Investment and Financing Decisions when Liquidation is Costly

摘要: In this paper we investigate how expected liquidation costs affect a firm's investment and financing decisions. We hypothesise that comovement of firm industry sales measures such costs, which create premium on external finance make more sensitive to the availability internal funds. Supportive evidence for conjecture is obtained from behaviour sample 206 large Dutch manufacturing firms observed during period 1983-1996. also demonstrate our measure does not convey same information other proxies - like leverage, retention practice or size already contain.