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Investment-cash flow sensitivity and financing constraints: New evidence from Indian business group firms

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  • George, Rejie
  • Kabir, Rezaul
  • Qian, Jing

Abstract

A controversy exists on the use of the investment-cash flow sensitivity as a measure of financing constraints of firms. We re-examine this controversy by analyzing firms affiliated to Indian business groups. We find a strong investment-cash flow sensitivity for both group-affiliated and independent firms, but no significant difference in the sensitivity between them. Additional tests consistently demonstrate that investment-cash flow sensitivity of Indian group affiliated firms is not significantly lower relative to unaffiliated firms.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Multinational Financial Management.

Volume (Year): 21 (2011)
Issue (Month): 2 (April)
Pages: 69-88

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Handle: RePEc:eee:mulfin:v:21:y:2011:i:2:p:69-88

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Web page: http://www.elsevier.com/locate/mulfin

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Keywords: Investments Cash flows Financing constraints Business groups India;

References

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Cited by:
  1. Gautam, Vikash, 2011. "Evidence on the dynamics of investment-cash flow sensitivity," MPRA Paper 35431, University Library of Munich, Germany, revised Dec 2011.
  2. Christian Arndt & Claudia Buch & Anselm Mattes, 2009. "Barriers to Internationalization: Firm-Level Evidence from Germany," IAW Discussion Papers 52, Institut für Angewandte Wirtschaftsforschung (IAW).

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