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Testing For The Impact Of Financing Constraints Of Corporate Investment
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Book Synopsis Testing for the Impact of Financing Constraints of Corporate Investment by : Benedicte Millet-Reyes
Download or read book Testing for the Impact of Financing Constraints of Corporate Investment written by Benedicte Millet-Reyes and published by . This book was released on 1998 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Financing constraints and corporate investment by : Steven Fazzari
Download or read book Financing constraints and corporate investment written by Steven Fazzari and published by . This book was released on 1987 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis How important are financing constraints? : the role of finance in the business environment by : Meghana Ayyagari
Download or read book How important are financing constraints? : the role of finance in the business environment written by Meghana Ayyagari and published by World Bank Publications. This book was released on 2006 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: What role does the business environment play in promoting and restraining firm growth? Recent literature points to a number of factors as obstacles to growth. Inefficient functioning of financial markets, inadequate security and enforcement of property rights, poor provision of infrastructure, inefficient regulation and taxation, and broader governance features such as corruption and macroeconomic stability are discussed without any comparative evidence on their ordering. In this paper, the authors use firm level survey data to present evidence on the relative importance of different features of the business environment. They find that although firms report many obstacles to growth, not all the obstacles are equally constraining. Some affect firm growth only indirectly through their influence on other obstacles, or not at all. Using Directed Acyclic Graph methodology as well as regressions, the authors find that only obstacles related to finance, crime, and political instability directly affect the growth rate of firms. Robustness tests further show that the finance result is the most robust of the three. These results have important policy implications for the priority of reform efforts. They show that maintaining political stability, keeping crime under control, and undertaking financial sector reforms to relax financing constraints are likely to be the most effective routes to promote firm growth.
Book Synopsis Financial Constraints, Asset Tangibility, and Corporate Investment by : Heitor Almeida
Download or read book Financial Constraints, Asset Tangibility, and Corporate Investment written by Heitor Almeida and published by . This book was released on 2008 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: When firms are able to pledge their assets as collateral, investment and borrowing become endogenous: pledgeable assets support more borrowings that in turn allow for further investment in pledgeable assets. We show that this credit multiplier has an important impact on investment when firms face credit constraints: investment-cash flow sensitivities are increasing in the degree of tangibility of constrained firms' assets. If firms are unconstrained, however, investment-cash flow sensitivities are unaffected by asset tangibility. Crucially, asset tangibility itself may determine whether a firm faces credit constraints - firms with more tangible assets may have greater access to external funds. This implies that the relationship between capital spending and cash flows is non-monotonic in the firm's asset tangibility. Our theory allows us to use a differences-in-differences approach to identify the effect of financing frictions on corporate investment: we compare the differential (marginal) effect of asset tangibility on the sensitivity of investment to cash flow across different regimes of financial constraints. We implement this testing strategy on a large sample of manufacturing firms drawn from COMPUSTAT between 1985 and 2000. Our tests allow for the endogeneity of the firm's credit status, with asset tangibility influencing whether a firm is classified as credit constrained or unconstrained in a switching regression framework. The data strongly support our hypothesis about the role of asset tangibility on corporate investment under financial constraints.
Book Synopsis Global Capital Flows and Financing Constraints by : Ann E. Harrison
Download or read book Global Capital Flows and Financing Constraints written by Ann E. Harrison and published by World Bank Publications. This book was released on 2002 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease host-country firms' financing constraints. However, if incoming foreign investors borrow heavily from domestic basnks, direct foreign investment (DFI) may exacerbate financing constraints by crowding host country firms out of domestic capital markets. Combininb a unique cross-country firm-level panel with time-series data on restrictions on international transactions and capital flows, we find that different measures of global flows are associated with a reduction in firm-level financing constraints. First, we show that one type of capital inflow--DFI--is associated with a reduction in financing constraints. Second, we test whether restrictions on international transactions affect firms' financing constraints. Our results suggest that only one type of restriction--those on capital account transactions--negatively affect firms' financing constraints. We also show that multinational firms are not financially constrained and do not appear to be sensitive to the level of DFI. This implies that DFI eases financing constraints for non-multinational firms. Finally, we show that DFI only eases financing constraints in the non-G7 countries.
