The effects of time-to-build and regulation on investment timing and size
研究了建设周期和监管这两种延迟收入的因素如何影响企业的投资时机和规模决策，发现建设周期的不确定性会提前投资时机，而监管不确定性则可能增加投资规模。
This study investigates the effects of the delay of revenue generation on a firm’s investment timing and size decisions. Time-to-build and regulation are considered as internal and external factors that impede the firm’s instant revenue generation, respectively. We show that in the absence of regulation, uncertainty in time-to-build always advances the timing of investment; however, the capacity size is independent of time-to-build. We also show that in the absence of time-to-build, the presence of regulation increases the expected capacity size and the uncertainty of regulation amplifies this effect. When both time-to-build and regulation exist, uncertainty in the delay of revenue generation by the two factors can advance the investment timing and increase the size, improving firm value. • Time-to-build and regulation are considered as factors that delay revenue generation. • Uncertainty in time-to-build always advances investment timing. • Absent regulation, the optimal capacity size is independent of time-to-build. • Absent time-to-build, the presence of regulation increases expected capacity size. • Regulatory uncertainty can make positive impacts on investment timing and its size.