We use cookies to ensure that we give you the best experience on our website. You can change your cookie settings at any time. Otherwise, we'll assume you're OK to continue.

Durham Research Online
You are in:

Liquidity constraints and the firms' investment return behavior.

Basu, P. and Guariglia, A. (2002) 'Liquidity constraints and the firms' investment return behavior.', Economica., 69 (276). pp. 563-581.


We construct a production-based model, which compares the investment return behaviour of liquidity-constrained firms with that of unconstrained firms. The key testable implication that emerges from the model is that the investment returns of the constrained firms are predictable, while those of the unconstrained firms are not. We test this implication indirectly, verifying whether the capital stock and investment returns of the latter firms lead those of the former, and directly, via the estimation of an Euler equation. Our results are consistent with the model's prediction.

Item Type:Article
Full text:Full text not available from this repository.
Publisher Web site:
Record Created:02 Apr 2007
Last Modified:10 Jun 2009 10:46

Social bookmarking: del.icio.usConnoteaBibSonomyCiteULikeFacebookTwitterExport: EndNote, Zotero | BibTex
Usage statisticsLook up in GoogleScholar | Find in a UK Library