Sala -1.26 EEG & Online
Artur is an associate professor of the department of Management at EEG – UMinho and a NIPE member. He hold a PhD in Business Administration from Universidade do Minho (2006). He was Vice-president of the School of Economics and Management from October 2011 to December 2020 and President of the Pedagogical Council of the School from April 2013 to October 2017. Previously he was deputy director of the Department of Management.
His research interests include Corporate Finance, Real options and Option valuation. His research has been published widely in journals such as Journal of Economic Dynamics and Control, International Review of Economics and Finance, Energy Economics, among others.
This paper studies investment timing and leverage decisions of firms under revenue
floors and caps. Floors and caps have significant effects, not only on investment timing and firm value, but also on leverage ratios and credit spreads. With leverage, a floor has a moderate effect if below a critical level. Above that level, the firm tends to issue less risky debt, being even able to issue risk-free debt, and the floor has a more significant effect, accelerating investment. A lower cap deters investment, increases leverage, but reduces credit spreads. When combined with a floor (in a collar regime) the effects of the cap become non-monotonic, as the firm is able to issue risk-free debt for intermediate levels of the cap. Uncertainty always deters investment, but the effects on leverage and credit spreads are non-monotonic.
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