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The effects of cash flow and size on the investment decisions of ICT firms: A dynamic approach

  • Aoun, Dany
  • Hwang, Junseok
Registered author(s):

    This paper examines one of the fastest growing industries in our world today, the ICT industry. We assess the sensitivity of a firm's investment to a set of financial determinants, by developing a flexible adjustment dynamic model. In particular, we examine the degree to which a firm's liquidity influences firm investment and whether firm size and firm specialization have any additional implications. Moreover, the effect of the dot-com burst is also considered. For a panel of ICT and non-ICT US companies listed on the NASDAQ stock exchange, the results reveal the following: (1) all firms are sensitive to the availability of internal funds; (2) investment intensity decreases with firm size; (3) and leverage negatively affects investment for ICT firms.

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    File URL: http://www.sciencedirect.com/science/article/B6V8J-4RPVHXJ-1/1/3241bf832ffb816feda7a70dd8292424
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    Article provided by Elsevier in its journal Information Economics and Policy.

    Volume (Year): 20 (2008)
    Issue (Month): 2 (June)
    Pages: 120-134

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    Handle: RePEc:eee:iepoli:v:20:y:2008:i:2:p:120-134
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505549

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