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New vs. used capital investment decisions under liquidity constraints

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Author Info
Konstantinos Drakos
Eleftherios Goulas
Christos Kallandranis

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Abstract

Informationally driven capital market imperfections may lead to a systematic relation between expenditure on used capital and the severity of liquidity constraints. We project used capital outlays on internal finance across sectors of different sizes documenting that the sensitivity of used capital investment to cash flow is higher for financially constrained sectors.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Applied Financial Economics Letters.

Volume (Year): 3 (2007)
Issue (Month): 1 (January)
Pages: 15-18
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Handle: RePEc:taf:apfelt:v:3:y:2007:i:1:p:15-18

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Audretsch, David B. & Elston, Julie Ann, 2002. "Does firm size matter? Evidence on the impact of liquidity constraints on firm investment behavior in Germany," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 1-17, January. [Downloadable!] (restricted)
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  2. Andrew B. Abel & Olivier J. Blanchard, 1987. "The Present Value of Profits and Cyclical Movements in Investment," NBER Working Papers 1122, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. R. Glenn Hubbard & Anil K Kashyap & Toni M. Whited, 1995. "Internal Finance and Firm Investment," NBER Working Papers 4392, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Fabio Schiantarelli & Xiaoqiang Hu, 1994. "Investment and Financing Constraints: A Switching Regression Approach Using U.S. Firm Panel Data," Boston College Working Papers in Economics 284., Boston College Department of Economics.
  5. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June. [Downloadable!] (restricted)
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