Does the investment opportunities bias affect the investment-cash flow sensitivities of unlisted SMEs?
AbstractUsing a panel of 5,999 small and medium-sized Belgian enterprises (SMEs) over the period 2000-2004, we identify three measures of investment opportunities suitable for unlisted firms. We then estimate firm-varying investment-cash flow sensitivities (ICFS) from reduced-form investment equations that include these measures, and compare them with those derived from a model that does not control for investment opportunities. We find that all our models yield similar ICFS estimates, which are significantly related to a wide set of proxies for financing constraints. These findings suggest that the ICFS of SMEs do not simply reflect investment opportunities. The investment opportunities bias may therefore have been overstated in previous literature.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven in its series Open Access publications from Katholieke Universiteit Leuven with number urn:hdl:123456789/388277.
Date of creation: 2010
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Other versions of this item:
- Bert D’Espallier & Alessandra Guariglia, . "Does the Investment Opportunities Bias Affect the Investment-Cash Flow Sensitivities of Unlisted SMEs?," Discussion Papers 09/12, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
- D'Espallier, Bert & Guariglia, Alessandra, 2009. "Does the investment opportunities bias affect the investment-cash flow sensitivities of unlisted SMEs?," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/252004, Katholieke Universiteit Leuven.
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- Filipe Silva & Carlos Carreira, 2012.
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