Critical Finance Review > Vol 2 > Issue 1

Dynamic Corporate Finance is Useful: A Comment on Welch (2013)

Ilya A. Strebulaev, Stanford University and NBER, Toni M. Whited, University of Rochester
 
Suggested Citation
Ilya A. Strebulaev and Toni M. Whited (2013), "Dynamic Corporate Finance is Useful: A Comment on Welch (2013)", Critical Finance Review: Vol. 2: No. 1, pp 173-191. http://dx.doi.org/10.1561/104.000000011

Publication Date: 01 Jul 2013
© 2013 I. A. Strebulaev and T. M. Whited
 
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In this article:
1. Specific Criticisms of the Dynamic Paradigm 
2. Alternative Methodologies 
3. Other Themes 
4. Unvoiced Critiques 
5. Tests 
6. Conclusion 
References 

Abstract

Welch (2013) critiques recent work in dynamic corporate finance. We offer the contrasting view that there is no logical reason to dismiss entire research methodologies, and that many methods can be useful. We explain why dynamic models and structural estimation are useful research tools, as well as why the criticisms of this research paradigm in Welch (2013) are incorrect.

DOI:10.1561/104.000000011