Investment Timing for Dynamic Business Expansion
研究企业动态扩张的投资时机，发现当扩张受限于企业规模时，内生资本成本高于价值最大化的回报阈值，管理者应在盈利改善时加速投资，这与传统文献建议的延迟相反。
We investigate the timing of business expansion. With an indefinite sequence of growth opportunities that have constant returns to scale, current investment neither displaces nor impairs future returns. In a dynamic setting with expansion restricted to a fraction of firm size, the endogenously determined cost of capital uniformly exceeds the value maximizing return threshold for expansion. Taking this into account, a manager accelerates investment to facilitate larger and more valuable future investments when earnings stochastically improve. This result is the opposite of deferral that the investment literature recommends due to irreversibility. This means that the managerial application of the cost of capital as an expansion hurdle rate is improperly conservative.