FRIC/Finance Seminar with Roberto Steri, University of Lausanne
The Department of Finance and FRIC, Center for Financial Frictions, are proud to announce the upcoming seminar with Roberto Steri, University of Lausanne.
Roberto Steri will present:
In order to identify the relevant sources of ﬁrms’ ﬁnancing constraints, we ask what ﬁnancial frictions matter for corporate policies. To that end, we build, solve, and estimate a range of dynamic models of corporate investment and ﬁnancing, embedding a host of ﬁnancial frictions. We focus on limited enforcement, moral hazard, and tradeoﬀ models. All models share a common technology, but diﬀer in the friction generating ﬁnancing constraints. Using panel data on Compustat ﬁrms for the period 1980-2015 and a more recent dataset on private ﬁrms from Orbis, we determine which features of the observed data allow to distinguish among the models, and we assess which model performs best at rationalizing observed corporate investment and ﬁnancing policies across various samples. Our tests, based on empirical policy function benchmarks, favor trade-oﬀ models for larger Compustat ﬁrms, limited commitment models for smaller ﬁrms, and moral hazard models for private ﬁrms. Our estimates point to signiﬁcant ﬁnancing constraints due to agency frictions.
Solbjerg Plads 3,