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Endogenous longevity and the value-maximizing firm

Author

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  • Zsolt Becsi

    (Federal Reserve Bank of Atlanta)

Abstract

We develop a simple analytical framework where the longevity of profit-maximizing firms requires costly resources. We show that a firm's longevity and value are positively related to the firm''s pricing power, cash reserves, honesty, and ratio of equity to debt financing.

Suggested Citation

  • Zsolt Becsi, 2002. "Endogenous longevity and the value-maximizing firm," Economics Bulletin, AccessEcon, vol. 5(7), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-02e20004
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    References listed on IDEAS

    as
    1. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    2. Merton H. Miller & Franco Modigliani, 1961. "Dividend Policy, Growth, and the Valuation of Shares," The Journal of Business, University of Chicago Press, vol. 34, pages 411-411.
    3. Richard E. Caves, 1998. "Industrial Organization and New Findings on the Turnover and Mobility of Firms," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1947-1982, December.
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    Cited by:

    1. Shabir Ahmad & Rosmini Omar & Farzana Quoquab, 2019. "Corporate Sustainable Longevity: Scale Development and Validation," SAGE Open, , vol. 9(1), pages 21582440188, January.

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    More about this item

    Keywords

    Intertemporal Profit Maximization;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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