Corporate governance and investment-cash flow sensitivity: Evidence from Russian unlisted firms

This study aimed to investigate the investment-cash flow sensitivity for Brazilian companies with different degrees of financial constraint according to the quality level of their corporate governance practices. An investment model was estimated through GMM for a panel data of 248 Brazilian publicly traded companies, which were a priori classified in two groups of financial constraint degrees (high and low) according to the Corporate Governance Practices Index (IPGC). The results showed that the quality of corporate governance influences the investment-cash flow sensitivity, and this sensitivity is negative and significant only for firms with poor governance, classified with high financial constraint. Furthermore, it can be concluded that IPGC proved to be an interesting variable for a priori classification of companies and an important determinant of the investment-cash flow sensitivity to identify potentially financially constrained firms.

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Corporate governance and investment-cash flow sensitivity: Evidence from emerging markets

Emerging Markets Review ◽

10.1016/j.ememar.2012.08.002 ◽

2013 ◽

Vol 15 ◽

pp. 57-71 ◽

Cited By ~ 36

Author(s):

Bill Francis ◽

Iftekhar Hasan ◽

Liang Song ◽

Maya Waisman

Keyword(s):

Corporate Governance ◽

Emerging Markets ◽

Cash Flow ◽

Flow Sensitivity ◽

Cash Flow Sensitivity

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Research and development, market valuation and cash flow sensitivity: the influence of firm’s characteristics and corporate governance factors

10.14201/gredos.76582 ◽

2009 ◽

Author(s):

Valdocéu Pereira de Queiroz

Keyword(s):

Corporate Governance ◽

Research And Development ◽

Cash Flow ◽

Market Valuation ◽

Flow Sensitivity ◽

Cash Flow Sensitivity

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Corporate governance and investment cash-flow sensitivity: evidence from Tunisia

Afro-Asian J of Finance and Accounting ◽

10.1504/aajfa.2020.10027516 ◽

2020 ◽

Vol 10 (2) ◽

pp. 168

Author(s):

Wafa Cherif ◽

Dorra Ellouze

Keyword(s):

Corporate Governance ◽

Cash Flow ◽

Flow Sensitivity ◽

Cash Flow Sensitivity

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Corporate governance and investment cash-flow sensitivity: evidence from Tunisia

Afro-Asian J of Finance and Accounting ◽

10.1504/aajfa.2020.106254 ◽

2020 ◽

Vol 10 (2) ◽

pp. 168

Author(s):

Dorra Ellouze ◽

Wafa Cherif

Keyword(s):

Corporate Governance ◽

Cash Flow ◽

Flow Sensitivity ◽

Cash Flow Sensitivity

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The source of investment cash flow sensitivity in manufacturing firms: Is it asymmetric information or agency costs?

South African Journal of Economic and Management Sciences ◽

10.4102/sajems.v19i3.1453 ◽

2016 ◽

Vol 19 (3) ◽

pp. 388-399 ◽

Cited By ~ 1

Author(s):

Daniel Makina ◽

Letenah Ejigu Wale

Keyword(s):

Corporate Governance ◽

Asymmetric Information ◽

South African ◽

Cash Flow ◽

Agency Costs ◽

Small Firms ◽

Manufacturing Firms ◽

Institutional Setting ◽

Flow Sensitivity ◽

Cash Flow Sensitivity

In the literature, positive investment cash flow sensitivity is attributed to either asymmetric information induced financing constraints or the agency costs of free cash flow. Using data from a sample of 68 manufacturing firms listed on the South African JSE, this paper contributes to the literature by investigating the source of investment cash flow sensitivity. We have found that asymmetric information explains the positive investment cash flow sensitivity better than agency costs. Furthermore, asymmetric information has been observed to be more pronounced in low-dividend-paying firms and small firms. Despite South Africa’s having a developed financial system by international standards, small firms are seen to be financially constrained. We attribute the absence of investment cash flow sensitivity due to agency costs to good corporate governance of South African listed firms. Thus the paper provides further evidence in support of the proposition in the literature that the source of investment cash flow sensitivity may depend on the institutional setting of a country, such as its corporate governance.

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Corporate governance, accounting information environment and investment-cash flow sensitivity

International Journal of Accounting and Information Management ◽

10.1108/ijaim-04-2017-0049 ◽

2018 ◽

Vol 26 (4) ◽

pp. 492-507 ◽

Cited By ~ 3

Author(s):

Ming Li ◽

Liang Song

Keyword(s):

Corporate Governance ◽

Cash Flow ◽

Accounting Information ◽

Agency Problems ◽

Free Cash Flow ◽

Information Environment ◽

Content Type ◽

Financial Decisions ◽

Flow Sensitivity ◽

Cash Flow Sensitivity

Purpose The purpose of this paper is to test the effects of antitakeover protection on investment-cash flow sensitivity and whether these effects are moderated by firms’ accounting information environment and agency problems. Design/methodology/approach To test the effects of agency problems, the authors use the passage of second-generation antitakeover laws as the testing ground, which is a pseudo-natural experiment that is widely used in the accounting, finance and economics literature (e.g. Armstrong et al., 2012; Bertrand and Mullainathan, 2003). Findings The authors’ analysis shows that investment-cash flow sensitivity is greater when managers are insulated from takeovers. The authors’ results also demonstrate that the effects of the passage of antitakeover laws on investment-cash flow sensitivity are greater when firms’ accounting information environment is poor, which is measured by fewer analysts following and higher analyst forecast dispersion. The authors also show that the effects of the passage of antitakeover laws on investment-cash flow sensitivity are greater when firms have severe agency problems, which are measured by more free cash flow. Originality/value The authors’ research extends the empirical accounting literature about the effects of corporate governance and accounting information environment on firms’ operating and financial decisions.

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