Financial Constraints and Investment: the Swiss Case
AbstractWe study the empirical link that exists between investment-cash flow sensitivities and financial constraints in the Swiss financial market. We follow the standard approach introduced by FAZARRI, HUBBARD and PETERSON (1988), but improve it by using a dynamic classification of firms, a new estimation procedure, while paying particular attention to information asymmetry indicators. We observe that investment-cash flow sensitivities are homogeneous among firms during boom periods, as in KAPLAN and ZINGALES (1995), but heterogeneous during recession periods. The link between investment-cash flow sensitivities and the intensity of financing constraints is monotonically increasing, as in FAZARRI, HUBBARD and PETERSON (1988).
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Bibliographic InfoArticle provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.
Volume (Year): 138 (2002)
Issue (Month): II (June)
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Phone: +41 (0)44 631 32 34
Fax: +41 (0)44 631 39 01
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More information through EDIRC
financial constraints; investment; Tobin Q;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
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