Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7351981 | Finance Research Letters | 2018 | 20 Pages |
Abstract
We examine the role of a country's institutional framework for investment and financing activities. A country's financial structure, investor rights, and legal environment are important determinants of the relation between cash flow and firms' investment and financing behavior. Firms from countries with a stronger institutional framework exhibit higher financing-cash flow sensitivities. These firms are more likely to substitute a cash flow shortfall with issuing equity. Conversely, investment-cash flow sensitivities are higher for firms in countries with a weaker institutional framework.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Simon Döring, Wolfgang Drobetz, Malte Janzen, Iwan Meier,