I show that firms' ability to adjust variable capital in response to productivity shocks has important implications for the interpretation of the widely documented investment-cash flow sensitivities. The variable capital adjustment is sufficient for firms to capture small variations in profitability, but when the revision in profitability is relatively large, limited substitutability between the factors of production may call for fixed capital investment.
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- Partial requirement for: Ph. D., Arizona State University, 2013Note typethesis
- Includes bibliographical references (p. 62-66)Note typebibliography
- Field of study: Business administration