The DOI matches its Crossref record; 3 of the 3 references it cites were found in a registry or an index.
How Costly Is External Financing? Evidence from a Structural Estimation
Abstract
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 financing 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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Cites
Corporate financing and investment decisions when firms have information that investors do not have
Myers, S. C., & Majluf, N. S. (1984) · Journal of Financial Economics · doi:10.1016/0304-405x(84)90023-0 · Cited by 18,957
Financing Constraints and Corporate Investment
Fazzari, S. M., Hubbard, R. G., Petersen, B. C., Blinder, A. S., & Poterba, J. M. (1988) · Brookings Papers on Economic Activity · doi:10.2307/2534426 · Cited by 5,574
Optimal contracts and competitive markets with costly state verification
Townsend, R. M. (1979) · Journal of Economic Theory · doi:10.1016/0022-0531(79)90031-0 · Cited by 3,204
Cited by
Corporate social responsibility and access to finance
Cheng, B., Ioannou, I., & Serafeim, G. (2014) · Strategic Management Journal · doi:10.1002/smj.2131 · Cited by 3,896
The Collateral Channel: How Real Estate Shocks Affect Corporate Investment
Chaney, T., Sraer, D., & Thesmar, D. (2012) · American Economic Review · doi:10.1257/aer.102.6.2381 · Cited by 977
Deposit Competition and Financial Fragility: Evidence from the US Banking Sector
Egan, M., Hortaçsu, A., & Matvos, G. (2017) · American Economic Review · doi:10.1257/aer.20150342 · Cited by 435
Agency Conflicts and Cash: Estimates from a Dynamic Model
NIKOLOV, B., & WHITED, T. M. (2014) · The Journal of Finance · doi:10.1111/jofi.12183 · Cited by 363
Self-citationKuppuswamy, V., & Villalonga, B. (2016) · Management Science · doi:10.1287/mnsc.2015.2165 · Cited by 348
Metadata
- Authors
- HENNESSY, C. A., & WHITED, T. M.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2007-08
- Volume
- 62
- Issue
- 4
- Pages
- 1705-1745
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W2056674732
- Cited by
- 1,146
- References
- 3
- FWCI
- 136.11
- Type
- journal article
- Language
- en
- Open access
- closed
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