Author: Rejie George
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
Book Description
A controversy exists on the use of the investment ndash; cash flow sensitivity as a measure of financing constraints of firms. We re-examine this controversy by analyzing firms affiliated to Indian business groups. We find a strong investment ndash; cash flow sensitivity for both group-affiliated and independent firms, but no significant difference in the sensitivity between them. Additional tests consistently demonstrate that investment ndash; cash flow sensitivity of Indian group affiliated firms is not significantly lower relative to unaffiliated firms.
Investment - Cash Flow Sensitivity and Financing Constraints
Author: Rejie George
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
Book Description
A controversy exists on the use of the investment ndash; cash flow sensitivity as a measure of financing constraints of firms. We re-examine this controversy by analyzing firms affiliated to Indian business groups. We find a strong investment ndash; cash flow sensitivity for both group-affiliated and independent firms, but no significant difference in the sensitivity between them. Additional tests consistently demonstrate that investment ndash; cash flow sensitivity of Indian group affiliated firms is not significantly lower relative to unaffiliated firms.
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
Book Description
A controversy exists on the use of the investment ndash; cash flow sensitivity as a measure of financing constraints of firms. We re-examine this controversy by analyzing firms affiliated to Indian business groups. We find a strong investment ndash; cash flow sensitivity for both group-affiliated and independent firms, but no significant difference in the sensitivity between them. Additional tests consistently demonstrate that investment ndash; cash flow sensitivity of Indian group affiliated firms is not significantly lower relative to unaffiliated firms.
Is Investment - Cash Flow Sensitivity a Good Measure of Financing Constraints?
Investment-cash Flow Sensitivities are Not Valid Measures of Financing Constraints
Author: Steven N. Kaplan
Publisher:
ISBN:
Category : Cash flow
Languages : en
Pages : 24
Book Description
Kaplan and Zingales [1997] provide both theoretical arguments and empirical evidence that investment-cash flow sensitivities are not good indicators of financing constraints. Fazzari, Hubbard and Petersen [1999] criticize those findings. In this note, we explain how the Fazzari et al. [1999] criticisms are either very supportive of the claims in Kaplan and Zingales [1997] or incorrect. We conclude with a discussion of unanswered questions.
Publisher:
ISBN:
Category : Cash flow
Languages : en
Pages : 24
Book Description
Kaplan and Zingales [1997] provide both theoretical arguments and empirical evidence that investment-cash flow sensitivities are not good indicators of financing constraints. Fazzari, Hubbard and Petersen [1999] criticize those findings. In this note, we explain how the Fazzari et al. [1999] criticisms are either very supportive of the claims in Kaplan and Zingales [1997] or incorrect. We conclude with a discussion of unanswered questions.
On the Relationship Between the Investment-cash Flow Sensitivity and the Degree of Financing Constraints
Do Financing Constraints Explain Why Investment is Correlated with Cash Flow?
Author: Steven N. Kaplan
Publisher:
ISBN:
Category :
Languages : en
Pages : 48
Book Description
This paper investigates the sources of the correlation between corporate cash flow and investment by undertaking an in-depth analysis of the 49 low-dividend firms identified by Fazzari, Hubbard, and Petersen (1988) as having an unusually high investment-cash flow sensitivity. We find that in only 15% of firm-years is there some question as to a firm's ability to access internal or external funds to increase investment. Strikingly, those firms that appear less financially constrained exhibit a significantly greater investment- cash flow sensitivity than firms that appear more financially constrained. We find this pattern for the entire sample period, for sub-periods, and for individual years. The results indicate that a higher sensitivity cannot be interpreted as evidence that a firm is more financially constrained. We discuss reasons and provide evidence why the opposite may be true. These findings challenge much of the existing evidence on the effects of financial constraints.
