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Cover Page -- Title Page -- Copyright Page -- Contents -- Figures -- I. Introduction -- II. Model -- 1. Timing of Events -- A. First-Best Investment -- B. Contracting Framework -- III. Equilibrium Financing and Investment -- 2. Equilibrium Payoffs and Welfare Loss -- IV. Extensions and Discussions -- A. Aggregate Uncertainty -- B. Multiple Assets -- C. Endogenous Default -- V. Policy Options -- A. Ex Ante Policy -- B. Ex Post Policy -- VI. Conclusion -- References -- Footnotes.

We propose a tax-adjusted q model with physical and intangible assets and estimate it with a self-collected comprehensive database of intangible assets. The presence of intangibles changes the accounting and economic measures of q. We show that when tax changes are temporary, the q model can be estimated by adjusting for the firmâ??s intangible stock and intangible intensity. We estimate our model using temporary investment tax incentive policies in the United States in the early 2000s. When the q-model accounts for intangible assets, the estimated investment elasticity to tax incentives is ge

I study whether firms' reliance on intangible assets is an important determinant of financing constraints. I construct new measures of firm-level physical and intangible assets using accounting information on U.S. public firms. I find that firms with a higher share of intangible assets in total assets start smaller, grow faster, and have higher Tobin's q. Asset tangibility predicts firm dynamics and Tobin's q up to 30 years but has diminishing predicative power. I develop a model of endogenous financial constraints in which firm size and value are limited by the enforceability of financial con