Conditional investment–cash flow sensitivities and financing constraints
Open accessAbstract
We study the sensitivity of investment to cash flow conditional on measures of q in an adjustment costs framework with costly external …nance. We present a benchmark model in which this conditional investment-cash flow sensitivity increases monotonically with the cost premium for external …- finance, for …firms in a fi…nancially constrained regime. Using simulated data, we show that this pattern is found in linear regressions that relate invest- ment rates to measures of both cash flow and average q. We also derive a structural equation for investment from the …first order conditions of our model, and show that this can be estimated directly.
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It is very common for investors to choose conditional investment behavior in their daily economic activities when interacting with other agents.
“Furthermore, it is very common for investors to choose conditional investment behavior in their daily economic activities when interacting with other agents [2, 5].”
From Conditional investment strategy in evolutionary trust games with repeated group interactions (2022) · cites this paper as [5]
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Flagged first, then by citations
Research works printed but not linked: 5
- Bond, S.R. and C. Meghir (1994), "Dynamic investment models and the …rm's …nancial policy", Review of Economic Studies 61:197-222.
- Bond, S.R. and M. Söderbom (2006), "Conditional investment-cash ‡ow sen- sitivities and …nancing constraints", mimeo, University of Oxford, available at www.nu¢ eld.ox.ac.uk/General/Members/Bond.aspx
- Cleary, S. (1999), "The relationship between …rm investment and …nancial status", Journal of Finance 54(2):673-692.
- Kaplan, S.N. and L. Zingales (1997), "Do investment-cash ‡ow sensitivies provide useful measures of …nancing constraints?", Quarterly Journal of Eco- nomics 112(1):169-216.
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Cited by
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Conditional investment strategy in evolutionary trust games with repeated group interactions
Liu, L., & Chen, X. (2022) · Information Sciences · doi:10.1016/j.ins.2022.07.073 · Cited by 45 · see citing works
- Authors
- Bond, S. R., & Söderbom, M.
- Affiliations
- Institute for Fiscal Studies (GB)
- University of Gothenburg (SE)
- Venue
- Journal of the European Economic Association
- Publisher
- Oxford University Press (OUP)
- Published
- 2013-01-15
- Volume
- 11
- Issue
- 1
- Pages
- 112-136
- ISSN
- 1542-4766 (ISSN-L)
- OpenAlex
- W2097673415
- Cited by
- 30
- References
- 29
- Citations by year
- 2023: 1 · 2022: 3 · 2021: 4 · 2020: 2 · 2019: 3 · 2018: 3 · 2017: 3 · 2016: 3 · 2015: 2 · 2012: 1
- FWCI
- 6.47
- Type
- journal article
- Language
- en
- Open access
- green
- hdl.handle.net
- Locations
- Journal of the European Economic Association (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Gothenburg University Publications Electronic Archive (Gothenburg University) (submittedVersion)
- Funders
- Economic and Social Research Council (ES/F037864/1, RES-000-)
- Topics
- Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
- Social Sciences › Business, Management and Accounting › Accounting › Financial Analysis and Corporate Governance
- Social Sciences › Economics, Econometrics and Finance › Finance › Capital Investment and Risk Analysis
- Keywords
- investment-cash flow sensitivity, q-theory of investment, adjustment costs, financial constraints, investment rate
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