...Hyun Soo Doh; Yiyao Wang We develop a credit-risk model to study the informational role of investment in an economy susceptible to large liquidity shocks. Firms' investment decisions carry information about their asset quality, thereby mitigating informational frictions when firms enter bankruptcy...

... of her wealth. We particularly focus on the effects of liquidity constraints on the individual's optimal annuitization decision, concerning their effects on the optimal investment and consumption strategies. We show that the annuitization decision can be significantly affected by the extent to which...

... flow is repaying debt, followed by buttressing cash reserves and financing investment. On average, Korean firms allocate 38.5% of cash flow to repaying debt (specifically, 27.3% to paying off short-term debt and 11.2% long-term debt), 32.1% to buttressing cash reserves and 21.5% to financing investment...