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Investment and Financial Decision Making in the UK Company Sector

Published online by Cambridge University Press:  17 August 2016

Carol Padgett
Carol Padgett*
Affiliation:
Reading University
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Summary

This paper looks at the interrelationships between the real and financial decisions made by the UK industrial and commercial company sector. It uses a capital gains augmented version of Purvis’ integrated expenditure and portfolio allocation model, a development of the Brainard-Tobin “pitfalls” approach. Investment, dividend payments, working capital, debt and equity decisions are modelled simultaneously subject to an income constraint. The results show that the size and composition of the sector’s borrowing commitment play an important part in determining the level of capital spending.

Résumé

Résumé

L’article étudie la relation entre les décisions réelles et financières des entreprises des secteurs industriel et commercial en Grande-Bretagne. Il fait appel à une version élargie aux gains en capital du modèle de Purvis, intégrant les décisions de dépenses et d’allocation de portefeuille, lui-même un développement de l’approche de Brainard-Tobin (le “pitfalls model”). Les décisions d’investissement, d’attributions de dividendes, d’utilisation du capital et de composition de la dette et des fonds propres sont modélisés simultanément sous une contrainte de revenu. L’analyse montre que la taille et la composition des obligations d’emprunt sont des facteurs déterminants du niveau des dépenses de capital.

Keywords

210210
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 54 , Issue 2 , 1988 , pp. 191 - 220
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1988 

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References

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