Financial Market Imperfections and Investment: an Overview
AbstractThe paper examines the interpretation of firms' investment-cash flow sensitivity as an artifact of financial market imperfection. Two alternative explanations of the financial constraints are compared. One is based on informational problems (asymmetric information). The other focuses on limited commitment between firms and financial intermediates. Empirical evidence of investment-cash flow sensitivity is discussed as well as some of the macroeconomic implications of financial market imperfections.
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Bibliographic InfoPaper provided by EconWPA in its series Finance with number 0409031.
Length: 29 pages
Date of creation: 08 Sep 2004
Date of revision:
Note: Type of Document - pdf; pages: 29
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Financial Accelerator; Cash Flow; Financial Constraints; Overinvestment;
Find related papers by JEL classification:
- D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Financing, Investment, and Capacity
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
This paper has been announced in the following NEP Reports:
- NEP-ACC-2004-09-12 (Accounting & Auditing)
- NEP-BEC-2004-09-12 (Business Economics)
- NEP-CFN-2004-09-12 (Corporate Finance)
- NEP-FIN-2004-09-12 (Finance)
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- Christian Calmès & Denis Cormier & Francois Éric Racicot & Raymond Théoret, 2012. "Firms' Accruals and Tobin’s q," RePAd Working Paper Series UQO-DSA-wp032012, Département des sciences administratives, UQO.
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