Investment under liquidity constraints and uncertainty: investigating the effects of irreversibility

Authors

  • Κωνσταντίνος Δράκος
  • Ελευθέριος Γούλας
  • Χρήστος Καλλανδράνης

Keywords:

Capital Market Imperfections, Investment, Irreversibility, Uncertainty

Abstract

Irreversibility affects investment spending via two channels, a) financial constraints and b) uncertainty. According to our results, the impact of cash flow is accentuated for sectors facing higher irreversibility, implying that their investment spending is more sensitive to internal funds. In addition, the investment-uncertainty derivative is of larger magnitude for the group of sectors facing higher irreversibility.

JEL Classifications: C23; E22; G31

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Published

20-10-2006

How to Cite

Δράκος Κ., Γούλας Ε., & Καλλανδράνης Χ. (2006). Investment under liquidity constraints and uncertainty: investigating the effects of irreversibility. SPOUDAI Journal of Economics and Business, 56(4), 7–16. Retrieved from http://spoudai.org/index.php/journal/article/view/379

Issue

Vol. 56 No. 4 (2006): Vol 56, No 4 (2006)

Section

Articles

License

Copyright (c) 2006 SPOUDAI Journal of Economics and Business

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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.