Title: Investment, alternative measures of fundamentals and revenue indicators

Authors: Nihal Bayraktar

Addresses: School of Business Administration, Penn State University Harrisburg, Middletown, PA 17057, USA

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.

Keywords: financing constraints; financial variables; fundamentals; fixed capital investment; revenue management; revenue indicators; profitability shocks; mandated investment rate; manufacturing firms.

DOI: 10.1504/IJRM.2009.024162

International Journal of Revenue Management, 2009 Vol.3 No.2, pp.148 - 178

Published online: 27 Mar 2009 *

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