Decreasing investment-cash flow sensitivity: Further UK evidence
Journal article
Authors | Machokoto, Michael, Tanveer, Umair, Ishaq, Shamaila and Areneke, Geofry |
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Abstract | Using publicly listed firms in the UK, we examine the time-series variation of investment-cash flow sensitivity after directly controlling for future growth opportunities in cash flow, which if overlooked, as in the literature, could bias inferences. We find that investment-cash flow sensitivity is disappearing over time, even for constrained firms during the global financial crisis when credit constraints were more significant or binding. Our results not only confirm the decline in investment-cash flow sensitivity that is not explained by factors so far identified in the literature but also its diminishing usefulness as a proxy of financial constraints. |
Keywords | financial constraints; Investment-cash flow sensitivity; time variations |
Year | 2019 |
Journal | Finance Research Letters |
Publisher | Elsevier |
ISSN | 1544-6123 |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.frl.2019.101397 |
Web address (URL) | http://hdl.handle.net/10545/624442 |
hdl:10545/624442 | |
Publication dates | 12 Dec 2019 |
Publication process dates | |
Deposited | 04 Feb 2020, 09:11 |
Accepted | 11 Dec 2019 |
Contributors | University of Northampton, University of Bristol, University of Derby and Manchester Metropolitan University |
File | |
File | File Access Level Open |
https://repository.derby.ac.uk/item/931z1/decreasing-investment-cash-flow-sensitivity-further-uk-evidence
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