterogeneity to study the implications of changes in real interest rates for the firm size distribution and firm dynamics. It shows that the decline in long-term real interest rates since the early 1980s can account for a significant fraction of the shift in employment shares to large firms as well as the decline in firms per capita and firm entry rates experienced in the U.S. over the same period. In the model, firms endogenously choose financial intermediaries issuing debt with either earnings-based (EBC) or asset-based (ABC) borrowing constraints. The two types of constraints arise naturally from the imperfect enforceability of debt contracts and are in line with recent empirical findings. A decline in real interest rates benefits firms with EBC more because they are not constrained by their assets and can expand more due to increased earnings. Since firms with higher earnings optimally choose earnings-based lending, the decline in real interest rates shifts employment shares to larger firms. Moreover, the growth of large firms crowds out smaller firms and firm entry through general equilibrium effects. The paper tests the mechanism in cross-country data from the OECD and finds a stronger association between the decline in real interest rates and changes in firm dynamics, especially in countries with deeper credit markets. In the second chapter, I study the effects of government regulations on firm dynamism. The impact of government regulations on the economy is a central topic in policy debates. However, due to the endogeneity of regulations and challenges in measuring them, these debates remain contentious. This paper establishes the causal effects of government regulations on firm dynamism by employing a novel shift-share (Bartik) instrument in conjunction with the RegData dataset, which quantifies regulations based on the text of federal regulatory documents. The primary assumption for identification is that, for each sector, the exposure to regulations from different government agencies at the beginning of the period is exogenous to any confounding factors. The findings reveal that government regulatory restrictions significantly increase firm exit rates and discourage the formation of establishments, while having no substantial impact on firm entry. Furthermore, these restrictions contribute to reduced job creation, elevated job destruction, and diminished overall employment. These effects are consistently observed across various age groups. The results lend support to the idea that government regulations can raise production costs for firms and/or enhance the monopolistic power of certain companies. Both mechanisms can diminish the profits of affected firms, leading to increased firm exit rates and reduced labor demand. Additionally, the findings refute the interpretation of regulations as solely serving as entry barriers. The final chapter of the dissertation investigates the labor market outcomes for involuntary part-time workers and their subsequent effects on welfare levels. Through an analysis of survey data, I demonstrate that involuntary part-time workers exhibit reservation wages comparable to those of unemployed workers. This similarity largely stems from parallel wage offers and offer arrival rates. Contrary to previous research, this finding indicates that involuntary part-time workers experience welfare levels akin to unemployed workers. One possible explanation for this discrepancy lies in the methodology of prior studies. Conclusions drawn from earlier research, which primarily focused on the faster transition of involuntary part-time workers into full-time positions compared to other workers, may be flawed. This is because these workers also tend to revert to their previous job types at a faster rate. To further explore the implications of these discoveries, I employ a quantitative search model. The calibrated model supports the assertion that involuntary part-time workers experience welfare levels similar to those of unemployed workers. Furthermore, the model suggests that neither extending unemployment insurance to part-time workers nor enhancing the likelihood that unemployed workers transition to part-time positions would effectively increase the prevalence of full-time employment
Book Synopsis Essays on Macroeconomics and Firm Dynamics by : Lei Zhang
Download or read book Essays on Macroeconomics and Firm Dynamics written by Lei Zhang and published by . This book was released on 2016 with total page 192 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three essays at the interaction between macroeconomics and the financial market, with an emphasis on macroeconomic implications of heterogeneous firms under financial frictions. My dissertation explores the relationships among financial market friction, firms' entry and exit behaviors, and job reallocation over the business cycle. Chapter 1 examines the macroeconomic effects of financial leverage and firms' endogenous entry and exit on job reallocation over the business cycle. Financial leverage and the extensive margin are the keys to explain job reallocation at both the firm-level and the aggregate level. I build a general equilibrium industry dynamics model with endogenous entry and exit, a frictional labor market, and borrowing constraints. The model provides a novel theory that financially constrained firms adjust employment more often. I characterize an analytical solution to the wage bargaining problem between a leveraged firm and workers. Higher financial leverage allows constrained firms to bargain for lower wages, but also induces higher default risks. In the model, firms adopt (S,s) employment decision rules. Because the entry and exit firms are more likely to be borrowing constrained, a negative shock affects the inaction regions of the entry and exit firms more than that of the incumbents. In the simulated model, the extensive margin explains 36% of the job reallocation volatility, which is very close to the data and is quantitatively significant. Chapter 2 investigates firms' financial behaviors and size distributions over the business cycle. We propose a general equilibrium industry dynamics model of firms' capital structure and entry and exit behaviors. The financial market frictions capture both the age dependence and size dependence of firms' size distributions. When we add the aggregate shocks to the model, it can account for the business cycle patterns of firm dynamics: 1) entry is more procyclical than exit; 2) debt is procyclical, and equity issuance is countercyclical; and 3) the cyclicalities of debt and equity issuance are negatively correlated with firm size and age. Chapter 3 studies the equilibrium pricing of complex securities in segmented markets by risk-averse expert investors who are subject to asset-specific risk. Investor expertise varies, and the investment technology of investors with more expertise is subject to less asset-specific risk. Expert demand lowers equilibrium required returns, reducing participation, and leading to endogenously segmented markets. Amongst participants, portfolio decisions and realized returns determine the joint distribution of financial expertise and financial wealth. This distribution, along with participation, then determines market-level risk bearing capacity. We show that more complex assets deliver higher equilibrium returns to expert participants. Moreover, we explain why complex assets can have lower overall participation despite higher market-level alphas and Sharpe ratios. Finally, we show how complexity affects the size distribution of complex asset investors in a way that is consistent with the size distribution of hedge funds.
