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Author: Simon Döring Publisher: ISBN: Category : Languages : en Pages : 15
Book Description
We examine the role of a country's institutional framework for investment and financing activities. A country's financial structure, investor rights, and legal environment are important determinants of the relation between internal cash flow and firms' investment and financing behavior. Firms from countries with a more developed institutional framework exhibit higher financing cash flow sensitivities. These firms are more likely to substitute a cash flow shortfall with equity issues. Conversely, firms' investment-cash flow sensitivity is higher in countries with a less developed institutional framework.
Author: Simon Döring Publisher: ISBN: Category : Languages : en Pages : 15
Book Description
We examine the role of a country's institutional framework for investment and financing activities. A country's financial structure, investor rights, and legal environment are important determinants of the relation between internal cash flow and firms' investment and financing behavior. Firms from countries with a more developed institutional framework exhibit higher financing cash flow sensitivities. These firms are more likely to substitute a cash flow shortfall with equity issues. Conversely, firms' investment-cash flow sensitivity is higher in countries with a less developed institutional framework.
Author: Charlotte Ostergaard Publisher: ISBN: Category : Languages : en Pages : 52
Book Description
We study how nonlisted firms trade off financial, real, and distributive uses of cash. We show that firms' marginal value of cash (MVC) affects the mix of external and internal finance used to absorb fluctuations in cash flows; in particular, high-MVC firms employ substantially more external finance on the margin. Linking firms to their main bank, we find that shocks to bank finance affect firms' trade-offs and have real effects in high-MVC firms, making investment more sensitive to firm cash flow. Our analysis suggests that shocks to external financing costs are transmitted to the real economy via firms' marginal value of cash.
Author: Klaas Mulier Publisher: ISBN: Category : Languages : en Pages : 42
Book Description
Low cash flow volatility firms receive stronger signals about future cash flow from a given cash flow shock, yielding a larger drop in demand for external finance and their cost of external finance, implying higher investment-cash flow sensitivities (ICFS). Empirical analysis in 6 European countries confirms this. Considering firms with the same cash flow volatility, ICFS are more pronounced for financially constrained firms (cf. Fazzari et al. (1988)). Considering firms with the same level of financial constraints, ICFS are more pronounced for firms with low cash flow volatility (cf. Kaplan and Zingales (1997)). The contradictory findings in the literature may be explained by cash flow volatility.
Author: Charlotte Ostergaard Publisher: ISBN: Category : Cash flow Languages : en Pages : 0
Book Description
We study how nonlisted firms trade off financial, real, and distributive uses of cash. We show that firms' marginal value of cash (MVC) affects the mix of external and internal finance used to absorb fluctuations in cash flows; in particular, high-MVC firms employ substantially more external finance on the margin. Linking firms to their main bank, we find that shocks to bank finance affect firms' trade-offs and have real effects in high-MVC firms, making investment more sensitive to firm cash flow. Our analysis suggests that shocks to external financing costs are transmitted to the real economy via firms' marginal value of cash.
Author: Xin (Simba) Chang Publisher: ISBN: Category : Languages : en Pages : 53
Book Description
We study how firms allocate cash flow by estimating the cash-flow sensitivities of various uses of cash flow. We decompose cash flow into a transitory and a permanent component and focus on the allocation of the transitory component, which by construction contains little information about future growth opportunities. We find that more financially constrained firms allocate more transitory cash flow to cash savings and direct less toward investment than do less constrained firms, consistent with constrained firms accumulating liquidity to buffer against future financial constraints. We also illustrate several methodological advantages of our approach over alternative methods in previous studies.
Author: Niclas Andrén Publisher: ISBN: Category : Languages : en Pages : 33
Book Description
According to a recent conjecture in the literature, earnings have become a poorer proxy for cash flow from operations over time. We find that since 1988, when cash flow statements started to be consistently reported in Compustat, the cash effectiveness of earnings has actually increased for a large sample of US manufacturing firms. This occurs despite the introduction of fair value accounting and increasing accounting accruals during the last three decades. The evidence suggests that this puzzle is explained by more efficient working capital management. Also contrary to the conjecture, using more comprehensive measures of cash flow does not restore the investment-cash flow sensitivity, which continues to be around 0.05 in more recent periods. We end by noting that the investment model used in the literature can be enhanced by including accruals, since it leads to a more precise estimation of cash flow.
Author: Inder K. Khurana Publisher: ISBN: Category : Languages : en Pages : 38
Book Description
Prior research has posited that market imperfections and the lack of institutions which protect investor interests create a divergence between the cost of internal and external funds, thereby constraining firms' ability to fund investment projects through external financing. One consequence of financial constraints is that it forces firms to manage their cash flows to finance potentially profitable projects. A related stream of research documents that financial constraints due to costly external financing are more pronounced in underdeveloped financial markets. In this paper we examine the influence of financial development on the demand for liquidity by focusing on how financial development affects the sensitivity of firms' cash holdings to their cash flows. Using firm-level data for 35 countries covering about 12,782 firms for the years 1994-2002, we find the sensitivity of cash holdings to cash flows decreases with financial development. We also consider additional implications of firms' cash flow sensitivity of cash with respect to firm size and business cycles. Overall, we provide new cross-country evidence on the role of financial development on financial constraints.
Author: Heitor Almeid Publisher: ISBN: Category : Languages : en Pages : 28
Book Description
This paper analyzes the investment behavior of firms under a quantity constraint on the amount of external funds which can be raised at a given cost (credit constraints). In this world, investment-cash flow sensitivities decrease in the degree of credit constraints, until a firm becomes effectively unconstrained. This generates a acirc;not;SU-shapedacirc;not;? curve for the relationship between sensitivities and credit constraints. Froman empirical perspective, the good news is that we suggest a theoretically consistent way to identify the impact of financial constraints on investment behavior, at least under the condition that financial constraints affect primarily the quantity of credit available to firms. The bad news is that our prediction is in a sense the opposite as the one explored in previous empirical literature.
Author: Iwan J. Azis Publisher: Springer ISBN: 9812872841 Category : Business & Economics Languages : en Pages : 129
Book Description
This book discusses the risks and opportunities that arise in Emerging Asia given the context of a new environment in global liquidity and capital flows. It elaborates on the need to ensure financial and overall economic stability in the region through improved financial regulation and other policy measures to minimize the emergent risks. "Managing Elevated Risk: Global Liquidity, Capital Flows, and Macroprudential Policy—An Asian Perspective" also explores the range of policy options that may be deployed to address the impact of global liquidity on domestic financial and socio-economic conditions including income inequality. The book is primarily aimed at policy makers, financial market regulators and supervisory agencies to help them improve national regulatory systems and to promote harmonization of national regulations and practices in line with global standards. Scholars and researchers will also gain important information and knowledge about the overall impacts of changing global liquidity from the book.
Author: Simon Döring
Author: Simon Döring
Author: Charlotte Ostergaard
Author: Heitor Almeida
Author: Klaas Mulier
Author: Charlotte Ostergaard
Author: Xin (Simba) Chang
Author: Niclas Andrén
Author: Inder K. Khurana
Author: Heitor Almeid
Author: Iwan J. Azis