A new look at firm market value, investment, and adjustment costs

Article Abstract:

Two new methods have been developed for estimating structural parameters related to adjustment costs. The first procedure is based on a closed-form solution for the value of the firm's optimal program obtained through the Bellman equation. The other is based on the first-order condition for investment. Both techniques are better than the conventional Q regression approach with sensitivities that are ten times greater than that for the latter. It was also estimated that the cost of installing new capital is between 10% to 13% of the total investment cost.

Accounting Methods NEC, Methods, Measurement, Accounting, Capital investments, Cost accounting, Cost (Economics), Costs (Economics)

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Further evidence on Japanese direct investment in U.S. manufacturing

Article Abstract:

The analysis of Bruce Kogut and Sea Jin Chiang in 'Technological Capabilities and Japanese Foreign Direct Investment in the US' is broadened in examining the cross-industry factors accounting for Japanese direct investment into US production. Results indicate that the intensity of Japanese R&D is a significant beneficial determinant for Japanese foreign direct investment as a whole and for greenfield investments.

Research, Foreign investments, Japan, Economic policy

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Investment under uncertain market conditions

Article Abstract:

Investment decisions of firms are studied in response to uncertain market conditions using stock market information on excess returns. The developed structural framework is used to analyze US firms in four manufacturing industries from 1959-1985. Economically sensible estimates of the cost of adjusting the capital stock were derived.

Economic aspects, Business enterprises

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