Author: Trang Diep LePublisher:
ISBN:
Category : Corporations
Languages : en
Pages : 108
Book Description
Corporate Investment and Financing Constraints
Author: Trang Diep LePublisher:
ISBN:
Category : Corporations
Languages : en
Pages : 108
Book Description
Financing constraints and corporate investment
Author: Steven FazzariFinancing constraints and corporate investment : response to Kaplan and Zingales
Author: Steven M. FazzariTesting for the Impact of Financing Constraints of Corporate Investment
Author: Benedicte Millet-ReyesPublisher:
ISBN:
Category : Capital investments
Languages : en
Pages : 182
Book Description
Corporate Investment and Financing Constraints
Author: Bert D'EspallierPublisher:
ISBN:
Category :
Languages : en
Pages : 33
Book Description
Recent studies in corporate finance estimate firm-varying investment-cash flow sensitivities (ICFS) when empirically studying financing constraints. We go along with this approach but suggest two methodological improvements. First, we estimate firm-varying ICFS by modeling heterogeneous slopes in the investment equation thereby taking into account the dynamics of the underlying investment model. Secondly, we study the drivers of ICFS in an ex-post regression-analysis thereby accounting for non-linear effects and lsquo;ceteris-paribus'-conditions. The results show that the firm's ICFS is negatively related to size, dividend payout, profitability, and positively related to leverage suggesting a tight link between ICFS and the firm's constraints-status. Additionally, ICFS is negatively related to the level and volatility of cash flow, suggesting that a significant ICFS occurs mainly in low cash flow-states and can be lowered by the practice of cash-buffering. Finally, we find evidence of a non-linear tangibility-effect in line with the non-monotonic credit multiplier.
Corporate Investment and Financing Constraints
Author: Allard BruinshoofdFinancing Constraints and Corporate Investment
Author: Steven M. FazzariPublisher:
ISBN:
Category : Capital market
Languages : en
Pages : 45
Book Description
Most empirical models of investment rely on the assumption that firms are able to respond to prices set in centralized securities markets (through the "cost of capital" or "q"). An alternative approach emphasizes the importance of cash flow as a determinant of investment spending, because of a "financing hierarchy, " in which internal finance has important cost advantages over external finance. We build on recent research concerning imperfections in markets for equity and debt. This work suggests that some firms do not have sufficient access to external capital markets to enable them to respond to changes in the cost of capital, asset prices, or tax-based investment incentives. To the extent that firms are constrained in their ability to raise funds externally, investment spending may be sensitive to the availability of internal finance. That is, investment may display "excess sensitivity" to movements in cash flow. In this paper, we work within the q theory of investment, and examine the importance of a financing hierarchy created by capital-market imperfections. Using panel data on individual manufacturing firms, we compare the investment behavior of rapidly growing firms that exhaust all of their internal finance with that of mature firms paying dividends. We find that q values remain very high for significant periods of time for firms paying no dividends, relative to those for mature firms. We also find that investment is more sensitive to cash flow for the group of firms that our model implies is most likely to face external finance constraints. These results are consistent with the augmented model we propose, which takes into account different financing regimes for different groups of firms. Some extensions and implications for public policy are discussed at the end
Corporate Investment and Financing Constraints
Author: Allard BruinshoofdFinancing Constraints and Corporate Investment
Author: Steven M. FazzariPublisher:
ISBN:
Category :
Languages : en
Pages : 61
Book Description
Most empirical models of investment rely on the assumption that firms are able to respond to prices set in centralized securities markets (through the quot;cost of capitalquot; or quot;qquot;). An alternative approach emphasizes the importance of cash flow as a determinant of investment spending, because of a quot;financing hierarchy,quot; in which internal finance has important cost advantages over external finance. We build on recent research concerning imperfections in markets for equity and debt. This work suggests that some firms do not have sufficient access to external capital markets to enable them to respond to changes in the cost of capital, asset prices, or tax-based investment incentives. To the extent that firms are constrained in their ability to raise funds externally, investment spending may be sensitive to the availability of internal finance. That is, investment may display quot;excess sensitivityquot; to movements in cash flow. In this paper, we work within the q theory of investment, and examine the importance of a financing hierarchy created by capital-market imperfections. Using panel data on individual manufacturing firms, we compare the investment behavior of rapidly growing firms that exhaust all of their internal finance with that of mature firms paying dividends. We find that q values remain very high for significant periods of time for firms paying no dividends, relative to those for mature firms. We also find that investment is more sensitive to cash flow for the group of firms that our model implies is most likely to face external finance constraints. These results are consistent with the augmented model we propose, which takes into account different financing regimes for different groups of firms. Some extensions and implications for public policy are discussed at the end.
Bank-based and Market-based Financial Systems
Author: Asl? Demirgüç-KuntPublisher: World Bank Publications
ISBN:
Category : Bancos
Languages : en
Pages : 73
Book Description