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COVID-19 and investment–cash flow sensitivity: A cross-country analysis

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  • Thai, Thi Hong An
  • Vo, Thi Thuy Anh
  • Mazur, Mieszko

Abstract

This study investigates investment–cash flow sensitivity during the COVID-19 economic crisis. Using an international sample of publicly listed firms, we find that the sensitivity of capital expenditures to cash flows is significantly reduced during the crisis. When we split the sample into strongly and weakly affected countries, we find that firms in countries affected more seriously by COVID-19 exhibit lower investment responsiveness to cash flows. We further find that investment–cash flow sensitivity is diminished when government aid is greater, firms have more cash on hand, and investment opportunities decline. Our results survive a host of robustness checks. This study contributes to the discussion on the impact of COVID-19 on corporate policies within an international framework.

Suggested Citation

  • Thai, Thi Hong An & Vo, Thi Thuy Anh & Mazur, Mieszko, 2023. "COVID-19 and investment–cash flow sensitivity: A cross-country analysis," Research in International Business and Finance, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s027553192300140x
    DOI: 10.1016/j.ribaf.2023.102014
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    References listed on IDEAS

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