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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Market frictions and corporate finance: An overview paper |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Mathematics and Financial Economics |
| Publisher | Springer |
| Geographical Reach | international |
| ISSN | 1862-9679 |
| Volume | 8 |
| Number | 4 |
| Page Range | 355 - 381 |
| Date | 2014 |
| Abstract Text | We present an overview of corporate-finance models where firms are subject to exogenous market frictions. These models, albeit quite simple, yield reasonable predictions regarding financing, pay-outs and default, as well as asset-pricing implications. The price to pay for the said simplicity is the need to use non-standard mathematical techniques, namely Singular and Impulse Stochastic Control. We explore the cases where a firm with fixed expected profitability has access to costly equity issuance as a refinancing possibility, and that where issuance is infinitely costly. We also present a model of bank leverage. |
| Digital Object Identifier | 10.1007/s11579-014-0121-5 |
| Other Identification Number | merlin-id:9646 |
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