Book Synopsis Fluctuations in Uncertainty, Efficient Borrowing Constraints and Firm Dynamics by : Sebastian Dyrda
Download or read book Fluctuations in Uncertainty, Efficient Borrowing Constraints and Firm Dynamics written by Sebastian Dyrda and published by . This book was released on 2016 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: In main essay of my dissertation I quantify the importance of microeconomic uncertainty shocks for the firm dynamics over the business cycle in economy with frictional financial markets. To begin, I document novel facts on asymmetric, cyclical behavior across age and size groups of firms in the US. Then I lay down a theory in which differences between firms originate from the presence of asymmetric information in the financial market and long-term efficient contracts with financial intermediaries. Fluctuations in microeconomic uncertainty drive movements of the endogenous borrowing constraint affecting real allocations and imply asymmetric response of firms to the shocks.
Book Synopsis Financial Frictions and Firm Dynamics by :
Download or read book Financial Frictions and Firm Dynamics written by and published by . This book was released on 2014 with total page 129 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Strategy, Value and Risk by : Jamie Rogers
Download or read book Strategy, Value and Risk written by Jamie Rogers and published by Springer Nature. This book was released on 2019-09-12 with total page 240 pages. Available in PDF, EPUB and Kindle. Book excerpt: The current transformation of the global economy is being driven by new fundamental innovations, digitalization, industry dynamics and climate change. The impact of this transformation in terms of value migration, industry boundaries, investment and firm continuity is vast. The fourth edition of Strategy, Value and Risk examines these issues, and how they will influence firms and industries in the future. Those aspects of the business environment that will have a significant impact on strategy, business models, investments and value are identified, and the accounting, finance, economic and quantitative principles that provide a foundation for the analysis of these issues are discussed. Part I: Strategy, Value and Risk provides the strategic, economic, accounting and financial framework. Strategy discusses technology and innovation, industry dynamics, globalization and industry concentration, climate change, industry boundaries and future value. Value discusses the accounting framework and corporate finance and investment, while Risk covers investment risk, corporate risk management and value and risk. Part II: Quantitative Analytics provides an overview of financial statistics, derivatives and derivative applications, and provides a background on the financial economics used in the analysis of physical, intangible, financial and energy assets. Part III: The Analysis of Investments, Transformation and Value examines platforms, data and analytics, the energy sector, pharmaceutical and biotech, a growth firm and media transformation, and applies the accounting, economic, financial and quantitative concepts. This fourth edition lays out scenarios that will likely shape firms and industries in the future, and has relevance to CFOs, corporate finance and investment professionals. Business model disruption, data and analytics, intangible assets and dynamic analysis are now key issues within the CFO role. Investment professionals are required to see the larger economic environment in which firms compete, assess a firm’s industry and its position within that industry, recognize which investments best serve its broad strategic goals and identify a firm’s capabilities and options. A background in the accounting, finance, economic, quantitative and valuation concepts that are relevant to the digital economy, new industries, business models and technologies is essential for finance professionals. This book addresses these issues within the context of the fundamental changes underway in the global economy, and provides applications of the techniques to illustrate the concepts.
Book Synopsis Bubbles and Contagion in Financial Markets, Volume 1 by : E. Porras
Download or read book Bubbles and Contagion in Financial Markets, Volume 1 written by E. Porras and published by Springer. This book was released on 2016-06-29 with total page 303 pages. Available in PDF, EPUB and Kindle. Book excerpt: Understanding the formation of bubbles and the contagion mechanisms afflicting financial markets is a must as extreme volatility events leave no market untouched. Debt, equity, real estate, commodities... Shanghai, NY, or London: The severe fluctuations, explained to a large extent by contagion and the fear of new bubbles imploding, justify the newly awaken interest in the contagion and bubble dynamics as yet again the world brazes for a new global economic upheaval. Bubbles and Contagion in Financial Markets explores concepts, intuition, theory, and models. Fundamental valuation, share price development in the presence of asymmetric information, the speculative behavior of noise traders and chartists, herding and the feedback and learning mechanisms that surge within the markets are key aspects of these dynamics. Bubbles and contagion are a vast world and fascinating phenomena that escape a narrow exploration of financial markets. Hence this work looks beyond into macroeconomics, monetary policy, risk aggregation, psychology, incentive structures and many more subjects which are in part co-responsible for these events. Responding to the ever more pressing need to disentangle the dynamics by which financial local events are transmitted across the globe, this volume presents an exhaustive and integrative outlook to the subject of bubbles and contagion in financial markets. The key objective of this volume is to give the reader a comprehensive understanding of all aspects that can potentially create the conditions for the formation and bursting of bubbles, and the aftermath of such events: the contagion of macro-economic processes. Achieving a better understanding of the formation of bubbles and the impact of contagion will no doubt determine the stability of future economies – let these two volumes be the starting point for a rational approach to a seemingly irrational phenomena.
Book Synopsis Investment Under Uncertainty by : Avinash K. Dixit
Download or read book Investment Under Uncertainty written by Avinash K. Dixit and published by Princeton University Press. This book was released on 1994 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.
Book Synopsis Have Financial Markets Become More Informative? by : Jennie Bai
Download or read book Have Financial Markets Become More Informative? written by Jennie Bai and published by . This book was released on 2012-12-01 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: The finance industry has grown, financial markets have become more liquid, and information technology allows arbitrageurs to trade faster than ever. But have market prices then become more informative? We use stock and bond prices to forecast earnings and find that the information content of market prices has not improved since 1960. We use a model with information acquisition and investment to link financial development, price informativeness, and allocational efficiency. As information costs fall, the predictable component of future earnings should rise and hence improve capital allocation and welfare. We find that this component has remained stable over the past 50 years. When we decompose price informativeness into real price efficiency and forecasting price efficiency, we find that both have remained stable.
