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http://hdl.handle.net/1942/8418
Title: | Investment-cash flow sensitivities or cash-cash flow sensitivities? An evaluative framework for measures of financial constraints | Authors: | D'ESPALLIER, Bert VANDEMAELE, Sigrid PEETERS, Ludo |
Issue Date: | 2008 | Publisher: | BLACKWELL PUBLISHING | Source: | Journal of Business Finance and Accounting, 35(7-8). p. 943-968 | Abstract: | We evaluate two models commonly used for measuring financial constraints in their ability to discriminate between constrained and unconstrained firms. We compute firm-specific estimates for the cash flow sensitivity of investment (CFSI), and the cash flow sensitivity of cash (CFSC) and provide a framework that summarizes the performance of each model into a single numerical metric. We argue that this ‘ex-post’ approach provides interesting advantages over the traditional operationalization, in which firms are classified ‘ex-ante’ on a theoretical basis. Our findings suggest the superiority of the CFSI model over the CFSC model for a sample of manufacturing SMEs in Belgium. | Document URI: | http://hdl.handle.net/1942/8418 | ISSN: | 0306-686X | e-ISSN: | 1468-5957 | DOI: | 10.1111/j.1468-5957.2008.02101.x | ISI #: | 000259681400007 | Category: | A1 | Type: | Journal Contribution | Validations: | ecoom 2009 |
Appears in Collections: | Research publications |
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