An analysis of corporate investment decisions

    Project: Research project

    Description

    The main purpose of the project is to provide an incremental insight into the determinants of the corporate investment. Since the Modigliani and Miller (1958) theorem of the separation of financing and investment decisions, a number of researchers have attempted to prove that in the presence of capital market imperfections the investment policy depends on firms' financial positions (e.g. Fazzari, Hubbard and Peterson (1998)). However, the results of different empirical findings are not always consistent and depend on the choice of sample, proxies and used methodology (Kaplan and Zingales (1995)). Moreover they may differ for the various countries and governance systems (Kadapakkam, Kumar and Riddick (1998)).
    Consequently a more coherent analysis of the factors influencing investment decisions, including developing new testable hypotheses and linking the theory and empirical data more closely is required, and will be done as part of the research. Moreover, the impact of the companies' investment opportunities (in combination with assets in place) on the risk of stock will be investigated. Later, a focus will made made on the modern valuation of investment projects, which is already starting to have a major impact on corporate investment decision making.
    Short titleAn analysis of corporate investment decisions
    StatusFinished
    Effective start/end date15/03/9915/03/03