Investment, alternative measures of fundamentals and revenue indicators

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Abstract

This article investigates the significance of revenue management in determining firm-level fixed capital investment when investment opportunities are controlled for by two of the recent empirical fundamentals: profitability shocks and the mandated investment rate. The data set includes US-based manufacturing firms. The results show that financial variables are important determinants of investment but they are not as significant as claimed by some studies. The explanatory power of financial variables in the investment process declines with increasing significance of fundamentals. Another result is that investment by expected to be financially constrained firms tends to be less sensitive to changes in financial variables.

Original languageEnglish (US)
Pages (from-to)148-178
Number of pages31
JournalInternational Journal of Revenue Management
Volume3
Issue number2
DOIs
StatePublished - Jan 1 2009

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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