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Time To Build with Flexible Capacity

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7
Author
Felix Huang
Category
Financial
Date Posted
2022/06/20
Date Retrieved
2022/06/21
Date Revised
2022/06/21
Date Written
2022/01/09
Description
A model with time to build predicts that the correlation between stock returns and future investment is too low. With flexible capacity utilization however the result is reversed as changes in utilization during the investment lag correlate highly with stock returns. Thus the interaction between time to build and flexible utilization is quantitatively important especially in the presence of costly irreversibility.
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JEL Classifications
G12
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URL
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4141725
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