Publisher:
ISBN:
Category :
Languages : en
Pages : 48
Book Description
This paper investigates the sources of the correlation between corporate cash flow and investment by undertaking an in-depth analysis of the 49 low-dividend firms identified by Fazzari, Hubbard, and Petersen (1988) as having an unusually high investment-cash flow sensitivity. We find that in only 15% of firm-years is there some question as to a firm's ability to access internal or external funds to increase investment. Strikingly, those firms that appear less financially constrained exhibit a significantly greater investment- cash flow sensitivity than firms that appear more financially constrained. We find this pattern for the entire sample period, for sub-periods, and for individual years. The results indicate that a higher sensitivity cannot be interpreted as evidence that a firm is more financially constrained. We discuss reasons and provide evidence why the opposite may be true. These findings challenge much of the existing evidence on the effects of financial constraints.
Investment-cash Flow Sensitivities, Credit Rationing and Financing Constraints
Using Investment-cash Flow Sensitivity to Test for Financing Constraints
Author: Guiying Wu
Publisher:
ISBN:
Category : Cash flow
Languages : en
Pages : 192
Book Description
Publisher:
ISBN:
Category : Cash flow
Languages : en
Pages : 192
Book Description
The Determinants of Financing Obstacles
Author:
Publisher: World Bank Publications
ISBN:
Category : Corporations
Languages : en
Pages : 36
Book Description
Publisher: World Bank Publications
ISBN:
Category : Corporations
Languages : en
Pages : 36
Book Description
Asymmetric Effects of the Financial Crisis
Author: Mr.Vadim Khramov
Publisher: International Monetary Fund
ISBN: 1475502877
Category : Business & Economics
Languages : en
Pages : 28
Book Description
This paper uses the financial crisis of 2008 as a natural experiment to demonstrate that when measuring investment-cash flow sensitivity, the value of a firm's assets that can be used as collateral should be taken into account. Using panel data on U.S. firms from 1990 to 2011, it was found that the share of physical capital in assets has a strong influence on investment-cash flow sensitivity, which decreased substantially after the crisis when banks changed their expectations about the value of assets on firms' balance sheets. This paper deepens our understanding of firms' investment behavior.
Publisher: International Monetary Fund
ISBN: 1475502877
Category : Business & Economics
Languages : en
Pages : 28
Book Description
This paper uses the financial crisis of 2008 as a natural experiment to demonstrate that when measuring investment-cash flow sensitivity, the value of a firm's assets that can be used as collateral should be taken into account. Using panel data on U.S. firms from 1990 to 2011, it was found that the share of physical capital in assets has a strong influence on investment-cash flow sensitivity, which decreased substantially after the crisis when banks changed their expectations about the value of assets on firms' balance sheets. This paper deepens our understanding of firms' investment behavior.
Do Financing Constraints Explain why Investment is Correlated with Cash Flow?
Author: Steven N. Kaplan
Publisher:
ISBN:
Category : Cash flow
Languages : en
Pages : 33
Book Description
This paper investigates the sources of the correlation between corporate cash flow and investment by undertaking an in-depth analysis of the 49 low-dividend firms identified by Fazzari, Hubbard, and Petersen (1988) as having an unusually high investment-cash flow sensitivity. We find that in only 15% of firm-years is there some question as to a firm's ability to access internal or external funds to increase investment. Strikingly, those firms that appear less financially constrained exhibit a significantly greater investment- cash flow sensitivity than firms that appear more financially constrained. We find this pattern for the entire sample period, for sub-periods, and for individual years. The results indicate that a higher sensitivity cannot be interpreted as evidence that a firm is more financially constrained. We discuss reasons and provide evidence why the opposite may be true. These findings challenge much of the existing evidence on the effects of financial constraints
Publisher:
ISBN:
Category : Cash flow
Languages : en
Pages : 33
Book Description
This paper investigates the sources of the correlation between corporate cash flow and investment by undertaking an in-depth analysis of the 49 low-dividend firms identified by Fazzari, Hubbard, and Petersen (1988) as having an unusually high investment-cash flow sensitivity. We find that in only 15% of firm-years is there some question as to a firm's ability to access internal or external funds to increase investment. Strikingly, those firms that appear less financially constrained exhibit a significantly greater investment- cash flow sensitivity than firms that appear more financially constrained. We find this pattern for the entire sample period, for sub-periods, and for individual years. The results indicate that a higher sensitivity cannot be interpreted as evidence that a firm is more financially constrained. We discuss reasons and provide evidence why the opposite may be true. These findings challenge much of the existing evidence on the effects of financial constraints