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dc.contributor.authorBroll, Udoen_US
dc.contributor.authorWong, Keith K.P.en_US
dc.date.accessioned2010-06-08en_US
dc.date.accessioned2010-09-09T09:45:47Z-
dc.date.available2010-09-09T09:45:47Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/39801-
dc.description.abstractThis paper examines the interplay between the real and financial decisions of the competitive firm under output price uncertainty. The firm faces additional sources of uncertainty that are aggregated into a background risk. We show that the firm always chooses its optimal debt-equity ratio to minimize the weighted average cost of capital, irrespective of the risk attitude of the firm and the incidence of the underlying uncertainty. We further show that the firm's optimal input mix depends on its optimal debt-equity ratio, thereby rendering the interdependence of the real and financial decisions of the firm. When the background risk is either additive or multiplicative, we provide reasonable restrictions on the firm's preferences so as to ensure that the firm's optimal output is adversely affected upon the introduction of the background risk.en_US
dc.language.isoengen_US
dc.publisherUniv. of Technology, Fac. of Business Management and Economics Dresdenen_US
dc.relation.ispartofseriesDresden discussion paper series in economics 04/10en_US
dc.subject.jelD21en_US
dc.subject.jelD81en_US
dc.subject.jelG32en_US
dc.subject.ddc330en_US
dc.subject.keywordBackground risken_US
dc.subject.keywordCapital structureen_US
dc.subject.keywordPrice uncertaintyen_US
dc.subject.stwKapitalstrukturen_US
dc.subject.stwEntscheidung bei Unsicherheiten_US
dc.subject.stwFinanzierungstheorieen_US
dc.subject.stwPreisen_US
dc.subject.stwRisikoen_US
dc.subject.stwTheorieen_US
dc.titleThe firm under uncertainty: capital structure and background risken_US
dc.typeWorking Paperen_US
dc.identifier.ppn627496423en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
dc.identifier.repecRePEc:zbw:tuddps:0410-
Appears in Collections:Dresden Discussion Paper Series in Economics, Faculty of Business and Economics, TU Dresden

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