How Costly is External Financing ? Evidence From A Structural Estimation  

Oleh:

Hennessy, Christopher A. ; Whited, Toni M.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 62 no. 4 (Aug. 2007), page 1705-1746.
Topik: FINANCING; studies; simulation; models; financing; financial management
Fulltext: p 1705.pdf (231.86KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We apply simulated method of moments to a dynamic model to infer the magnitude of financing costs. The model features endogenous investment, distributions, leverage, and default. The corporation faces taxation, costly bankruptcy, and linear - quadratic equity flotation costs. For large (small) firms, estimated marginal equity flotation costs start at 5.0% (10.7%) and bankruptcy costs equal to 8.4% (15.1%) of capital. Estimated idnancing frictions are higher for low - dividend firms and those identified as constrained by the cleary and whited - wu indexes. In simulated data, many common proxies for financing constraints actually decrease when we increase financing cost parameters.

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