This study empirically verifies that the form of the adjustment cost function serves as an important mechanism in investment decision-making after confirming that the investment dispersion of Korean companies is pro-cyclical and can affect economic fluctuations. Specifically, it is revealed through empirical analysis using corporate financial data rather than a macroeconomic model that the investment adjustment cost function generally assumed in macroeconomics is asymmetric and irreversible in the Korean economy. In particular, since the substitution effect of the marginal value-to-cost of a one-unit investment in inter-temporal investment decision-making is affected by the additional adjustment cost from the sale of equipment assets, and not the investment in equipment assets, it is empirically proven to lead to an expansion of investment dispersion. This ultimately shows, albeit indirectly, that investment dispersion can affect economic fluctuations as the investment adjustment cost function influences the decision-making in investment. What is implied here is that the adjustment cost function is not merely a deep parameter that fits the dynamics of economic fluctuations in a macroeconomic model, but it could be a macro policy variable that can be endogenized through economic policy.

Preface
Executive Summary

Chapter 1 Introduction

Chapter 2 Relationship Between Corporate Investment and Business Cycles
　Section 1 Decision-Making in Corporate Investment
　Section 2 Investment Adjustment Cost Function of Corporations
　Section 3 Corporate Investment and Business Cycles
　Section 4 Corporate Investment and Business Cycles in Korea

Chapter 3 Corporate Investment Model and Empirical Methodology
　Section 1 Corporate Investment Decision Model
　Section 2 Data for Empirical Analysis
　Section 3 Empirical Methodology: Generalized Method of Moments

Chapter 4 Empirical Results: Investment and Business Cycles
　Section 1 Estimation of Investment Adjustment Cost Function
　Section 2 Investment Adjustment Cost Function and Business Cycles
　Section 3 Comparison Between Empirical Analysis and Simulation
　Section 4 Digression: Industry-Specific Investment Adjustment Cost Functions and Q-Theory

Chapter 5 Conclusion and Policy Implications
　Section 1 Conclusion and Limitations
　Section 2 Policy Implications

References
Appendices
ABSTRACT