Dynamic Models and Structural Estimation in CorporateFinance

ArXiv ID: ssrn-2091854 “View on arXiv”

Authors: Unknown

Abstract

We review the last two decades of research in dynamic corporate finance, focusing on capital structure and the financing of investment. We first cover continuo

Keywords: Dynamic Corporate Finance, Capital Structure, Investment Financing, Continuous Time Models, Stochastic Processes, Corporate Finance

Complexity vs Empirical Score

• Math Complexity: 8.5/10
• Empirical Rigor: 3.0/10
• Quadrant: Lab Rats
• Why: The paper is a review of advanced theoretical models (continuous-time contingent claims, dynamic optimization) requiring heavy mathematical formalism, but it focuses on model exposition and intuition rather than presenting new data, backtests, or implementation details.

  flowchart TD
    A["Research Goal: Review Dynamic Corporate Finance Models"] --> B["Methodology: Continuous-Time Stochastic Processes"]
    B --> C["Data/Inputs: Firm-level financial data"]
    B --> D["Computational Processes: Structural Estimation"]
    C --> D
    D --> E["Outcome 1: Optimal Capital Structure"]
    D --> F["Outcome 2: Investment Financing Dynamics"]
    D --> G["Outcome 3: Macro-Financial Linkages"]
    E --> H["Key Findings: Models Explain Debt Heterogeneity & Investment Sensitivity"]
    F --> H
    G --> H