PLEASE NOTE
Capital Ideas is now Chicago Booth Review but unfortunately original articles are no longer available. If you click through you will be taken to the Internet Archive site to find an archived copy.
Capital Ideas is now Chicago Booth Review but unfortunately original articles are no longer available. If you click through you will be taken to the Internet Archive site to find an archived copy.
As a firm’s cash flow increases, it is expected that its investment in potential revenue-generating opportunities will also increase. However, recent research examining the auctions of oil and gas leases shows that greater cash flow does not lead to investment in a greater number of tracts, a larger amount of acreage, or more productive, revenue-generating tracts. Instead, greater cash flow leads to paying more for leases that are not more productive.
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