The dynamics of external financing
2000 (English)Report (Other academic)
A dynamic process underlying firms' discrete financial choices has previously been found, but without controlling for unobserved heterogeneity, this dependence can either be of a"true"nature or an effect of firm-specific characteristics that we cannot observe. This study extends previous research focusing on firms' discrete external financing decision by adapting a model by Honoré and Kyriazidou (2000), which accommodates both fixed effects and a lagged dependent variable, which makes it possible to establish the nature of the dependence. We find that there is a smoothing of financing, even after controlling for unobserved heterogeneity, and also that unobserved heterogeneity plays a significant explanatory role.
Place, publisher, year, edition, pages
Uppsala: Nationalekonomiska institutionen , 2000. , 35 p.
Working paper, ISSN 0284-2904
IdentifiersURN: urn:nbn:se:uu:diva-2487ISBN: 99-3357842-1OAI: oai:DiVA.org:uu-2487DiVA: diva2:128748