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    Rights statement: This is a pre-copy-editing, author-produced PDF of an article accepted for publication in The Review of Financial Studies following peer review. The definitive publisher-authenticated version Sudipto Dasgupta, Erica X N Li, Dong Yan; Inventory Behavior and Financial Constraints: Theory and Evidence, The Review of Financial Studies, , hhy064, https://doi.org/10.1093/rfs/hhy064 is available online at: https://academic.oup.com/rfs/article/32/3/1188/5036235

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Inventory Behavior and Financial Constraints: Theory and Evidence

Research output: Contribution to journalJournal article

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Inventory Behavior and Financial Constraints : Theory and Evidence. / Dasgupta, Sudipto; Li, Erica; Yan, Dong.

In: Review of Financial Studies, Vol. 32, No. 3, 01.03.2019, p. 1188–1233.

Research output: Contribution to journalJournal article

Harvard

Dasgupta, S, Li, E & Yan, D 2019, 'Inventory Behavior and Financial Constraints: Theory and Evidence', Review of Financial Studies, vol. 32, no. 3, pp. 1188–1233. https://doi.org/10.1093/rfs/hhy064

APA

Dasgupta, S., Li, E., & Yan, D. (2019). Inventory Behavior and Financial Constraints: Theory and Evidence. Review of Financial Studies, 32(3), 1188–1233. https://doi.org/10.1093/rfs/hhy064

Vancouver

Dasgupta S, Li E, Yan D. Inventory Behavior and Financial Constraints: Theory and Evidence. Review of Financial Studies. 2019 Mar 1;32(3):1188–1233. https://doi.org/10.1093/rfs/hhy064

Author

Dasgupta, Sudipto ; Li, Erica ; Yan, Dong. / Inventory Behavior and Financial Constraints : Theory and Evidence. In: Review of Financial Studies. 2019 ; Vol. 32, No. 3. pp. 1188–1233.

Bibtex

@article{5d750b9915704a0284ab955316f93a93,
title = "Inventory Behavior and Financial Constraints: Theory and Evidence",
abstract = "We model the interaction of financial constraints, capacity constraints, and the response of production and inventory to cost and demand shocks. The model predicts that in response to favorable shocks, financially constrained firms are unable to build inventory as rapidly as are unconstrained firms. However, because the favorable shocks gradually ease the financial constraints, constrained firms continue to build inventory and eventually carry surplus inventory (relative to unconstrained firms) to unfavorable states. This allows them to deplete inventory more aggressively in response to unfavorable shocks. Our empirical evidence provides broad support for the model{\textquoteright}s predictions.",
author = "Sudipto Dasgupta and Erica Li and Dong Yan",
note = "This is a pre-copy-editing, author-produced PDF of an article accepted for publication in The Review of Financial Studies following peer review. The definitive publisher-authenticated version Sudipto Dasgupta, Erica X N Li, Dong Yan; Inventory Behavior and Financial Constraints: Theory and Evidence, The Review of Financial Studies, , hhy064, https://doi.org/10.1093/rfs/hhy064 is available online at: https://academic.oup.com/rfs/article/32/3/1188/5036235 ",
year = "2019",
month = mar
day = "1",
doi = "10.1093/rfs/hhy064",
language = "English",
volume = "32",
pages = "1188–1233",
journal = "Review of Financial Studies",
issn = "0893-9454",
publisher = "Oxford University Press",
number = "3",

}

RIS

TY - JOUR

T1 - Inventory Behavior and Financial Constraints

T2 - Theory and Evidence

AU - Dasgupta, Sudipto

AU - Li, Erica

AU - Yan, Dong

N1 - This is a pre-copy-editing, author-produced PDF of an article accepted for publication in The Review of Financial Studies following peer review. The definitive publisher-authenticated version Sudipto Dasgupta, Erica X N Li, Dong Yan; Inventory Behavior and Financial Constraints: Theory and Evidence, The Review of Financial Studies, , hhy064, https://doi.org/10.1093/rfs/hhy064 is available online at: https://academic.oup.com/rfs/article/32/3/1188/5036235

PY - 2019/3/1

Y1 - 2019/3/1

N2 - We model the interaction of financial constraints, capacity constraints, and the response of production and inventory to cost and demand shocks. The model predicts that in response to favorable shocks, financially constrained firms are unable to build inventory as rapidly as are unconstrained firms. However, because the favorable shocks gradually ease the financial constraints, constrained firms continue to build inventory and eventually carry surplus inventory (relative to unconstrained firms) to unfavorable states. This allows them to deplete inventory more aggressively in response to unfavorable shocks. Our empirical evidence provides broad support for the model’s predictions.

AB - We model the interaction of financial constraints, capacity constraints, and the response of production and inventory to cost and demand shocks. The model predicts that in response to favorable shocks, financially constrained firms are unable to build inventory as rapidly as are unconstrained firms. However, because the favorable shocks gradually ease the financial constraints, constrained firms continue to build inventory and eventually carry surplus inventory (relative to unconstrained firms) to unfavorable states. This allows them to deplete inventory more aggressively in response to unfavorable shocks. Our empirical evidence provides broad support for the model’s predictions.

U2 - 10.1093/rfs/hhy064

DO - 10.1093/rfs/hhy064

M3 - Journal article

VL - 32

SP - 1188

EP - 1233

JO - Review of Financial Studies

JF - Review of Financial Studies

SN - 0893-9454

IS - 3

ER -