in The Review of Financial Studies
November 2009; p ublished online April 2009 .
Journal Article. Subjects: Production and Organizations; Intertemporal Choice and Growth; Macroeconomics: Consumption, Saving, Production, Employment, and Investment; Money and Interest Rates; Economics; Corporate Governance. 14635 words.
We take a simple q-theory model and ask how well it can explain external financing anomalies, both qualitatively and quantitatively. Our central insight is that optimal investment is an...