Abstract:
This paper relaxes the homogeneity assumption of corporations’ capital needs, based on the difference of corporations’ organizational characteristics, financing needs and financing capacity, with the difference of financing constraints in the different stages of the corporate life cycle as the starting point. Integrating investors irrational sentiment’s influence on external financing environment, this paper dynamically investigates the influence of changes in investor sentiment on corporations’ financing options and the relaxing effect of financing constraints. We find that corporations’ financing constraints condition is different in the different stages of corporate life cycle. Also, the degree and financing method of relaxing financing constraints are different through using high investor sentiment.
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