Investments and capital market imperfections, identification issues: a survey
Bruno Ćorić, University of Split, Faculty of Economics, Split, Croatia
If financial markets are perfect, the choice of the sources of finance does not influence investment decisions. However, financial markets are considered to be far from perfect. This review concentrates on the role of information asymmetry in determining real investment decisions. Despite the theoretical plausibility of a relationship between capital market imperfections and real investments, the empirical literature has found it difficult to identify this channel. Overall, more research is needed to identify a method that will not be subject to criticisms related to the use of cash-flow in the investment equation and will be based on the data that are relatively available across countries and over time.
Keywords: investment, asymmetric information, capital markets imperfections
Year: 2010 | Volume: 34 | Issue: 4 | Pages: 407 - 434
Full text (PDF) | E-mail this article | Download to citation manager
IV / 2010
Book review: Neue Konzepte zur Verbesserung der Innovationsfinanzierung bei kleinen und mittleren Unternehmen: Unternehmensbefragung und Handlungsempfehlungen für neue Finanzierungsinstrumente / Marianne Kulicke and Thomas Stahlecker. Stuttgart: Fraunhofe