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Capital Management in a Stochastic Earnings Framework (2006–2008)

Abstract:
The traditional suite of methods relating to the complex interplay between corporate valuation, corporate financing policy and optimal capital structure ignore the ability of managers and investors to react strategically to events as they unfold. This project will examine these issues in an entirely new framework that incorporates the unpredictable nature of future cash flows and they way in which investors react as information is revealed. Our research program investigates the interaction between the strategic options to react to new information and financing policy - how does the existence of the strategic options (that are ignored by the standard models) impact on the firm's dynamic choice of how to finance its assets?
Grant type:
ARC Discovery Projects
Researchers:

  • Professor Stephen Gray

    Malcolm Broomhead Chair in Finance
    School of Business
    Faculty of Business, Economics and Law
Funded by:
Australian Research Council