Article

Corporate Policies with Temporary and Permanent Shocks

Jean-Paul Décamps, S. Gryglewicz, E. Morellec et Stéphane Villeneuve

Résumé

We develop a dynamic model of investment, financing, liquidity and risk manage- ment policies in which firms face financing frictions and are subject to permanent and temporary cash ow shocks. In this model, the cash- ow sensitivity of cash increases with financing constraints and cash ow volatility. Persistence of cash ow shocks and volatility of permanent shocks help manage corporate liquidity. Temporary shocks volatility hinders it. More profitable firms access equity markets less often but raise more funds when doing so. Hedging permanent or temporary shocks may involve op- posite positions. Derivatives usage and asset substitution are not equivalent when hedging permanent shocks.

Mots-clés

Corporate policies; permanent vs; temporary shocks; financing frictions;

Codes JEL

  • F32: Current Account Adjustment • Short-Term Capital Movements
  • G31: Capital Budgeting • Fixed Investment and Inventory Studies • Capacity
  • G35: Payout Policy

Remplace

Jean-Paul Décamps, S. Gryglewicz, E. Morellec et Stéphane Villeneuve, « Corporate Policies with Temporary and Permanent Shocks », IDEI Working Paper, n° 843, janvier 2015, révision mars 2016.

Jean-Paul Décamps, S. Gryglewicz, E. Morellec et Stéphane Villeneuve, « Corporate Policies with Temporary and Permanent Shocks », TSE Working Paper, n° 15-552, janvier 2015, révision 15 juin 2016.

Référence

Jean-Paul Décamps, S. Gryglewicz, E. Morellec et Stéphane Villeneuve, « Corporate Policies with Temporary and Permanent Shocks », The Review of Financial Studies, vol. 30, n° 1, janvier 2017, p. 162–210.

Publié dans

The Review of Financial Studies, vol. 30, n° 1, janvier 2017, p. 162–210