The Department of Banking and Financial Management
announces  the upcoming seminar with
Prof. Plutarchos Sakellaris, Athens University of Economics and Business

“How do Firms Finance Lumpy Adjustment?”

Seminar Organizers: Assist. Prof. Michail Anthropelos, Prof. George Skiadopoulos

Abstract:
We study how firms finance lumpy adjustment in capital and employment using U.S. firm-level data from Compustat.
Lumpy adjustment is preceded by a finance preparatory phase. During this phase firms use primarily two margins in order to expand or contract capacity, namely, cash balances and debt, but these margins are not perfect substitutes.
Cash balances rise (fall) temporarily in preparation to lumpy expansion (contraction). Firms de-leverage (increase leverage) in preparation to lumpy expansion (contraction).
Leverage increases slowly often several years after the lumpy adjustment. Understanding the financing of lumpy adjustment is highly relevant from a macroeconomic perspective as lumpy expansions and contractions drive a disproportionate share in the aggregate volatility of fixed investment, Tobin’s Q, aggregate debt issuance and corporate cash use.

Plutarchos Sakellaris is Professor at Athens University of Economics and Business. He has a PhD in Economics from Yale University and his work has been published in the American Economic Review, the International Economic Review, the Journal of Monetary Economics, the Review of Economics and Statistics, the Journal of Financial Stability and other academic journals.  From 1991 to 2002 he was faculty member at the University of Maryland-College Park.  From 2008 to 2012 he was Vice President of the European Investment Bank and prior to that he held the position of Chairman of the Council of Economic Advisers at the Hellenic Ministry of Economy and Finance.  He has also served as Staff Economist at the Federal Reserve Board and as Visiting Expert at the European Central Bank.