Costly External Financing, Investment Timing, and Investment-Cash Flow Sensitivity

2005 ◽  
Author(s):  
Evgeny Lyandres
Keyword(s):  
Cash Flow ◽  
External Financing ◽  
Investment Timing ◽  
Flow Sensitivity ◽  
Cash Flow Sensitivity

scholarly journals THE EFFECT OF FINANCIAL CONSTRAINT MODERATION IN CASH FLOW SENSITIVITY TO EXTERNAL FINANCING OF MANUFACTURING COMPANIES

2020 ◽  
Vol 10 (1) ◽  
pp. 65
Author(s):  
Abu Hasan Ahmad ◽  
Maria Adventia Mentari Mayang Cardicna
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Order Theory ◽  
Debt Financing ◽  
Financial Constraint ◽  
External Financing ◽  
Manufacturing Companies ◽  
Short Term ◽  
Flow Sensitivity ◽  
Cash Flow Sensitivity

This study aims to test the pecking order theory by looking at the level of cash flow sensitivity as a source of internal financing for all types of external financing (debt and equity). This testing also considering the financial constraint variable as moderation. The data used are the financial statements of manufacturing companies listed on the Indonesia Stock Exchange in 2014 - 2018. The dependent variable is all types of external financing (debt and equity). Debt financing is divided into two forms, short-term debt financing and long-term debt financing. While the independent variable is cash flow. The results obtained is that cash flow does not substitute all types of external financing, and the highest cash flow sensitivity occurs in short-term debt financing. The next result is that financial constraint strengthen the sensitivity of cash flow to debt and equity financing

The Sensitive Dynamic Study of Business Investment Decision-Making on Cash Flow

2011 ◽  
Vol 403-408 ◽  
pp. 394-399
Author(s):  
Zhe Fan Piao ◽  
Mei Rong Ni
Keyword(s):  
Cash Flow ◽  
Factor Model ◽  
Investment Decision ◽  
External Financing ◽  
Manufacturing Companies ◽  
Flow Sensitivity ◽  
Investment Decision Making ◽  
Cash Flow Sensitivity ◽  
Euler Model ◽  
Financial Market Development

This study bases on investment - cash flow related theories and Euler model, references to the research of Forbes(2003) and Jaewoon Koo(2005), exports investment- cash flow sensitivity and impact factor model , makes 77 of China's listed manufacturing companies as a sample, uses the empirical to analyze (I/K)i,t-1,(S/K)i,t, (CF/K)i,t, and also to analyze whether external financing , corporate nature (whether are state-owned enterprises), the degree of financial market development, the period around the financial crisis, the effect (fi+d)thave an impact on investment - cash flow. The empirical results show that although China's listed companies as a whole show a strong investment - cash flow sensitivity, this phenomenon is not just caused by financing constraints, trade-off theory or agency problems, but by the type of the company.

Financial Development and the Cash Flow Sensitivity of Cash

2006 ◽  
Vol 41 (4) ◽  
pp. 787-808 ◽  
Author(s):  
Inder K. Khurana ◽  
Xiumin Martin ◽  
Raynolde Pereira
Keyword(s):  
Financial Development ◽  
Cash Flow ◽  
Financial Constraints ◽  
Cash Holdings ◽  
Cash Flows ◽  
External Financing ◽  
Firm Level ◽  
Investment Projects ◽  
Flow Sensitivity ◽  
Cash Flow Sensitivity

AbstractPrior research posits that market imperfections and the lack of institutions that 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. Financial constraints force 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. 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 of the role of financial development on financial constraints.

The Study on Relationship between Financing Constraints and Investment-Cash Flow Sensitivity in Chinese Listed Companies

2011 ◽  
Vol 268-270 ◽  
pp. 1844-1849
Author(s):  
Chang Chun Li
Keyword(s):  
Cash Flow ◽  
Logistic Regression Model ◽  
Listed Companies ◽  
Financial Data ◽  
Financing Constraints ◽  
External Financing ◽  
Flow Sensitivity ◽  
Chinese Listed Companies ◽  
Cash Flow Sensitivity ◽  
The Relationship

This paper uses the financial data of all Chinese listed companies to construct two indexes that reflect the degree of external financing constraints faced by firms, using logistic regression model and multiple discriminate analyses respectively. Second, the author examines the relationship between financing constraints and the investment-cash flow sensitivity using OLS regressions. This paper provides evidence that the relationship between financing constraints and investment-cash flow sensitivity is monotonic, which is consistent with the findings of FHP(1988).

The impact of cash holdings and external financing on investment-cash flow sensitivity

2014 ◽  
Vol 13 (3) ◽  
pp. 251-273 ◽  
Author(s):  
Tae-Nyun Kim
Keyword(s):  
Cash Flow ◽  
Fixed Effects ◽  
Financial Constraints ◽  
Negative Relationship ◽  
Cash Holdings ◽  
External Financing ◽  
Content Type ◽  
Flow Sensitivity ◽  
Cash Flow Sensitivity ◽  
The Impact

Purpose – This paper aims to propose several factors which can explain the negative relationship between financial constraints and investment-cash flow sensitivity. Design/methodology/approach – The author uses traditional fixed effects model and minimum distance panel estimation by Erickson and Whited (2000) to estimate investment-cash flow sensitivity in the cash flow-augmented investment equation. In addition, principal component analysis is used to construct a financial constraints measure. Findings – First, it was found that substitutability between cash holdings and free cash flow can partially explain why financially constrained firms do not depend on cash flow as heavily as we expect. Second, it was confirmed that the level of net external financing can also partially explain the investment-cash flow sensitivity puzzle. Furthermore, it was argued that the influence of cash holdings and external financing on investment-cash flow sensitivity is caused by the low level of internal cash flow for financially constrained firms. This argument is supported by our findings from an examination of investment-cash flow sensitivity for bank-dependent firms during the recession periods. Originality/value – This paper contributes to the literature by suggesting possible partial explanations for the contradictory relationship between investment-cash flow sensitivity and financial constraints.

Managerial Overconfidence and Investment－Cash Flow Sensitivity

2017 ◽  
Vol 32 (6) ◽  
pp. 345-363
Author(s):  
Jeong-Ho Koo ◽  
◽  
Daecheon Yang ◽  
Keyword(s):  
Cash Flow ◽  
Flow Sensitivity ◽  
Cash Flow Sensitivity ◽  
Managerial Overconfidence

The Effect of Public Subsidies on Firms’ Investment-Cash Flow Sensitivity: Transient or Persistent?

2010 ◽  
Author(s):  
Massimo G. Colombo ◽  
Annalisa Croce ◽  
Massimiliano Guerini
Keyword(s):  
Cash Flow ◽  
Flow Sensitivity ◽  
Public Subsidies ◽  
Cash Flow Sensitivity
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