Does firms' financial status affect plant-level investment and exit decisions?

Winter, Joachim

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URL:	https://ub-madoc.bib.uni-mannheim.de/2864
URN:	urn:nbn:de:bsz:180-madoc-28649
Document Type:	Working paper
Year of publication:	1998
The title of a journal, publication series:	Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung
Volume:	98-48
Place of publication:	Mannheim
Publication language:	English
Institution:	Außerfakultäre Einrichtungen > SFB 504 (-2008) School of Law and Economics > Graduiertenkolleg VWL/BWL
MADOC publication series:	Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject:	330 Economics
Classification:	JEL: E44 G31 D92 ,
Subject headings (SWD):	USA , Investitionspolitik , Desinvestition , Finanzierung , Schätzung , Marktausstieg
Keywords (English):	investment , divestiture , financial constraints
Abstract:	This paper investigates the influence of a firm's financial status on the within-firm allocation of funds, reflected in its plant-level investment and exit decisions. In the empirical analysis, financial status is measured by both standard measures and an indicator variable recently suggested by Kaplan and Zingales. Based on these firm-level financial variables and on plant-level investment and production data from the U.S. Census Bureau's Longitudinal Research Database (LRD), econometric models of plant operating regimes are estimated which summarize investment and exit decisions. The empirical evidence supports the view that firm-level financial status affects investment and market exit decisions observed at the plant level.
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