Book Synopsis Asset Pricing Implications of Firms' Financing Constraints by : Joao F. Gomes
Download or read book Asset Pricing Implications of Firms' Financing Constraints written by Joao F. Gomes and published by . This book was released on 2002 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We incorporate costly external finance in an investment-based asset pricing model and investigate whether financing frictions are quantitatively important for pricing a cross-section of expected returns. We show that common assumptions about the nature of the financing frictions are captured by a simple financing cost' function, equal to the product of the financing premium and the amount of external finance. This approach provides a tractable framework for empirical analysis. Using GMM, we estimate a pricing kernel that incorporates the effects of financing constraints on investment behavior. The key ingredients in this pricing kernel depend not only on fundamentals', such as profits and investment, but also on the financing variables, such as default premium and the amount of external financing. Our findings, however, suggest that the role played by financing frictions is fairly negligible, unless the premium on external funds is procyclical, a property not evident in the data and not satisfied by most models of costly external finance.
Book Synopsis Testing Financing Constraints on Firm Investment Using Variable Capital by : Andrea Caggese
Download or read book Testing Financing Constraints on Firm Investment Using Variable Capital written by Andrea Caggese and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The impact of financing constraints on investment by : John Edward Stuart Brown
Download or read book The impact of financing constraints on investment written by John Edward Stuart Brown and published by . This book was released on 1999 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Financial Factors and Corporate Investment by : Yong-Doo Cho
Download or read book Financial Factors and Corporate Investment written by Yong-Doo Cho and published by . This book was released on 1996 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investigates the impact of financial factors on corporate investment in Korea
Book Synopsis Firms' Investment and Finance Decisions by : Paul Butzen
Download or read book Firms' Investment and Finance Decisions written by Paul Butzen and published by Edward Elgar Publishing. This book was released on 2003-01-01 with total page 354 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides coherent theoretical and empirical analysis of firms’ investment and financing decisions. It assesses the role of uncertainty, financial imperfections, corporate governance and taxation. Evidence is obtained using several unique and high quality microeconomic data-sets, which explore features seldom addressed.
Book Synopsis Investment-cash Flow Sensitivities are Not Valid Measures of Financing Constraints by : Steven N. Kaplan
Download or read book Investment-cash Flow Sensitivities are Not Valid Measures of Financing Constraints written by Steven N. Kaplan and published by . This book was released on 2000 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis MONETARY POLICY R&D INVESTMENT by : Huili Chang
Download or read book MONETARY POLICY R&D INVESTMENT written by Huili Chang and published by Open Dissertation Press. This book was released on 2017-01-26 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, "Monetary Policy, R&D Investment, and Test of Corporate Capital Structure Theory" by Huili, Chang, {273c54}{273f2f}丽, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This dissertation consists of three chapters on monetary policy, R&D investment, and test of corporate capital structure theory. In the first chapter, I examine the impact of large-scale asset purchases (LSAPs) on corporate financing and investment. I find that LSAPs increased corporate financing and shifted the corporate financing pattern towards greater equity financing. Specifically, LSAPs enabled noninvestment-grade firms to issue more public equity and allowed investment-grade firms to issue more bonds. I find that LSAPs also affected the stock market through the portfolio balance channel. With the reversal of flight to quality, noninvestment-grade firms enjoyed significantly higher stock returns than investment-grade firms. After raising capital, public equity issuers used these proceeds to avoid bankruptcy, whereas debt issuers used the funds to expand their businesses. Therefore, unlike traditional monetary policy tools that affect bank lending, LSAPs stimulate the real economy by spurring the stock and bond markets and thereby providing firms with alternative sources of financing. In the second chapter, I attempt to differentiate demand-side reasons from supply-side reasons for firms with higher R&D investment to have a lower leverage. I use two identification events to test their different predictions, the introduction of state-level R&D tax credits and the grant of patents. Because state R&D tax credits increase R&D investment by firms headquartered in the state, I use their introduction to examine whether supply-side frictions affect corporate financing choices to finance R&D investment. I find that constrained firms issue more equity and have a lower leverage after their introduction, whereas unconstrained firms do