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Financial Constraints in Investment - Foreign Versus Domestic Firms. Panel Data Results From Estonia, 1995-1999

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Author Info

  • Tomasz Mickiewicz

    ()

  • Kate Bishop

    ()

  • Urmas Varblane

    ()

Abstract

Using data from Estonian manufacturing firms during the period 1995-1999 we apply panel data techniques, in particular the Arellano-Bond (1991) method to investigate the investment behaviour. We employ the model of optimal capital accumulation in the presence of convex adjustment costs. We find that the domestic companies seem to be more financial constrained than those with the presence of foreign investors. Furthermore we find that smaller firms are more constrained than their larger counterparts.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp648.pdf
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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2004-648.

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Length: 34 pages
Date of creation: 01 Feb 2004
Date of revision:
Handle: RePEc:wdi:papers:2004-648

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Keywords: Investment; Cash Flow; Foreign Ownership; Firm Size; Estonia;

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References

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Cited by:
  1. Mykhayliv, Dariya & Zauner, Klaus G., 2013. "Investment behavior and ownership structures in Ukraine: Soft budget constraints, government ownership and private benefits of control," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 265-278.
  2. Jaan Masso & Jaanika Meriküll & Priit Vahter, 2011. "Gross Profit Taxation Versus Distributed Profit Taxation And Firm Performance: Effects Of Estonia’S Corporate Income Tax Reform," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 81, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  3. Spiros Bougheas & Paul Mizen & Simone Silva, . "The open economy balance sheet channel and the exporting decisions of firms: Evidence from the Brazilian crisis of 1999," Discussion Papers 11/15, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).

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