not, which suggests that supply-side frictions force firms to issue equity to fund innovation. Because patents can partially relieve credit constraints, I use the grant of patents to analyze whether firms change their leverage after credit constraints are lessened. I find that firms increase their leverage after the grant of patents, which again indicates that supply-side frictions are dominant in shaping corporate leverage. Therefore, the negative relationship between R&D investment and corporate leverage is primarily due to supply-side frictions. In the third chapter, I point out that prior tests of the pecking order theory fail to consider whether firms have access to the debt market or not, and argue that small and high-growth firms' tendency to issue equity reflects no access to the debt market rather than rejects the pecking order. I adopt financial constraints as proxy for firms' access to the debt market, and empirically demonstrate that once financial constraints are controlled for, the pecking order provides a better description of firms' financing behaviors. To address the endogeneity problem, I use an exogenous event, firms' addition into the S&P 500 index. Consistent with my prediction, firms are more likely to issue debt after the addition. Finally, I show that financial constraints are different from the alternative explanation of debt capacity constraints. Subjects: Corporations - Finance
Book Synopsis Quantifying the Effects of Financing Constraints on Investment by : Hongren Wang
Download or read book Quantifying the Effects of Financing Constraints on Investment written by Hongren Wang and published by . This book was released on 2000 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis An Introduction to Modern Econometrics Using Stata by : Christopher F. Baum
Download or read book An Introduction to Modern Econometrics Using Stata written by Christopher F. Baum and published by Stata Press. This book was released on 2006-08-17 with total page 362 pages. Available in PDF, EPUB and Kindle. Book excerpt: Integrating a contemporary approach to econometrics with the powerful computational tools offered by Stata, this introduction illustrates how to apply econometric theories used in modern empirical research using Stata. The author emphasizes the role of method-of-moments estimators, hypothesis testing, and specification analysis and provides practical examples that show how to apply the theories to real data sets. The book first builds familiarity with the basic skills needed to work with econometric data in Stata before delving into the core topics, which range from the multiple linear regression model to instrumental-variables estimation.
Book Synopsis Handbook of the Economics of Finance by : G. Constantinides
Download or read book Handbook of the Economics of Finance written by G. Constantinides and published by Elsevier. This book was released on 2003-11-04 with total page 698 pages. Available in PDF, EPUB and Kindle. Book excerpt: Arbitrage, State Prices and Portfolio Theory / Philip h. Dybvig and Stephen a. Ross / - Intertemporal Asset Pricing Theory / Darrell Duffle / - Tests of Multifactor Pricing Models, Volatility Bounds and Portfolio Performance / Wayne E. Ferson / - Consumption-Based Asset Pricing / John y Campbell / - The Equity Premium in Retrospect / Rainish Mehra and Edward c. Prescott / - Anomalies and Market Efficiency / William Schwert / - Are Financial Assets Priced Locally or Globally? / G. Andrew Karolyi and Rene M. Stuli / - Microstructure and Asset Pricing / David Easley and Maureen O'hara / - A Survey of Behavioral Finance / Nicholas Barberis and Richard Thaler / - Derivatives / Robert E. Whaley / - Fixed-Income Pricing / Qiang Dai and Kenneth J. Singleton.
Book Synopsis Using Investment-cash Flow Sensitivity to Test for Financing Constraints by : Guiying Wu
Download or read book Using Investment-cash Flow Sensitivity to Test for Financing Constraints written by Guiying Wu and published by . This book was released on 2006 with total page 192 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Missing Link Between Financial Constraints and Productivity by : Marialuz Moreno Badia
Download or read book The Missing Link Between Financial Constraints and Productivity written by Marialuz Moreno Badia and published by International Monetary Fund. This book was released on 2009-04 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the macroeconomic and budgetary impact of tax reforms in a New Keynesian two-country model. Our results show that both income and consumption unilateral tax rate reductions do not constitute a "free lunch," in the sense that they have negative budgetary consequences for the country which implements them. In addition, the degree of self-financing implied by our model is in the -24 percent range. Since the degree of self-financing estimated in previous literature was larger, we conclude that in our model not only the "lunch" is not "free," but is also not that "cheap." A comparison of alternative (income-tax versus consumption-tax based) fiscal stimulus packages shows that consumption tax cuts imply a larger short-run impact on domestic output but the income tax cuts stimulate the domestic economy more in the long run. We also look at the implications of a revenue-neutral tax reform in which consumption taxes are increased to compensate for lower income tax collection.